Interim Results

28 September 2022

7digital Group plc

("7digital", "the Group" or "the Company")

7digital (AIM: 7DIG), the global leader in B2B end-to-end digital music solutions, announces its interim results for the six months ended 30 June 2022.

Financial Highlights

· Total revenue increased by 21% to £3.9m (H1 2021: £3.3m), including licensing revenue growth of 45% to £2.5m (H1 2021: £1.7m)

· Gross margin improved to 70.2% (H1 2021: 62.6%)

· Achieved adjusted positive EBITDA of £0.03m (H1 2021: loss of £1.0m)*

· Operating loss reduced to £0.2m (H1 2021: £1.9m)

· Cash and cash equivalents of £0.03m as at 30 June 2022 (H1 2021: £0.5m); as at 27 September 2022, cash and cash equivalents were £0.6m**

* Adjusted to exclude other adjusting items, amortisation, foreign exchange, depreciation and share-based payments (see note 5 to the financial statements)

** Including fundraising announced on 23 September 2022

Operational Highlights

· Secured 5 new licensing customers and 3 contract expansions or extensions, including:

o  A new contract worth at least £1m with a pan-Asian consumer services company

o  A contract expansion worth at least €2.2m with a B2B music streaming service

o  Further progress in social media industry with a new two-year contract with Lomotif, one of the top worldwide social video-sharing apps

· Sustained ramp-up in licensing revenue post period; as at 27 September 2022 the total contracted licensing revenue for full year 2022 is 43% greater than that generated in 2021

Paul Langworthy, CEO of 7digital, said:

"This was a great six months for 7digital. We delivered strong revenue growth and achieved adjusted EBITDA profitability as the new and expanded contracts we won last year and in the early part of this year began to ramp up. We continued to win new customers and sign renewals with existing customers, many of which are multi-year agreements. Some of these deals also include significant usage terms, which we expect to drive further increases in revenue as these clients scale their own services.

"We entered the second half of the year delivering against a strong contracted order book and with a solid new business pipeline. The business has already secured a 43% increase in contracted platform licensing revenue for FY 2022 over FY 2021. As a result, we are on track to deliver strong revenue growth for 2022 and we look forward to reporting on our further progress."

Enquiries

7digital c/o 020 4582 3500

Paul Langworthy, CEO

Strand Hanson Limited (Nominated and Financial Adviser) 020 7409 3494

Richard Johnson, James Harris, James Bellman

Arden Partners plc (Broker) 020 7614 5900

Ruari McGirr

Gracechurch Group (Financial PR) 020 4582 3500

Harry Chathli, Claire Norbury

About 7digital (www.7digital.com)

7digital is the global leader in B2B end-to-end digital music solutions. The core of its business is the provision of robust and scalable technical infrastructure and extensive global music rights used to create music streaming and radio services for a diverse range of customers - including consumer brands, mobile carriers, broadcasters, automotive systems, record labels and retailers. 7digital also offers radio production and music curation services, editorial strategy and content management expertise.

7digital fosters industry growth and innovation by simplifying access to music for clients. From years of being the largest independent producer of programming for the BBC and powering services for partners like Soundtrack Your Brand, Global Eagle, GrandPad and Fender, 7digital is perfectly positioned to lead innovation at the intersection of digital music and next-generation radio services.

Operational Review

The six months to 30 June 2022 was a strong period for the Group as it delivered a significant increase in revenue to £3.9m (H1 2021: £3.3m) and achieved adjusted EBITDA profitability of £0.03m (H1 2021: loss of £1.0m). This growth was driven by the Group's licensing business, based on new customers won in the prior year coming on stream as well as contract renewals and expansions with existing customers during the period. The Group also continued to win new licensing customers. Many of these new and renewed contracts are multi-year agreements, which enhances visibility over future revenues.

During the period, the Group secured 5 new licensing customers, which included a new two-year contract worth at least £1m with a pan-Asian consumer services company. The new customer will be using several unique services provided by 7digital's music-as-a-service platform, which was selected after a competitive tender, to deliver an app-based music streaming service to enhance its engagement with its customers.

In further success in the social media industry, one of the Group's core target segments, 7digital won a new two-year contract with Singapore-based Lomotif, one of the top worldwide social video-sharing apps. The Group's music-as-a-service platform will provide music used by creators in the Lomotif app globally. The initial contract will cover licenced major label content in the app's current territories and will accommodate expansion in content from newly licenced labels as well as usage. As such, this contract also reflects the increasing transitioning of the Group's pricing model to align revenue with usage that expands as the customer grows.

The Group signed a long-term contract with Utopia Music AG, a B2B music fintech company that exists to build technology and data accounting to improve the way the music industry pays royalties to the creators for the music copyrights consumption, as well as a two-year contract with a new music and data B2B platform designed to better meet the monetisation needs of the rightsholder community. Using 7digital's global music database capabilities, in addition to Utopia's existing data capabilities, Utopia's customers will be able to monitor and measure the consumption of their music copyrights globally. In so doing, Utopia's customers can leverage data for faster, more accurate payouts of royalties to copyright holders.

In progress with existing licensing customers, the Group secured 3 contract renewals or expansions during the first half of the year (H1 2021: 4), reflecting the value of 7digital's platform and services to its customers. This included a contract expansion with a B2B music streaming service customer, worth a minimum of €2.2m over a three-year period. 7digital has been providing services to the customer since 2016, with contract renewals on an annual basis. This latest contract expands the relationship to a long-term agreement, providing the Group with greater visibility over revenue.

Outside of licensing, eMusic Live, the Company's live streaming platform in partnership with eMusic.com, livestreamed Hangout Music Festival and Cali Vibes Festival, festivals of the world's largest entertainment company, AEG Presents. eMusic Live also livestreamed the iHeartCountry Festival of iHeartMedia, the largest audio company in the US. At the end of the period, as announced on 30 June 2022, the Group entered into an agreement with eMusic.com that expands 7digital's potential revenue generating opportunities with eMusic Live to include a portion of net revenue derived from all activity on the platform rather than just from providing the digital music tracks for download in the eMusic Live experience. The Group does not, however, anticipate generating revenue under this new agreement in the current year.

Board Changes

As announced on 23 September 2022, Mark Foster, who has been a Non-executive Director of the Group since April 2015, has been appointed Interim Chairman following the resignation of Tamir Koch, who stepped down from his role as Chairman to focus more time on the development of eMusic Blockchain. Tamir Koch remains on the Board as a Non-executive Director. Alongside this, and as described further in the Financial Review below, the Group has terminated the loan that had previously been secured with Tamir Koch, as announced on 30 June 2022, with no accrual of interest.

Financial Review

Revenue for the first half of 2022 increased by 21% to £3.9m compared with £3.3m for the first half of the prior year, reflecting significant growth in licensing revenue and good growth in content revenue. Licensing revenue continued to be the largest contributor to Group revenue, accounting for 63% (H1 2021: 52%), with 30% provided by Content (H1 2021: 32%) and 7% by Creative (H1 2021: 16%). The reduction in creative revenue, which was more than offset by the growth elsewhere in the business, is primarily due to H1 2021 benefitting from a rollover of projects that had been delayed due to COVID-19. As at 30 June 2022, the Group had deferred licensing revenue relating to set up fees of £345k of which £183k is expected to be received by the Group in H2 2022, £131k in the year ending 31 December 2023 and £31k in future periods.

Gross margin for the first half of 2022 improved substantially to 70.2% (H1 2021: 62.6%), reflecting the higher margin nature of the Group's licensing business. Gross profit for the period increased to £2.8m (H1 2021: £2.0m), reflecting the increase in revenue and gross margin.

Adjusted administrative expenses were reduced by 11% to £2.7m (H1 2021: £3.1m). This decrease of £0.3m was attributable to salary savings of £0.2m and a reduction in bad debt provision of £0.1m.

The Group achieved a substantial reduction in operating loss of 87% to £0.2m (H1 2021: £1.8m), which is primarily a combination of:

· £0.7m increase in revenue;

· £0.3m reduction in adjusted administrative expenses;

· £0.1m reduction in depreciation and amortisation due to the removal of right-of-use assets;

· £0.2m decrease in share-based payments; and

· £0.1m reduction in both non-operating expenses and FX expenses.

As a result, the Group achieved adjusted EBITDA profitability of £0.03m compared with a loss of £1.0m for the first half of the prior year (adjusted for other adjusting items, amortisation, foreign exchange, depreciation and share-based payments).

Loss per share was 0.01 pence (H1 2021: 0.07 pence loss).

As at 30 June 2022, the Group had cash and cash equivalents of £0.03m (30 December 2021: £0.4m). Post period, the Group has received £0.5m in the form of a loan, as announced on 23 September 2022, from Magic Investments S.A., a significant shareholder represented by David Lazarus who is a Non-executive Director of the Group, that has been fully drawn. Alongside entering the new loan, and as noted above, the Group terminated a shareholder loan that had been previously secured with Tamir Koch, as announced on 30 June 2022. The Group will fully repay the £50k that had been drawn under the loan from Tamir Koch, which has been terminated with no accrual of interest. As at 27 September 2022, the Group had cash and cash equivalents of £0.6m.

Outlook

7digital entered the second half of 2022 with a strong contracted order book as well as a solid new business pipeline, some of which has transitioned to contract since period end. Accordingly, the Group is on track to deliver strong total revenue growth for the full year.

The licensing business is expected to continue to be the key contributor to Group revenue and to drive growth. Contracted licensing revenue for full year 2022 is 43% higher than that generated in 2021. The Group also expects content and creative revenue to remain constant year-on-year.

As a result, the Board remains confident in 7digital's prospects and looks forward to reporting on the Company's progress.

CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

SIX MONTHS ENDED 30 JUNE 2022 (unaudited)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 JUNE 2022 (unaudited)

CONSOLIDATED CASHFLOW STATEMENT

SIX MONTHS ENDED 30 JUNE 2022 (unaudited)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

SIX MONTHS ENDED 30 JUNE 2022 (unaudited)

NOTES TO THE INTERIM RESULTS

SIX MONTHS ENDED 30 JUNE 2022 (unaudited)

1. Presentation of financial information and accounting policies

Basis of preparation

The condensed consolidated financial statements are for the six months to 30 June 2022.

The information for the six months ended 30 June 2021 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The information for the year ending 31 December 2021 is taken from the Annual Reports and Financial Statements 2021 of 7digital Group plc.

The combined financial information has been prepared in accordance with 7digital Group plc accounting policies. 7digital Group plc accounting policies are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and as issued by the International Accounting Standards Board, and are set out in the 7Ddigital Group plc Annual Reports and Financial Statements 2021.

Going concern

The Group made a loss before/after tax of £330k for the period (2021: £1,909k) and at the period-end had a net current liability position of £5,034k (December 2021: £4,681k). The Directors note that the Group has generated positive adjusted EBITDA since May 2022 to date and are optimistic that the Group will achieve its forecast revenue for the remainder of 2022 and for 2023.

£0.5m funding was received in September 2022 from David Lazarus, a major shareholder and director. In addition, certain existing shareholders will continue to provide support of up to £4m to the Group, enabling the Group to continue trading as a going concern. The shareholders who have pledged their support will provide this support as and when the Group requires it to ensure there is sufficient cash over a period of at least 12 months from 30 June 2022. On this basis, the Directors have prepared the financial statements on a going concern basis.

Revenue

The Group comprises of mainly three types of revenues

1) Licensing fees (also known as B2B sales)

a. Setup Fees

b. Monthly development and support fees

c. Usage fees

2) Content ("download") revenues (also know as B2C sales)

3) Creative revenues

Each type of revenue is detailed below

Revenue comprises of:

I. Licensing revenues

7digital defines licensing revenues as fees earned both for access to the Group's platform and for development work on that platform in order to adapt functions to customer needs. The Board considers that the provision of Technology Licensing Services comprises three separately identifiable components:

The description of the licence fees compromise three categories;

1. Set-up fees which grant initial access to the platform, allow use of our catalogue and associated metadata and mark the start of work to define a client's exact requirements and create the detailed specifications of a service. Recognition of set-up fees is detailed below.

2. Monthly development and support fees which cover the costs of developer and customer support time. These are usually fixed and are paid monthly once a service has been specified in detail; they are calculated at commercial rates based on the number of developer or support days required. Recognition of these fees is detailed below.

3. Usage fees which cover certain variable costs like bandwidth which can be re-charged to clients with an administrative margin are recognised at point in time based on usage.

II. Content ("download") revenues

Content revenues are recognised at the value of services supplied and on delivery of the content. The Group manages several content stores, and the income is recognised in the month it relates to. Majority of the revenue converts directly to cash; any accrued revenue converts to trade receivables within 30 days.

III. Creative revenues

Creative revenues relate to the sale of programmes and other content. 7digital also undertakes bespoke radio programming for its customers. As the programmes are being created the associated revenue is recognised when the programme is delivered and accepted by the client. These mainly include the production of weekly radio programmes, as well as the one-off production of episodes.

In the case of one-off productions which required the Group to provide progress reports to its customers and where the Group has no alternative use of the programme produced, the Group recognises revenue over the period i.e., based on percentage of completion, for the rest of the regular programs and contents, where the Group does not own the IP, the group measures the revenue based on delivery of the content i.e., at a point in time.

Contracts with multiple performance obligations

Many of the Group's contracts include a variety of performance obligations, including Licensing revenue (set-up fees, monthly revenue for using 7digital's API licence platform and usage fees), however these may not be distinct in nature. Under IFRS 15, the Group evaluates the segregation of the agreed goods or services based on whether they are 'distinct', if both the customer benefits from them either on its own or together with other readily available resources, and it is 'separately identifiable' within the contract.

To determine whether to recognise revenue, the Group follows a 5-step process:

- Identifying the contract with customers

- Identifying the performance obligations

- Determining the transaction price

- Allocating the transaction price to the performance obligations

- Recognising revenue when/ as performance obligations are satisfied.

Performance Obligations and timing of revenue recognition

Revenue generated from B2B customer contracts often identify separate goods/services, with these generally being the access of the API licence platform, and the associated monthly licence maintenance fees and content usage fees.

The list of obligations as per the contract that are deemed to be one performance obligation in case of Licensing revenue are (B2B):

- The licences provide access to the 7digital platform

- The development and support fees which cover the costs of developer and customer support time

- Usage fees which cover certain variable costs like bandwidth and content.

A key consideration is whether Licensing fees give the customer the right to use the API Licence as it exists when the licence is granted, or access to API which will, amongst other considerations, be significantly updated during the API licence period.

The Group grants the customer a limited, revocable, non-exclusive and non-transferable licence in the Territory during the Term, to use the 7digital API and the content to enable the provision of the Music Service to the End Users via Application.

Set-up fees represent an obligation under the contract, which is not a distinct performance obligation, as the customer is not able to access the platform without them. These are therefore spread over the period of the contract agreed initially with the customers.

Monthly licence maintenance fees indicate service contracts that provide ongoing support over a period of time. Revenue is recognised over the term of the contract on a straight-line basis.

In the case of Creative Revenue, the sole performance obligation is to deliver the content specified as per contract, whether this be the delivery of regular content throughout the period (e.g., a radio series), or the production of a longer, one-off episode.

The only obligation for the Group is to deliver the content production agreed in the contract. Control and risks are passed to the customer on delivery of the episode produced, news bulletins etc. The right to the IP varies from project to project. If the customer suggests a specific programme idea to tender, they will then own the underlying rights of the recordings and the IPR is exclusive to the customer; 7digital's only performance obligation would be to produce the content.

In the case of one-off productions for an identifiable customer contract where 7digital is required to update the client on the progress of work completed, the Group applies an output method to determine the stage of completion and amount of revenue to recognise.

Payment terms vary depending on the specific product or service purchased. With licence fees, the set-up fees element is invoiced and paid upfront, while monthly maintenance revenues and usage fees are normally invoiced on a monthly basis. In the case of download sales, the cost is paid immediately by the customer upon download of the music/songs content from the 7digital platform. In the case of creative revenues, the payment terms are generally 50% on signing with the balance on delivery. All contracts are subject to these standard payment terms, to the extent that the parties involved expressly agree in writing that the conflicting terms of any agreement shall take precedence.

In the case of fixed-price contracts, the customer pays the fixed amount based on a monthly schedule. If the services rendered by the Group exceed the payment, a contract asset (Accrued Income) is recognised; if the payments exceed the services rendered, a contract liability (Deferred Revenue) is recognised.

Determine transaction price and allocating to each performance obligation

The transaction price for Licensing fees (set-up fees and monthly licence fee) is fixed as per contract and is explicitly noted in the contract. In the case of usage fees, the per gigabyte fee is determined and agreed in the contract. In the case of creative revenue, the transaction fees for radio services and one-off series are determined by taking into account the length of the production (this may vary for commercials, radio programs, tv shows, series, etc.). Any variations in transaction price are agreed and charged additionally depending on the obligations to be performed. None of the five factors (i.e., variable consideration, constraining estimates of variable consideration, the existence of a significant financing component in the contract, non-cash consideration, and consideration payable to a customer identified) are particularly relevant to 7digital's customer contracts. The transaction price included in 7digital's contracts is generally easily identifiable and is for cash consideration.

Other adjusting items

Other adjusting items are those items the Group considers to be non-recurring or material in nature that should be brought to the readers' attention in understanding the Group's financial statements. Other adjusting items consist of one-off acquisition costs, costs related to non-recurring legal and statutory events, restructuring costs and other items which are not expected to re-occur in future years.

Foreign currency

For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in Pounds Sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

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 and loss for the period. 

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 transactions are used.

Intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.

Intangible assets (Bespoke Applications) arising from the internal development phase of projects is recognised if, and only if, all of the following have been demonstrated:

- The technical feasibility of completing the intangible asset so that it will be available for use or sale

- The intention to complete the intangible asset and use or sell it

- The ability to use or sell the intangible asset

- How the intangible asset will generate probable future economic benefits

- The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

- The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.

Internally generated intangible assets are amortised over their useful economic lives on a straight-line basis, over 3 years.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchased price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions.

Depreciation is provision on all items of property, plant and equipment, so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Property - 33.33% per annum straight line

Computer equipment - 33.33% per annum straight line

Fixtures and fittings - 33.33% per annum straight line

Impairment of tangible and other intangible assets

Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e., the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ('CGUs'). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from a business combination that gives rise to the goodwill.

Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.

Leases

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

• Leases of low value assets; and

• Leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease.

On initial recognition, the carrying value of the lease liability also includes:

• amounts expected to be payable under any residual value guarantee;

• the exercise price of any purchase option granted in favour of the group if it is reasonably certain to assess that option; and

• any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Critical accounting judgements and key areas of estimation uncertainty

In the application of the Group accounting policies, which are described above, the Directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period which the estimate is revised if the revisions affect only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Content cost of sales

The API platform has the ability to analyse the usage reports derived from download sales and which are distributed to the publishers on a quarterly basis. These usage reports assist management in calculating publisher cost of sales and publisher accruals. There is some uncertainty with regards the publisher accrual as publisher costs are based on complex annual calculations taking into account market share which are primarily determined by the publishing suppliers. Management considers the usage reports for the publisher element to be the most effective method of determining the true cost of publisher content. Using data usage reports, historical invoicing patterns and supplier confirmations, management have determined that there was no adjustment for prior periods.

Impairment of accounts receivables

The management and Directors have made certain estimates and judgements in the application of IFRS 9 when measuring expected credit losses and the assessment of expected credit loss provisions required for accounts receivable balances.

Capitalsation of internally developed software

Distinguishing the research and development phases of a new customised software project and determining whether the recognition requirements for the capitalisation of development costs are met, requires judgement. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired.

2. Revenue

2.1. Business segments

For management purposes, the Group is organised into three continuing operating divisions - Licensing, Content and Creative. The principal activity of Licensing is the creation of software solutions for managing and delivering digital content. The principal activity of the Content division is the sales of digital music direct to consumers. The principal activity of Creative is the production of audio and video programming for broadcasters. These divisions comprise the Group's operating segments for the purposes of reporting to the Group's chief operating decision maker, the Chief Executive Officer.

2.2. Geographical information

2.3. On-going operations

3. Other adjusting items

4. Operating loss

5. Reconciliation of non-IFRS financial KPIs

This note reconciles the adjusted operating loss to the adjusted EBITDA loss. This note reconciles these key performance indicators to individual lines in the financial statements. In the Directors' view it is important to consider the underlying performance of the business during the period. Therefore, the directors have used certain alternative performance measures (APMs) which are not IFRS compliant metrics. The main effect has been that the APMs exclude other adjusting items, amortisation, foreign exchange, depreciation and share-based payments to reflect the underlying cash utilisation for the performance of the business. The APMs are consistent with those established within the prior year annual report and their derivation is set out in the table below.

Reconciliation of adjusted operating loss and adjusted EBITDA profit/loss:

6. Staff costs

7. Finance income and charges

8. Earnings per share

9. Intangible assets

Additions relate to internally developed software relating to the 7digital platform. Amortisation charges are included within the administrative expenses within the Income Statement. The useful life of each group of intangible assets varies according to the underlying length of benefit expected to be received.

10.  Tangible assets

There was a misanalysis between additions and charge for the year in the 31 December 2021 financial statements; the net book value of £114k remains unchanged.