Half-year Report

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

EVR Holdings plc

('EVR', the 'Group' or the 'Company')

Half-yearly Results

EVR Holdings (AIM: EVRH), the leading creator of virtual reality music ('VR') content and operator of the MelodyVR platform, is pleased to announce its Half-yearly Results for the six months ended 30 June 2018.

Highlights

· Major multi-year agreements with Warner/Chappell Music and Big Machine Label Group

· Further six multi-year agreements with multiple publishers and record labels

· The official launch of the MelodyVR music platform in the US, UK and 8 European territories.

· First sales recorded of VR content, with encouraging initial data points.

· Completion of a successful equity placing to raise £20 million (before costs).

· As at 30 June 2018 the Group had cash and cash equivalents of approximately £26.1 million for future expansion and development.

· Post period end, MelodyVR has entered exclusive multi-year partnerships to deliver virtual access to selected live events signed with major UK venues.

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Chairman's Statement

Overview

I am pleased to be able to present our report on what has been an important phase in the Group's development; one which culminated in the successful launch of the MelodyVR platform in both the US and in Europe, in conjunction with the release of Facebook's Oculus Go VR device.

A further strengthening of our balance sheet following a successful fundraise in May 2018, combined with the addition of experienced individuals to the management team and positive critical recognition of our MelodyVR platform, have helped to lay stable foundations for future success.

Financial Results

With the launch of the MelodyVR platform occurring only a matter of weeks prior to the end of this reporting period, in tandem with the launch with the world's first commercially viable standalone VR device, Facebook's Oculus Go, revenue during the period has been influenced by the initially limited distribution and accessibility of Facebook's VR Headset. Whilst the MelodyVR platform has been available for only a limited period, I am pleased to report that our early metrics regarding user engagement and conversion rates are extremely encouraging and remain on track with management expectations; with over 72% of MelodyVR's install base, now having utilised the platform to consume our content.

Gross profit at a loss of £0.2 million has been calculated after the deduction of content creation costs as well as amounts due to all rights holders. These amounts include commissions and revenue share arrangements due to app stores, record labels, artists, publishers, songwriters and exclusive event/venue partners.

Adjusted operating loss before non-cash and recurring items was £3.8 million (H1 2017: £1.8 million), and is stated after the costs associated with significant original content creation, expansion of internal resources, development/operation and launch of the MelodyVR platform as well as the associated costs leading up to the successful launch of MelodyVR.

Operations

Our principle focus for the period under review concentrated our operational activities on the release of the Melody VR app, which officially launched in the US and UK on 1 May 2018 and in a further 8 countries throughout Europe on the 26 June 2018. The release followed a period of significant engineering and R&D, which included the development of unique proprietary software, IP, tools and workflows. Each have enabled MelodyVR to maintain a market leading advantage in both content delivery, user experience and platform architecture. In addition, our Company has continued to create engaging exclusive VR music content with the world's most recognisable artists, in partnership with the world's major music companies, which further cemented our commitment to building the next medium for global music consumption. Following the launch of the MelodyVR platform and a limited subset of our content, we have been re-assured by the platform's stability and scalability, as well as by user engagement, usage and adoption from those customers currently able to access the platform via the Oculus storefront, in Europe and the US.

Our innovation within the marketplace has been equally well received by major news outlets and press, including features in GQ, Billboard, VICE, The Daily Telegraph, The Financial Times, Wired, CrunchBase, Sky News, Fox News and BBC News, amongst others. As we move through the initial stages of commercialisation of our service, we seek to broaden the reach and breadth of our platform as currently, we are largely dependent upon VR hardware manufacturers such as Oculus, and the proliferation and adoption of their VR devices as the principal conduit for access to our service. We will continue to extend the reach of our MelodyVR platform across new territories and via new channels, as well as via a broader range of VR hardware.

Analysing the post launch metrics available to us at the time of writing this report, we are encouraged by the number of consumers who, having purchased a VR headset device, have installed the MelodyVR app, also of those who having downloaded the app, have utilised MelodyVR content. Whilst it is too early to draw any meaningful conclusions from the data reconciled over the two month period following launch, we are encouraged by the engagement and conversion metrics experienced to date when measured against both our own expectations and when benchmarked against other leading music and technology products. In addition, having launched successfully with a limited subset of our exclusive original content, as the VR market develops over the coming months we intend to widen the depth of available content, adding further experiences from our vast library of VR experiences.

As part of a series of new and innovative initiatives, MelodyVR will introduce live-streamed VR content which will enable music fans the opportunity to experience live real-time performances from internationally recognised artists direct from sold-out concerts and venues. We intend to launch this new functionality with a showcase offering, featuring a live performance of a globally recognised artist in partnership with an equally prominent global media channel. Users will be able to experience live VR content via the MelodyVR platform, by purchasing a virtual ticket. Given the partnerships already in place with the key stakeholders in the music industry, fans will subsequently be able to re-live these experiences at a later date, as part of our ever-broadening library of original content.

Our exclusive partnership agreements which provide access, capture and live stream arrangements with numerous partners, including recent additions such as the NEC Group and Alexandra Palace, join over 70 individual festival and event brands, which will soon provide users with the opportunity to access a rich calendar of live performances and events, which feature many of the major recording artists from around the world. Artists billed to perform at our partners events and venues over the coming 12 months include the vast majority of the world's current top 50 artists.

These initiatives, in combination with the introduction of platform advertising and sponsorship will further broaden MelodyVR's monetisation model, increase revenue generation capabilities and further stimulate growth of the service.

Ansco Arena Limited

In addition, we are pleased to today announce that MelodyVR has also entered into an agreement with Ansco Arena Limited, operator of the O2 arena London. Our companies will share revenue from live-streamed and recorded VR content, made available via the MelodyVR platform.

Funding

On 1 May 2018, the Company announced that it had successfully raised a further £20m of additional funds (before costs) via the issue of 125 million new ordinary shares at a placing price of 16p per share further strengthening the balance sheet. The net proceeds of the fundraise are being used to further expand the Group, including on a global basis. The placing also presented the opportunity to welcome new institutions to the register of shareholders. As at the balance sheet date of 30 June 2018 cash reserves totalled £26 million which at the current anticipated rate of burn will provide the Group with in excess of 24 months of funding.

Outlook

Our primary focus during the next twelve months is to drive awareness of the MelodyVR platform, in turn developing our user base in order to further monetise our recorded, live and interactive original VR content. With the development and successful launch of a robust and proven technology platform behind us, backed by global licensing agreements with all of the major record labels and exclusive rights of capture at a significant number of the leading music venues and festivals from around the world, our Company has never been better positioned for on-going success. 

Operationally, we will continue to expand on a global basis, whilst managing our costs prudently. Over the coming months we look forward to the benefit of receiving additional user data from our platform, which will enable our team to secure greater insight into consumer behaviour and engagement with the MelodyVR platform. As with any mass-market consumer technology, data and analytics not only provide significant opportunity to improve our product itself but also provide significant data points relating to key metrics such as user engagement, retention and conversion. It is our intention to maximise the performance of these metrics over the coming year, enhancing the lifetime value of our customers and increasing revenues from our MelodyVR platform.

The consumer reaction to the launch of the Oculus Go headset has been very positive, yet we are keen to accelerate the growth of MelodyVR's user base beyond the reach of the 324 million VR devices the market forecasts by the end of 2021. In order for the rate of MelodyVR user acquisition to surpass the expectation of VR hardware sales and adoption, we intend to extend the accessibility of our services to Android and iOS device users worldwide, which are currently in excess of 3 billion. With this in mind, we are currently evaluating a number of initiatives which will enable users to access content with their smartphone devices. I look forward to providing further updates on this, as well as our other initiatives, in due course.

The introduction of live stream events, launches of new VR hardware devices and platform sponsorship will accelerate the awareness and accessibility of MelodyVR to millions of more users worldwide over the next year. We intend to further capitalise on this by launching in numerous additional territories, including Canada and the AsiaPac region, where many countries are displaying signs of rapid VR adoption.

These developments provide us with great opportunities in the near term as we move in to the next phase of our Company's development and growth. A strong balance sheet and validation from the music industry and technology sectors, provide us with not only great confidence in being able to successfully execute on this exciting opportunity, but also in realising our goal of building the world's next major global music service.

Anthony Matchett

Chairman & CEO

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR EVR HOLDINGS PLC

for the six months ended 30th June 2018

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR EVR HOLDINGS PLC

for the six months ended 30th June 2018

(unaudited)

CONSOLIDATED STATEMENT OF FINANCIAL POSISITON FOR EVR HOLDINGS PLC

as at 30th June 2018

CONSOLIDATED CASH FLOW STATEMENT FOR EVR HOLDINGS PLC

for the six months ended 30th June 2018

NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR EVR HOLDINGS PLC

for the six months ended 30th June 2018 

1. Basis of preparation of interim financial information 

The consolidated interim financial statements have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as endorsed by the European Union ("IFRS") and expected to be effective at the year-end of 31 December 2017.

New accounting policies adopted during the year are detailed in Notes 3 and 4 while all other accounting policies remain unchanged from the financial statements for the year ended 31 December 2017.

The interim financial statements are unaudited and do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2017, prepared in accordance with IFRS, have been filed with the Registrar of Companies. The Auditors' Report on these accounts was unqualified, did not include any matters to which the Auditors drew attention by way of emphasis without qualifying their report and did not contain any statements under section 498 of the Companies Act 2006.

The consolidated interim financial statements are for the 6 months to 30 June 2018.

The interim consolidated financial information do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the group's annual financial statements for the year ended 31 December 2017, which were prepared in accordance with IFRS's as adopted by the European Union.

Going Concern

The directors have prepared detailed cash flow forecasts and are of the opinion that it is appropriate to prepare these financial statements on a going concern basis. In making this assessment management has considered:

a) The current working capital position and operational requirements

b) The sensitivities associated with projected expenditure

c) The timing and magnitude of planned capital expenditure

d) The strategic exploitation of the company's significant resources

e) The timing of launch within new territories and on new Virtual Reality (VR) platforms

The conclusion of this assessment and having regard to the existing working capital position the Directors are of the opinion that the Group will have adequate resources to enable it to undertake its planned activities for the next twelve months.

2. Accounting Policies

Standards and amendments and interpretations to published standards not yet effective.

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group's accounting period beginning on or after 1 July 2017 or later periods and which the group has decided not to adopt early are:

· Amendments to IFRS 2 Share Based Payment (effective for accounting periods beginning on or after 1 January 2018)

· IFRS 15 Clarification of Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018)

· IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019)

3. Revenue

Revenue represents amounts receivable for goods and services provided in the normal course of business, and excludes intra-group sales, Value Added Tax and trade discounts.

Revenue comprises of the sale of content with the value of goods and services supplied being recognised on delivery of content.

Management considers the detailed criteria for the recognition of revenue from the sale of goods and services set out in IAS 18 Revenue, in particular whether the Group had transferred to the buyer the significant risks and rewards of ownership of the goods.

4. Capitalisation of Development and Content creation costs

The Group recognises both internal development costs as well as VR content creation costs as intangible assets only when the following criteria are met: the technical feasibility of completing the intangible asset exists, there is an intent to complete and an ability to use or sell the intangible asset, the intangible asset will generate probable future economic benefits, there are adequate resources available to complete the development and to use or sell the intangible asset, and there is the ability to reliably measure the expenditure attributable to the intangible asset during its development.

Intangible assets with finite lives are amortised on a straight-line basis over their estimated useful lives and are assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset are reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation of intangible assets is recognised in the consolidated statement of comprehensive income/costs in the expense category consistent with the function of the intangible assets.

Amortisation rates applicable to internal development is typically between 2 and 5 years and;

Amortisation rates applicable to VR content is as follows:

· Year 1: 80%

· Year 2: 15%

· Year 3: 5%

5. Loss per share 

6. Intangible assets

Goodwill has been calculated as the fair value of the EVR Holdings plc ordinary shares pre reverse takeover less the net asset value of the Company at the time of take over.

7. Share options and Directors Warrants

Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

On 12th March 2018 the Company granted options under the Company's Option Scheme to purchase ordinary shares of 1p each of EVR ("Ordinary Shares") over 8,311,724 Ordinary Shares to employees. The exercise prices of the options granted range between £0.0625 and £0.09. These options have an expiry date of the 10th anniversary of the date of grant (subject to vesting conditions).

The pertinent information with respect of these options is as follows:

8. Share Capital

Further copies of this document are available both at the registered office of the Company. The statement will also be available to download on the Company's website at http://evrholdings.com