Statements of Cash Flows

for the year ended 31 December 2017

	Consolidated 2017                             2016 £'000                           £'000		Company 2017                  2016 £'000                £'000
Cash flows from operating activities
Operating (loss)/Profit	(391)	60	(1,585)	(438)
Depreciation	118	4	-	-
Amortisation of intangibles - Tournament rights	-	-	-	136
Impairment provision - Tournament rights	-	-	-	1,321
Impairment provision - Investment in subsidiary	-	-	-	54
Mr David Ciclitira commission paid	(355)	-
Director fees capitalised	-	-	220	-
Decrease/(increase) in receivables	(20)	(1,098)	(241)	(66)
Increase/(decrease) in payables	2,936	1,217	1,344	281
Exceptional item	-	-	-	(1,182)
Cash generated from operations	2,288	183	(262)	106
Cash flow from investing activities
Acquisition of property, plant and equipment	(740)	(183)	-	-
Net cash (used in)/generated from investing activities	(740)	(183)	-	-
Cash flow from financing activities
Issue of new shares	1,260	-	1,260	-
Loans repaid	-	-	(81)	(65)
Interest paid	(12)		(93)	(30)
Net cash used in financing activities	1,248	-	1,086	(95)
Reconciliation impact of reverse acquisition accounting	(1,925)	-	-	-
Net cash inflow	871	-	824	11
Cash and cash equivalents at beginning of the year	-	-	18	7
Net increase in cash and cash equivalents	871	-	824	11
Cash and cash equivalents at end of the year	871	-	842	18

 

 

Notes Forming Part of the Financial Statements

for the year ended 31 December 2017

1. Basis of preparation

These financial statements have been prepared on the historical cost basis as modified by use of the fair-value basis where required and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS as at 31 December 2017.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the financial statements which are disclosed in note 3 to these financial statements.

A separate Income Statement or Statement of Comprehensive Income for the parent company LVCG has not been presented as permitted by section 408 of the Companies Act 2006. The parent company loss for the year was £664,000 (2016 - £1,651,000 loss).

1.1 Going concern

These financial statements have been prepared on a going concern basis. The Group Statement of Financial Position shows net current liabilities of £2,164,000 as at 31 December 2017. In assessing going concern the Directors take into account the groups cash flows, solvency and liquidity positions.

The Directors have prepared trading and cash flow forecasts for the Group up to and including the year ended 31 December 2019. The forecasts incorporate a number of trading assumptions, including income from existing licence contracts, and contracts which are in the process of being negotiated. The forecasts show that the Group has sufficient cash to meet its liabilities as they fall due for a period of 12 months from the date of signature of the financial statements.

The Directors believe these forecasts to be realistic and consequently have prepared the financial statements on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future.

1.2 Adoption of standards effective in 2017

The financial statements are prepared in accordance with International Financial Reporting Standards and

Interpretations as adopted by the EU in force at the reporting date.

New and Revised Standards

There were no new standards in effect that have had a significant effect on the financial statements. There have been improvements to standards which provide clarifications rather than substantive changes to existing requirements.

IFRS in issue but not applied in the current financial statements

The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Group and the Company in preparing these financial statements, as they are not as yet effective and, in some cases, had not yet been adopted by the EU. The Company intends to adopt these Standards and Interpretations when they become effective, rather than adopt them early.

·        IFRS 9, 'Financial Instruments'

·        IFRS 15, 'Revenue from Contracts with Customers'

·        IFRS 16 'Leases'

·        IFRS 10 and IAS 28 (amendments), 'Sale or Contribution of Assets between an Investor and its Associate or Joint Venture'

·        Amendments to IFRS 2, 'Classification and Measurement of Share-based Payment Transactions'

·        Amendments to IAS 7, 'Disclosure Initiative'

•     Amendments to IAS 12, 'Recognition of Deferred Tax assets for Unrealised Losses'

The Directors do not expect that the adoption of the Standards listed above will have a material impact on the Group in future periods except that IFRS 9 will impact both the measurement and disclosure of financial instruments and IFRS 15 may have an impact on revenue recognition and related disclosures. Beyond this, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 and IFRS 15 until a detailed review has been completed.

IFRS 16 is a significant change to lease accounting and all leases will require balance sheet recognition of a liability and a right-of-use asset, except short term leases of low value assets. The effect on the Group is expected to be immaterial.

A number of IFRS and IFRIC interpretations are also currently in issue which are not relevant for the Company's activities and which have not therefore been adopted in preparing these financial statements.

2. Accounting policies

2.1 Business combinations and investments The consolidated financial statements incorporate:

·        The results of Brick Live Group for the year ended 31 December 2017; and

·        The assets and liabilities of Brick Live Group as parent company and its subsidiary companies (including LVCG) as at 31 December 2017.

A number of transactions took place on 22 December 2017.

Order of transactions

The Directors have discussed the timing of each of the eight LVCG equity transactions that took place on 22 December 2017 and in accordance with the requirements of IFRS3 determined that they took place in the order as shown below. This order drives the value of the notional consideration paid by Brick Live Group for LVCG on the reverse acquisition. The following points are relevant:

·        The acquisition of Brick Live Group was deemed to happen first as, without this acquisition, none of the other transactions would have been possible. This acquisition gave the Group a business whose growth prospects encouraged the other equity transactions (such as the fundraising and conversion of loans) to take place.

·        The acquisition of Parallel Live took place after the acquisition of Brick Live Group because it is a far smaller company than Brick Live Group and promoted its first event in the United States, which the Board consider to be an important area for future potential business.

·        The acquisition by LVCG of the remaining shares in BLFE (not already owned by Brick Live Group) was deemed to happen next.

·        The share placing is determined to have happened next, on the basis that this provided the necessary working capital for the Group to fund the anticipated increase in the footprint of BRICKLIVE events globally. This fundraising was integral to the decision by David Ciclitira to convert his outstanding loans to LVCG to equity and for the two other directors, namely Ranjit Murugason and Simon Bennett, to capitalise their outstanding fees into equity.

The equity transactions explained in detail

LVCG issued shares for multiple transactions all on the same day, 22 December 2017.

The detail of each transaction is described below:

1.     LVG acquisition of Brick Live Group Limited and subsidiaries - consideration of 16,666,666
new ordinary shares in LVCG with a nominal value of 1p and a price of 30p per share, resulting in total transaction consideration of £5,000,000.

LVCG acquired the entire share capital of Brick Live Group Limited for consideration of £5,000,000 settled in shares. In the company's own records, this was accounted for by recognising the £166,667 nominal value of the shares issued as share capital, with the premium of £4,833,333 recognised as a merger reserve (on the basis that Merger Relief applies as 90% or more of the consideration was in the form of shares in the legal acquirer). LVCG's legal investment in Brick Live Group was subject to a formal impairment review by the Directors prior to signing these accounts, who concluded that no impairment was required.

In order to account for the transaction as a reverse acquisition, on a consolidated basis, it was necessary to ascertain the notional value that the accounting acquirer, Brick Live Group, had paid for the accounting acquiree, LVCG. This was determined by using the market value price at which the shares were issued, which was 30p. At that date, the company had 3,009,233 shares in issue, resulting in calculated consideration of £902,770. LVCG had net liabilities at completion of the transaction of £3,678,396 (as this was before the loans and outstanding director fees due to David Ciclitira, Ranjit Murugason and Simon Bennett had been capitalised), resulting in a goodwill asset arising on acquisition of £4,581,166.

This goodwill asset of £4,581,166 was subject to a formal impairment review by the Directors who determined that the fair value of LVCG was £nil. As a stand-alone company, it has limited trading activities and generated no revenue in 2017. These factors, combined, resulted in a full impairment of the goodwill asset of £4,581,166 generated on consolidation from the reverse acquisition of LVCG by Brick Live Group.

2.     LVCG acquisition of Parallel Live Group Limited and its subsidiaries - consideration of 3,333,334 new ordinary shares in LVCG with a nominal value of 1p at a price of 30p per share, resulting in total transaction consideration of £1,000,000.

LVCG acquired the entire share capital of Parallel Live Group Limited for £1,000,000 settled in shares. In the company's own records, this was accounted for by recognising the £33,334 nominal value of the shares issued as share capital, with the premium of £966,666 recognised as a merger reserve (on the basis that Merger Relief applies as 90% or more of the consideration was in the form of shares in the legal acquirer).

The acquisition of Parallel Live Group was accounted for using the purchase method of accounting. Under the purchase method the results of subsidiary undertakings are included from the date of acquisition and the goodwill value is calculated as the difference between the fair value of the consideration and the fair value of the net assets/liabilities at the date of the acquisition.

The fair value of the consideration was £1,000,000, whereas the net liabilities of Parallel Live Group at acquisition were £271,336 and therefore a goodwill asset arose relating to this acquisition of £1,271,336. This goodwill was subject to a formal impairment review by the Directors prior to signing these accounts, who concluded that no impairment was required.

3.     LVCG acquisition of 61.1% stake Brick Live Far East Limited ("BLFE") - consideration of 9,832,060 new ordinary shares in LVCG with a nominal value of 1p and a price of 30p per share, resulting in total transaction consideration of £2,949,618.

Brick Live International Limited (a wholly owned subsidiary of Brick Live Group) already held a direct 38.9% shareholding in BLFE prior to this transaction. BLFE is a company registered in Hong Kong which owns a 49% stake in the Brick Live Group's China joint venture company, Brick Live Centre Education Development (Beijing) Company Limited.

LVCG's acquisition of BLFE has been accounted for using the purchase method of accounting. Under the purchase method the results of subsidiary undertakings are included from the date of acquisition and the goodwill value is calculated as the difference between the fair value of the consideration and the fair value of the net assets/liabilities at the date of the completion.

The fair value of the consideration was £2,949,618, net assets of BLFE at completion were £nil and so, hence, the goodwill asset relating to this acquisition is £2,949,618. This investment was subject to a formal impairment review by the Directors prior to signing these accounts, who concluded that no impairment was required.

4.     The fund raising of 4,200,000 new ordinary shares in LVCG with a 1p nominal value and a price of 30p per share (£1,260,000 gross proceeds).

LVCG issued new ordinary shares which generated £1,260,000 of cash prior to the expenses of the transaction. The nominal value of the shares of £42,000 was taken to share capital with the balance of £1,218,000 treated as share premium.

5.     Conversion of David Ciclitira loans by issue of 6,766,667 new ordinary shares in LVCG with a 1p nominal value at a price of 30p per share

At 22 December 2017, Mr David Ciclitira (a Director) had outstanding loans due to him from the company of £2,030,000. These loans were converted into new ordinary shares.

6.     Conversion of outstanding fees due to Ranjit Murugason by the issue of 616,500 new ordinary shares in LVCG with a 1p nominal value at a price of 30p per share.

At 22 December 2017, Mr Ranjit Murugason (a Director) was owed a total of £184,950 in respect of past directors fees and associated costs and his fee for work done in connection with the acquisition of the Brick Live Group. These outstanding fees were converted into new ordinary shares.

7.     Conversion of outstanding fees due to Simon Bennett by issue of 116,667 new ordinary shares in LVCG with a 1p nominal value at a price of 30p per share.

At 22 December 2017, Mr Simon Bennett (a Director) was owed a total of £35,000 in respect of his fee for work done in connection with the acquisition of the Brick Live Group. These outstanding fees were converted into new ordinary shares.

8.     Settlement of merchandising rights for by the issue of 333,333 new ordinary shares in LVCG with a 1p nominal value and a price of 30p per share.

CIDEA, a Korean company controlled by Mr Hyun Seok Kim, was granted certain merchandising rights for the Greater China territory. LVCG, Brick Live International and CIDEA entered into a contractual arrangement whereby CIDEA agreed to relinquish these rights and was as a result issued with shares to the value of £100,000.

Rationale

The Directors first considered whether the first three transactions were business combinations in accordance with the requirements of IFRS3. To be treated as business combinations all parties must be capable of being conducted and managed for the purpose of providing a return. The Brick Live Group and Parallel Live were trading and clearly businesses in accordance with the IFRS 3 definition. In 2017, although LVCG did not generate any revenue, it incurred administrative expenses and the Directors were exploring opportunities for the company. On this basis the Directors have concluded that the transactions are business combinations.

The first transaction, being LVCG's acquisition of Brick Live Group has been treated as a reverse acquisition predominantly on the basis of the 'size' and 'management' criteria described in IFRS3:

Size

·         Where one entity is significantly greater in size than the other it is usually the acquirer.

For the year ended 31 December 2017 the Brick Live Group reported growing revenue of £1,928,000 compared with LVCG's revenue of £nil. In addition, the Brick Live Group had employees during the year and LVCG did not and Brick Live Group had a significantly lower level of net liabilities at completion than LVCG.

Management

·         Senior management of the combined entity - the entity whose (former) management dominate the combined management is usually the acquirer.

Day-to-day management of the enlarged group consists of Brick Live Group's previous and current management. All key strategic decisions in the enlarged group relate to the trade of Brick Live Group.

Impact on Consolidated Income Statement

The impact of treating LVCG's acquisition of Brick Live Group as a reverse acquisition is that Brick Live Group is considered to be the acquirer for the purposes of the consolidated financial statements. It is important to note that this is only the case in the consolidated accounts; in LVCG's own accounts, LVCG remains the legal acquirer of Brick Live Group and therefore recognises the acquisition as an investment in its own financial statements.

The most material consequence of treating Brick Live Group as the accounting acquirer at a consolidated level, is that the Consolidated Income Statement reflects the trading performance of Brick Live Group for the year ended 31 December 2017, and LVCG from only the date of the reverse acquisition on 22 December 2017. As a result, there is a material change from the published 2016 financial statements, hence the comparatives are entirely different from last year's annual report (as they reflect the 2016 trading performance of Brick Live Group and not that of LVCG). The results of LVCG would be required to be added into the 2017 consolidation from the date of acquisition, but as the reverse acquisition of Brick Live Group was completed on 22 December 2017, only nine days before the financial year end, the results for LVCG for this period are immaterial and have therefore been excluded.

Impact on Statement of Financial Position

The Statement of Financial Position at 31 December 2017 shows the consolidated assets and liabilities of the Group and so there is little change as a result of the treatment of the acquisition of Brick Live Group as a reverse acquisition (other than the treatment of the transaction itself, explained later in this note).

The main impact is shown in equity. IFRS3 has specific requirements for reserves that should be shown in the financial statements in the event of a reverse acquisition:

·         Legal parent company for all reserves relating to the issue or redemption of shares;

·         Accounting acquirer (in this case, Brick Live Group) for all distributable reserves. This resulted in several adjustments to brought forward reserves:

·         The consolidated share capital of the group should be that of the parent company, LVCG. That company issued new share capital during the year ended 31 December 2017 to the value of £452,000 (excluding share premium). This was for the acquisition of Brick Live Group and Parallel Live (£200,000 share capital, plus £5,800,000 treated as a merger reserve due to the acquisition consideration consisting of over 90% shares in the acquiring company), a share placing for cash on 22 December 2017 (£42,000 share capital, plus £1,218,000 share premium), the acquisition of a 61.1% acquisition of Brick Live Far East Limited (£98,000 share capital and £2,851,000 share premium), conversion of Director loan accounts and buy-out of David Ciclitira's commission arrangements (£108,000 share capital and £3,142,000 share premium) and the purchase of merchandise stock for shares (£4,000 share capital and £96,000 share premium).

·         The profit and loss reserve should be that of the deemed accounting acquirer, which under the reverse acquisition rules, is Brick Live Group. Therefore the 2016 profit and loss reserve has been restated to reflect the consolidated profit and loss reserve balance of Brick Live Group at 31 December 2016, which was £49,000.

·         The Company has applied Merger Relief accounting principles as set out Companies Act 2006 in relation to the treatment of the acquisition of Brick Live Group in its own accounts. The relief applies on the basis that at least 90% of the consideration to acquire Brick Live Group was settled in the form of shares in LVCG. As a result, the credit (which would ordinarily be taken to the share premium account) is taken to the merger reserve.

The Statement of Changes in Equity also shows several other equity transactions, which all happened on the same date as the acquisition of Brick Live Group. The accounting treatment is based on the equity structure of the consolidated group at the point of each equity transaction.

Intercompany balances

All intercompany balances are eliminated on consolidation.

2.2 Intangible assets - Tournament rights

The rights to promote European Tour golf events were acquired by LVCG in September 2006 and are included in the statement of financial position as intangible assets in the audited financial statements for the year ended 31 December 2017. These assets were intended to be amortised over their expected life of 20 years. However, these assets were impaired to a net book value of £1,000 as of 31 December 2016 to reflect the fact that the ongoing business of LVCG is not expected to generate revenues from these rights in the foreseeable future.

2.3 Investment in joint ventures

A joint venture is an entity over which the Group has joint control. Joint control is the contractually agreed sharing of control over an economic activity and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The investment in a joint venture is initially recognised at cost and adjusted for the Group's share of the changes in the net assets of the joint venture after the date of acquisition, and for any impairment in value. If the Group's share of losses of a joint venture exceeds its interest in the joint venture, the Group discontinues recognising its share of further losses.

2.4 Property, plant & equipment

All property, plant and equipment assets are stated at cost less accumulated depreciation.

Depreciation is provided on bricks and content at 25% on a straight-line basis to reflect their useful life. Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if appropriate.

Bricks and content are capitalised in the periods in which they are purchased and valued at the lower of cost and net realisable value.

Depreciation on other fixtures, fittings and office equipment is provided at 20% on a straight-line basis. Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if appropriate.

2.5 Impairment of assets

The carrying amounts of the Group's assets, other than inventories, are reviewed at each reporting date to

determine whether there is any indication of impairment.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Income Statement. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised.

The Directors have carried out a formal impairment review on all material assets at 31 December 2017. No impairment losses have been made, other than the impairment relating to the reverse acquisition of BLG and the investment into the joint venture as set out respectively in notes 2.1 and 17 to these financial statements.

2.6 Financial instruments

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are recognised on trade date when the Group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair-value plus, in the case of a financial instrument not at fair-value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

Financial instruments are derecognised on trade date when the Group is no longer a party to the contractual provisions of the instrument.

2.7 Trade receivables

Trade receivables are stated at their amortised cost. Trade receivables are reduced by appropriate

allowances for estimated irrecoverable amounts.

2.8 Cash and cash equivalents

Cash equivalents comprise short-term, highly liquid investments that are readily convertible into known

amounts of cash and which are subject to an insignificant risk of changes in value.

2.9 Trade payables

Trade payables are stated at their amortised cost.

2.10 Interest-bearing borrowings (other than compound financial instruments)

Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability.

2.11 Revenue recognition

Revenue is the value of goods and services provided by the Group to customers, net of VAT and discounts. Revenue includes licence fees, revenue from the sale of content (mostly large Lego-based statues), brick lease fees and ticket sales from self-promoted events. Revenue is recognised when the Group has earned the right to receive consideration for its performance, measured on the following basis:

(i)      Annual licence fees - on a straight-line basis in accordance with the terms of the agreement, unless it is non-refundable in which case fees are recognised on the contractual invoice date;

(ii)     Event licence fees and revenue shares - on the completion of the event in accordance with the terms of the agreement;

(iii)    Content fees - on delivery of the specific content to the client in accordance with the terms of the agreement;

(iv)     Brick lease fees - on a straight-line basis in accordance with the terms of the agreement; and

(v)     Ticket sales from self-promoted events - on the date of the event.

2.12 Deferred taxation

Deferred tax is provided in full using the balance sheet liability method. Deferred tax is the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities shown on the statement of financial position.

The amount of deferred tax provided is based on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

The Group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differences associated with investments in subsidiaries, as it is not considered probable that the temporary differences will reverse in the foreseeable future.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. The carrying amounts of the deferred tax assets are reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the assets to be recovered.

2.13 Segmental reporting

LVCG has two operating segments, namely: proprietary shows (events) and licences. In identifying these operating segments, management generally follows the Group's service lines representing its main products and services (see note 4). All inter-segment transfers are carried out at arm's length prices.

For management purposes, the Group uses the same measurement policies as those used in its financial statements, except for certain items not included in determining the operating profit of the operating segments, such as share-based payment expenses.

In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. This primarily applies to the Group's headquarters.

2.14 Foreign currencies

Monetary assets and liabilities expressed in foreign currencies are translated at the rates of exchange ruling at the reporting date. Transactions in foreign currencies are translated at the rate ruling at the date of the transaction. Differences on exchange arising on translation of subsidiaries are charged directly to other comprehensive income. All other exchange differences have been charged to the Income Statement in the period under review.

2.15 Business combinations

The information contained in this note sets out how the group typically accounts for Business Combinations, which is effectively using the purchase method explained in IFRS3, "Business Combinations". However, it is important to that that LVCG's acquisition of Brick Live Group was not accounted for in this way, as it was considered to be a reverse acquisition under the IFRS3 reverse acquisition requirements.

In the event of acquisitions which are not treated as a reverse acquisition, the company accounts for these transactions using the purchase method as follows:

The cost of an acquisition is measured as an aggregate of the consideration transferred, measured at the acquisition date fair-value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group measures the non-controlling interest in the acquiree at the proportionate share of the acquiree's identifiable net assets. Subsequent changes in the proportion of the non-controlling interests, which do not result in de-recognition of the subsidiary, are accounted for in equity. Costs incurred in connection with the acquisition are recognised in profit or loss as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date.

If the business combination is achieved in stages, the acquisition date fair-value of the Group's previously held equity interest in the acquiree is re-measured to fair-value at the acquisition date through profit or loss. Goodwill is initially measured at cost being the excess of the consideration transferred over the Group's share of net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair-value of nets assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any recognised impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to either the acquired business or to each of the Group's cash generating units that are expected to benefit from the combination irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms a part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in these circumstances is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit until retained.

Goodwill arising from business combinations is assessed for impairment annually.

The results of the acquired operations are included in the consolidated Income Statement and consolidated statement of comprehensive income from the date on which control is obtained.

2.16 Exceptional items

Exceptional costs and are those costs incurred by the Group which are considered by the Directors to be material in size and are unusual and infrequent in occurrence which require separate disclosure within the financial statements. See note 7 for details of exceptional items ensuing in the year.

2.17 Prior Period Restatement

These 2017 accounts reflect a historic restatement to share capital and the share premium account. On 27 December 2013, a capital reorganisation took place whereby 49,140,569 existing Ordinary Shares of 2.2p each were consolidated on a 24:1 basis creating 2,047,523 ordinary shares of 52.8p each. Immediately following this, each Ordinary share of 52.8p was subdivided into one New Ordinary Share of 1p each, and one New Deferred Share of 51.8p each. This resulted in 2,047,523 New Ordinary Shares and 2,047,523 New Deferred Shares with effect from 27 December 2013.

On 30 December 2013, a total of 961,710 New Ordinary Shares were issued at £1.56 per share which should have been accounted for as increasing nominal share capital by £9,617 and increasing share premium by £1,490,650.

However, these shares were incorrectly accounted for as having been issued before the capital reorganisation and were subsequently treated as having been for Ordinary Shares of 52.8p, and therefore the incorrect position of 3,009,233 New Deferred Shares was arrived at. This led to the nominal share capital balance being overstated, and the share premium balance being understated.

To rectify this, the share capital balance for 2016 has been reduced by £498,166 and the balance standing to the credit of the share premium account has been increased by the same amount.

Accordingly, the issued share capital of the Company at 31 December 2013 comprised: 3,009,233 ordinary shares of £0.01 each; 2,047,523 new deferred shares of £0.518 each; 199,831,545 deferred ordinary shares of £0.005 each and 103,260 deferred B shares of £19.60 each. This position remained unchanged at 31 December 2016.

3. Accounting estimates and judgements

The preparation of financial information in accordance with generally accepted accounting practice, in the case of the Group, being International Financial Reporting Standards as adopted by the European Union, requires the Directors to make estimates and judgements that affect the reported amount of assets, liabilities, income and expenditure and the disclosures made in financial statements. Such estimates and judgements must be continually evaluated based on historical experience and other factors, including expectations of future events.

The significant judgements made by management in applying the Group's accounting policies as set out above, and the key source of estimation, were:

Notional consideration value of LVCG

As the acquisition of Brick Live Group by LVCG was treated as a reverse acquisition, the Directors have had to assign a notional consideration value to LVCG. As a publicly traded company, this was calculated by using the market value that the shares were issued at to fund the legal acquisition of Brick Live Group by LVCG. This is explained in more detail in note 2.1.

Impairment review of value of LVCG

The reverse acquisition of LVCG by Brick Live Group created a goodwill asset of £4,581,000. The Directors carried out a formal impairment review on this goodwill asset and deemed that it should be fully impaired. This is on the basis that LVCG has limited trading activities and generated no revenue in 2017, as explained in note 2.1.

Impairment review of Brick Live Group

The Directors have carried out an impairment review of LVCG's £5,000,000 investment into Brick Live Group, £1,000,000 investment into Parallel Live and LVCG's £2,949,618 investment in BLFE, all held within the consolidated group as at 31 December 2017. It was deemed that no impairment is required to the cost of these investments or the related goodwill.

Depreciation

Depreciation rates have been set to accurately reflect the reduction in value of assets over their economic life, less their expected residual value. This requires judgement by the Directors, who have set the depreciation rates as detailed in Note 2.4 to these financial statements based on their knowledge of the industry and typically how long each asset type retains its value.

Revenue recognition

Revenue from contracts is assessed on an individual basis with revenue earned being ascertained as the right to the economic benefit from the contract transfers to the Group. This requires judgement as each revenue transaction is assessed separately, albeit under the general guidelines of the accounting policies for revenue recognition as explained in note 2.11 to these financial statements.

4. Segment reporting

As described in note 1 to these financial statements, the Directors consider that the Group's internal financial reporting is organised along product and service lines and therefore segmental information has been presented about LVCG's business segments. The segmental analysis of the Group's business was derived from its principal activities as set out below.

Reportable segments

The reportable segment results for the year ended 31 December 2017 are as follows:

	Events £000s	Licences £000s	Unallocated £000s	Total £000s
Revenues from external customers	213	1,715	-	1,928
Total revenue	213	1,715	-	1,928
Cost of sales	280	546	-	826
Administrative expenses	48	1,145	300	1,493
Finance costs	-	-	12	12
Exceptional items	-	-	5,037	5,037
Segment (loss)/profit for the year	(115)	24	(5,349)	(5,440)

 

The reportable segment results for the year ended 31 December 2016 are as follows:

	Events £000s	Licences £000s	Unallocated £000s	Total £000s
Revenues from external customers	428	1,307	-	1,735
Total revenue	428	1,307	-	1,735
Cost of sales Administrative expenses Taxation	91 -	302 780 -	- 502 11	393 1,282 11
Segment profit/(loss) for the year	337	225	(513)	49

 

Segment assets consist primarily of property; plant and equipment, intangible assets, investments, goodwill, trade and other receivables and cash and cash equivalents. Unallocated assets comprise deferred taxation; available for sale financial assets, financial assets held at fair value through profit or loss, and derivatives. Segment liabilities comprise operating liabilities; liabilities such as deferred taxation are not allocated to individual business segments.

Segment assets and liabilities as at 31 December 2017 are as follows:

Events              Licences         Unallocated                  Total

£000s               £000s                    £000s                      £000s

Assets                                                                       50               6,966                    -                      7,016

Liabilities                                                                 549               3,611                   12                   4,172

Segment assets and liabilities are reconciled to the Group's assets and liabilities as follows:

Segment assets/liabilities                                                                                                                   Assets              Liabilities

  £000s                     £000s

Unallocated:

Deferred tax                                                                                                                        -                    12

-                    12

Segment assets and liabilities as at 31 December 2016 are as follows:

	Events £000s	Licences £000s	Unallocated £000s	Tota £000s
Assets	141	1,142	1	1,284
Liabilities	431	793	11	1,235

 

Segment assets and liabilities are reconciled to the Group's assets and liabilities as follows:

Segment assets/liabilities                                                                                                                 Assets              Liabilities

£000s                     £000s

Unallocated:

Deferred taxation                                                                                                                                 11

Investment                                                                                                                            1

1                    11

Geographical information

The Group's business segments operate in three principal geographical areas, although they are managed

on a worldwide basis from the Group's head office in the United Kingdom.

A geographical analysis of the Group's revenue and non-current assets is given below. Revenue is allocated based on the location of the customer; non-current assets are allocated based on the physical location of the asset.

	2017 £'000	2016 £'000
Revenue
United Kingdom	634	423
Europe	440	-
Far East and China	854	1,312
	1,928	1,73

 

2017                        2016

£'000                      £'000

Non-current assets

United Kingdom                                                                                                              798                   179

Europe                                                                                                                                -                        -

Unallocated                                                                                                                 4,222                        -

5,020                   179

Major customers

Included within revenue arising from licences are revenues of approximately £455,000 (2016: £378,000)

which arose from sales to the Group's largest customer.

5.       Operating (loss)/profit before exceptional items

2017                        2016

£'000                      £'000

This is stated after charging:

Content and Bricks Depreciation (included within cost of sales)                                     117                       -

Office Equipment Depreciation (included within administrative expenses)                         1                       4

Exceptional items (see Note 6 below)                                                                          5,037                        -

6.       Exceptional items

The exceptional items are made up as follows:

2017                        2016

£'000                      £'000

Impairment of goodwill                                                                                                 4,582                        -

David Ciclitira commission                                                                                              355                        -

Merchandising rights                                                                                                       100                        -

 5,037                        -

2017 Exceptional Items

·         As a result of the reverse acquisition treatment of the acquisition of Brick Live Group by LVCG, notional consideration was applied to the transaction which created a goodwill asset on consolidation of £4,581,166. This goodwill asset was subject to a formal impairment review by the Directors who determined that the fair value of LVCG was £nil. As a stand-alone company, it has limited trading activities and generated no revenue in 2017. These factors, combined, resulted in a full impairment of the goodwill at 31 December 2017.

·         Prior to the acquisition of Brick Live Group by LVCG, Mr David Ciclitira charged £355,000 of commission on related sales made during 2017, in line with his agreement with Brick Live Group. This contractual agreement was settled by the Company on 22 December 2017 in exchange for £1,000,000 of shares in LVCG. This commission will therefore not be an ongoing cost in the company (other than that which would normally be released as part of the deferred revenue balance) and so has been treated as exceptional.

·         A company controlled by Mr Hyun Seok Kim has agreed to relinquish certain merchandising rights in Asia for a consideration of £100,000, which was settled by the issue of 333,333 new ordinary shares in LVCG.

2016 Exceptional Items

There are no exceptional items in 2016 as the accounts have been prepared using reverse acquisition accounting and so the consolidated profit and loss account relates to the trading performance of Brick Live Group.

Readers of these financial statements should be aware that the 2016 annual report for LVCG included £1,182,000 of exceptional items relating to the holding company (mostly impairment review write-downs). Full analysis of these exceptional items can be reviewed in the publicly available 2016 annual report.

7.       Auditor's remuneration

	2017 £'000	2016 £'000
Fees payable to the auditor Kingston Smith LLP for the audit of the
annual accounts of the Group, the Company and the Group subsidiaries.	51	30
Services relating to taxation	10	5
	61	35

 

8.  Employees

2017                        2016

Group

The average number of employees (including Directors not under

employment contracts) during the year was:                                                       (Number)          (Number)

Administration                                                                                                              5                     0

2017                      2016

£'000                     £'000

The aggregate payroll costs including Directors not under employment
contracts) were:

Wages, salaries and fees                                                                                                394                     -

Social security costs                                                                                                            4                     -

  398                     -

Due to the requirements of IFRS 3 in relation to the reverse acquisition, the wages and salaries figures above constitutes that of Brick Live Group and not LVCG.

9.  Remuneration of Directors

The Directors are the key management personnel of the Group. Directors' remuneration and fees, relating to LVCG and including non-executive Directors, during the year were as follows:

LVCG Directors	2017 £'000	2016 £'000
David Ciclitira (Chairman)	191	110
Maria Serena (Non-Executive)	24	15
Ranjit Murugason (Non-Executive)	185	35
Timothy Sturm (Non-Executive)	-	15
Total Emoluments	400	175

In addition to the disclosures above, Clive Morton, a Director of Brick Live Group in the year, was paid total emoluments from Brick Live Group of £152,000 (2016: £47,000).

·        Mr Ciclitira received £8,000 in respect of life insurance and pension contributions and £12,000 in respect of healthcare costs. In addition, he reclaimed £38,000 in business expenses incurred.

·        All the Group Directors are covered by Group Directors' liability insurance policy.

The directors' emoluments referred to in this note refer solely to the directors of LVCG. As such, these do not refer back to the Consolidated Income Statement (which constitutes just Brick Live Group because of the reverse acquisition accounting treatment); however, the remuneration of all Group directors has been provided for transparency. Further details are provided in the Related Parties Note 27 to these Financial Statements.

It should be noted that £105,000 of the above director fees related to project fees for work done in connection with the reverse takeover of the Brick Live Group by LVCG by Ranjit Murugason and Simon Bennett as set out in the Admission document.

10. Finance costs

2017                        2016

£'000                      £'000

Bank fees                                                                                                                         12                        -

Finance costs                                                                                                                 12                        -

11.  Tax

2017                        2016

£'000                      £'000

UK Corporation tax in respect of current year:

Current taxation                                                                                                                 -                     11

Total tax charge for the year                                                                                          -                     11

(Loss)/profit on ordinary activities before tax                                                            (5,440)                    60

(Loss)/profit on ordinary activities at the standard rate of corporation

tax of 2017 19% (2016 - 20%)                                                                                  (1,034)                    11
Effect of:

Tax losses carried forward/utilised against profits - deferred tax not recognised      1,034                       -

Total tax charge for the year                                                                                          -                      11