Interim Results

RNS Number : 7135A

Cornerstone FS PLC

27 September 2022

 

Certain information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon publication of this Announcement, this information is now considered to be in the public domain .

27 September 2022

Cornerstone FS plc

("Cornerstone" or the "Company" or the "Group")

Interim Results

Cornerstone FS plc (AIM: CSFS), the cloud-based provider of international payment, currency risk management and electronic account services to SMEs, is pleased to announce its unaudited interim results for the six months ended 30 June 2022.

Highlights

·   Total revenue increased by 127% to £1.9m (H1 2021: £837k)

o  Growth driven by direct sales, which increased to £1.4m (H1 2021: £231k)

·     Gross margin improved substantially to 61.7% (H1 2021: 38.1%)

·   Acquired Capital Currencies Limited ("Capital Currencies") and, post period, Pangea FX Limited ("Pangea FX"), two well-established FX businesses

· Commenced trading through an additional payment partner and liquidity provider, Banking Circle, strengthening and enhancing the Group's offer

·   Post period, raised a combined total of £1.1m through a placing and issue of a convertible loan note

Gareth Edwards, Chairman of Cornerstone, said:

"The first half of 2022 represents a period of significant growth - both in terms of revenue as well as the expansion of the operations with the acquisition of Capital Currencies. Our business has been strengthened further post period with the addition of the Pangea FX team, who will help drive our sales function both in the UK and Dubai. With the arrival of James Hickman, our new CEO, on 12 September 2022, we can expect an added impetus to the growth in direct sales and, in due course, the addition of further revenue streams.

"The strong trading momentum that was experienced in the first half of the year has been sustained through the second half, reflecting underlying growth as well as the initial contribution from Pangea FX. Accordingly, we c ontinue to expect to achieve significant revenue growth for full year 2022 and I look forward to reporting on our progress."

Enquiries

Cornerstone FS plc	[phone]
James Hickman , Chief Executive Officer Judy Happe, Chief Financial Officer
SPARK Advisory Partners Limited (Nomad)	[phone]
Mark Brady, A dam Dawes
SP Angel Corporate Finance LLP (Broker)	[phone]
Jeff Keating, Harry Davies-Ball
G racechurch Group (Financial PR)	[phone]
Harry Chathli, Claire Norbury

About Cornerstone FS plc

Cornerstone FS plc is a payments focused fintech business that makes managing currency simple for SMEs. It provides international payment, currency risk management and electronic account services using a proprietary cloud-based multi-currency payments platform. These services are delivered directly and via white label partners on a SaaS basis to UK-based SMEs that engage in international trade. Cornerstone also serves some high-net worth individual clients.

Headquartered in the City of London with offices in Tunbridge Wells and Dubai, Cornerstone is admitted to trading on AIM under the trading symbol 'CSFS'. For more information, please visit www.cornerstonefs.com.

Operational Review

The six months to 30 June 2022 was another strong period for the Group, with revenue more than doubling to £1.9m (H1 2021: £837k) and continued strategic execution.

In particular, the Group reached a significant milestone with the acquisition of Capital Currencies, a well-established broker that is authorised and regulated by the FCA as an authorised payment institution permitted to provide payment services. The integration of Capital Currencies' clients onto Cornerstone's technology has progressed well, with approximately 250 transitioned across to the Cornerstone platform during the period and the migration completed subsequently. Since the acquisition, the business has performed well and is positioned to grow its contribution to the Group now that integration is complete.

Cornerstone has expanded further, in the second half, with the acquisition of Pangea FX, a specialist FX and treasury consultancy, which is expected to assist in the Group's growth particularly through the addition of two senior sales executives. The Pangea FX executives will be divided between the Group's headquarters in London and the Group's office in Dubai, where the Group is seeing strong demand for its services.

Performance

The Group delivered significant growth in revenue to £1.9m (H1 2021: £837k). In line with the Group's stated strategy, this reflects an increase in revenue generated by clients that the Group serves directly. The proportion of total revenue that was accounted for by direct clients increased to 74% compared with 28% for the same period last year, being £1.4m (H1 2021: £231k). A key contributor to this growth was the new Asia team that was brought on board in the second half of 2021.

Revenue generated through the Group's introducer network (which is primarily white label partners, who use Cornerstone's technology, but also introducer brokers) accounted for 26% of total revenue (H1 2021: 72%) and was £501k (H1 2021: £606k). On a reported basis this represents a reduction due to some revenue that the Group previously generated through the introducer network now being serviced directly. However, on an underlying basis, there was an increase in revenue generated through the Group's introducer network in H1 2022 compared with H1 2021.

By client type, there was an increase in revenue generated by both corporate accounts and HNWIs. This includes particularly strong growth in revenue from HNWIs, which was primarily due to the addition of the Asia team. As a result, the proportion of total revenue accounted for by HNWIs increased to 45% (H1 2021: 16%) with corporate accounts contributing 55% (H1 2021: 84%). However, for the majority of the HNWI revenue (and nearly exclusively for the Asia team's HNWI revenue), whilst the underlying transaction is with an individual, the relationship is via a corporate that provides services to the HNWI.

Revenue continued to be generated from the provision of foreign exchange and payments services in the form of spot and forward trades, accounting for 93% and 7% of revenue respectively (H1 2021: 83% and 17%), which reflects a more normal distribution compared with the first half of the previous year.

During the first half of 2022, transactions were conducted between 43 different currency pairs (H1 2021: 33), with 86% of transactions being between various combinations of Sterling, Euros and US Dollars (H1 2021: 90%).

Product Enhancement

The Group continued to enhance its offer during the period by commencing trading through an additional payment partner and liquidity provider, Banking Circle, which sits alongside Currency Cloud and Velocity. All trades placed with the Group by clients are replicated in a back-to-back contract with a third-party liquidity provider, which provides pricing, execution and settlement services. By partnering with Banking Circle, not only does this provide more resilience by having multiple suppliers, but it expands the Group's business offering in several respects. Firstly, it enables the Group to provide clients with European IBANs (with some customers wanting a European IBAN rather than a UK IBAN). It also enables Cornerstone to service a broader range of countries and industries thanks to the range of services and partnerships that Banking Circle has in place.

Financial Review

Revenue for the six months to 30 June 2022 increased by 127% to £1.9m, compared with £837k for the first half of the previous year, and by 27% sequentially (H2 2021: £1.5m). This reflects strong underlying growth, driven by the revenue generated by clients that the Group serves directly, as well as the contribution from Capital Currencies, which was acquired during the period.

As a result of the increased contribution to revenue from clients that the Group serves directly, gross margin improved substantially to 61.7% in the first half of 2022 (H1 2021 38.1%). The improvement in gross margin combined with the increased revenue enabled the Group to achieve significant growth in gross profit to £1.2m (H1 2021: £319k).

Total administrative expenses for the first half of 2022 were £4.1m compared with £1.5m for the first half of the prior year. This primarily reflects an increase of:

·   £2.0m in share-based compensation to £2.2m (H1 2021: £234k), which predominantly relates to share-based incentivisation for the Asia team and the General Manager APAC and Middle East; and

·   £626k in other administrative expenses to £1.9m (H1 2021: £1.3m). 

Post period, the Company reached an agreement with Robert O'Brien, the General Manager APAC and Middle East, and the Asia team to vary the terms of their incentivisation agreement, as a result of performance being ahead of expectations. On joining Cornerstone, Mr. O'Brien and his team were entitled to receive share-based incentivisation based on a multiple of revenue generation and contribution to profit over the two years following their appointment. The variation capped the settlement at a total value of £3.15m and extended the term of full settlement by a further year (see note 11 to the financial statements).

The £626k increase in other administrative expenses included a £112k increase in depreciation and amortisation costs, reflecting the continued investment in the Group's proprietary technology platform and also amortisation of the value attributed to the customer base acquired through the acquisition of Capital Currencies. The costs related to public company requirements increased by approximately £131k owing to the Company becoming public part way through the comparative period (6 April 2021). The Group also recognised £128k in administrative expenses in relation to Capital Currencies. The remaining administrative expense increase of approximately £255k largely reflects additional hires made during 2021 (including the addition of Mr. O'Brien and the Asia team), as well as small increases in banking partner fees due to the Group's enhanced product offering, and rental costs owing to rent discounts realised during the COVID-19 restrictions in 2021.  

The Group recognised a loss before tax of £3.0m for the first half of 2022 compared with £1.2m for the prior period, which primarily reflects the greater administrative expenses. Loss per ordinary share on a basic and diluted basis was 13.05 pence (H1 2021: 6.49 pence), due to the increased loss.

The Group's underlying loss from operations (excluding share-based compensation charges and transaction costs) was £721k, an improvement of £41k compared to the prior period (H1 2021: £762k).

As at 30 June 2022, the Group had cash and cash equivalents of £283k (31 December 2021: £348k; 30 June 2021: £951k). This followed the raising of gross proceeds of £870k via the placing of, and subscription for, new ordinary shares, which was partly used to fund the initial £586k cash consideration for the acquisition of Capital Currencies. Post period, the Group raised a total of approximately £1.1m through the placing of new ordinary shares (£860k) and the issue of a convertible loan note (£225k). The loan note was issued to one investor who also took shares up to the maximum amount allowed before obtaining FCA approval (9.9% of the Company's issued share capital). Application for FCA approval has been made and the loan note converts automatically into shares on approval being received.

Outlook

The strong trading momentum that was experienced in the first half of the year has continued into the second half, reflecting underlying growth as well as the initial contribution from the Pangea FX acquisition. With the investment in the expansion of its sales team, the Group expects this trend to be sustained throughout the year. In addition, revenue for 2022 will benefit from the contribution from Capital Currencies, which was acquired during the year. As a result, the Board continues to expect to achieve substantial revenue growth for full year 2022.

Looking further ahead, with the strength of the Group's platform combined with an enhanced and expanded team, the Board continues to believe that Cornerstone is well-placed to take advantage of the meaningful opportunities to build a significant business offering technology-enabled international payment services. Accordingly, the Board remains confident in Cornerstone's prospects and looks forward to reporting on its progress.

Cornerstone FS PLC

Consolidated Statement of Comprehensive Income

		Unaudited 6 months to 30 June 2022		Unaudited 6 months to 30 June 2021		Audited 12 months to 31 Dec 2021
	Notes	£		£		£
Revenue	2	1,896,073		836,554		2,301,172
Cost of sales		(727,081)		(517,753)		(1,113,995)
Gross profit		1,168,992		318,801		1,187,177
Administrative expenses
Share-based compensation		(2,243,258)		(234,329)		(2,338,495)
Further adjustments to underlying profit from operations (see below)		(12,600)		(195,050)		(402,515)
Other administrative expenses		(1,889,819)		(1,081,054)		(2,621,962)
Total administrative expenses		(4,145,677)		(1,510,433)		(5,362,972)
Underlying loss from operations		(720,827)		(762,253)		(1,434,785)
Stated after the add-back of:
- share-based compensation		2,243,258		234,329		2,338,495
- transaction costs		12,600		195,050		402,515
Loss from operations	3	(2,976,685)		(1,191,632)		(4,175,795)
Finance and other income		10		1,622		1,622
Finance costs		(49,280)		(360)		(360)
Loss before tax		(3,025,955)		(1,190,370)		(4,174,533)
Income tax		6,699		-		70,764
Loss for the financial period		(3,019,256)		(1,190,370)		(4,103,769)
Total comprehensive loss for the period		(3,019,256)		(1,190,370)		(4,103,769)
Loss per share
from continuing operations
Basic and diluted (pence)	4	(13.05)		(6.49)		(21.24)

Cornerstone FS PLC

Consolidated Statement of Financial Position

		Unaudited as at 30 June 2022		Unaudited as at 30 June 2021		Audited as at  31 Dec 2021
	Notes	£		£		£
ASSETS
Non-current assets
Intangible assets and goodwill	6	2,106,268		463,552		577,447
Tangible assets		34,256		13,770		21,542
		2,140,524		477,322		598,989
Current assets
Trade and other receivables	8	415,216		592,505		493,244
Cash and cash equivalents		283,075		951,056		348,102
		698,291		1,543,561		841,346
TOTAL ASSETS		2,838,815		2,020,883		1,440,335
Equity
Share capital	5	236,837		202,776		202,776
Share premium		3,906,533		3,074,355		3,074,355
Share-based payment reserve		4,635,968		288,544		2,392,710
Merger relief reserve		5,557,645		5,557,645		5,557,645
Contingent consideration reserve		891,784
Reverse acquisition reserve		(3,140,631)		(3,140,631)		(3,140,631)
Retained earnings		(10,847,482)		(4,914,829)		(7,828,230)
TOTAL EQUITY		1,240,654		1,067,860		258,625
Current liabilities
Trade and other payables	9	1,524,477		953,023		1,181,710
Deferred tax liability		16,076		-		-
		1,540,553		953,023		1,181,710
Non-current liabilities
Deferred tax liability		57,608		-		-
TOTAL EQUITY AND LIABILITIES		2,838,815		2,020,883		1,440,335

Cornerstone FS PLC

Consolidated Statement of Changes in Equity

	Share Capital	Share Premium	Share-based payment reserve	Merger relief reserve	Contingent consideration reserve	Reverse acquisition reserve	Retained earnings	Total
	£	£	£	£	£	£	£	£
At 1 January 2021	165,887	951,422	54,215	5,557,645	-	(3,140,631)	(3,724,461)	(135,923)
Issue of shares	36,889	2,208,447	-	-	-	-	-	2,245,336
Cost of raising equity	-	(85,514)	-	-	-	-	-	(85,514)
Share-based payments	-	-	234,329	-	-	-	(234,329)	-
Other comprehensive loss	-	-	-	-	-	-	(956,039)	(956,039)
At 30 June 2021	202,776	3,074,355	288,544	5,557,645	-	(3,140,631)	(4,914,829)	1,067,860
Share-based payments	-	-	2,104,166	-	-	-	(2,104,166)	-
Other comprehensive loss	-	-	-	-	-	-	(809,235)	(809,235)
At 31 December 2021	202,776	3,074,355	2,392,710	5,557,645	-	(3,140,631)	(7,828,230)	258,625
Issue of shares	34,061	868,538	-	-	-	-	-	902,599
Cost of raising equity	-	(36,360)	-	-	-	-	-	(36,360)
Equity based acquisition consideration	-	-	-	-	891,784	-	-	891,784
Share-based payments	-	-	2,243,258	-	-	-	(2,243,258)	-
Other comprehensive loss	-	-	-	-	-	-	(775,994)	(775,994)
At 30 June 2022	263,837	3,906,533	4,635,968	5,557,645	891,784	(3,140,631)	(10,847,482)	1,240,654

Cornerstone FS PLC

Consolidated Cash Flow Statement

		Unaudited six months to 30 June 2022		Unaudited six months to 30 June 2021		Audited 12 months to 31 Dec 2021
		£		£		£
Loss before tax		(3,019,256)		(1,190,370)		(4,174,533)
Adjustments to reconcile profit before tax to cash generated from operating activities:
Finance income		(10)		(1,622)		(1,622)
Finance costs		49,280		360		360
Share-based compensation		2,243,258		234,329		2,338,495
Other equity settled share-based payments		32,595		-		-
Depreciation and amortisation		170,909		59,020		152,386
(Increase) / decrease in accrued income, trade and other receivables		78,028		(153,838)		(54,577)
Increase in trade and other payables		312,676		403,690		682,374
Decrease in deferred tax liabilities		(6,699)		-		-
Cash used in operations		(139,219)		(648,431)		(1,057,117)
Income tax received		-		-		70,764
Cash used in operating activities		(139,219)		(648,431)		(986,353)
Investing activities
Acquisition of property, plant and equipment		(2,994)		(6,933)		(17,371)
Acquisition of intangible assets		(228,484)		(199,974)		(404,568)
Acquisition of subsidiary, net of cash acquired		(527,984)		-		-
Cash used in investing activities		(759,462)		(206,907)		(421,939)
Financing activities
Shares issued (net of costs)		833,644		1,621,457		1,571,457
Interest and similar income		10		1,622		1,622
Interest and similar charges		-		(360)		(360)
Cash generated from financing activities		833,654		1,622,719		1,572,719
(Decrease) / increase in cash and cash equivalents		(65,027)		767,381		164,427
Cash and cash equivalents at beginning of period		348,102		183,675		183,675
Cash and cash equivalents at end of period		283,075		951,056		348,102

Cornerstone FS plc

Notes to the financial statements

1.         General information and basis of preparation

Cornerstone FS Plc is a public limited company, incorporated and domiciled in England. T he Company was admitted to AIM, London Stock Exchange's market for small and medium size growth companies on 6 April 2021 . The registered office of the Company is The Old Rectory, Addington, Buckingham, England, MK18 2JR, and its principal business address is 75 King William Street, London, EC4N 7BE. Cornerstone FS plc is a payments focused fintech business that makes managing currency simple for SMEs. It provides international payment, currency risk management and electronic account services using a proprietary cloud-based multi-currency payments platform. These services are delivered directly and via white label partners on a SaaS basis to UK-based SMEs that engage in international trade. Cornerstone also serves some high-net worth individual clients.

The consolidated financial information contained within these financial statements is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. While the financial figures included in this interim report have been prepared in accordance with IFRS applicable to interim periods, this interim report does not contain sufficient information to constitute an interim financial report as defined in IAS 34. Financial information for the year ended 31 December 2021 has been extracted from the audited financial statements for that year. With the exception of an additional accounting policy for goodwill included below, the accounting policies applied by the Group in this consolidated interim financial report are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2021.

The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings. Entities are accounted for as subsidiary undertakings when the Group is exposed to or has rights to variable returns through its involvement with the entity and it has the ability to affect those returns through its power over the entity.

                Details of subsidiary undertakings and % shareholding:

                Cornerstone Payment Solutions Ltd                         -              100% owned by the Company

                Cornerstone Middle East FZCO                                  -              100% owned by the Company

Capital Currencies Limited                                          -              100% owned by the Company

Avila House Limited                                                     -              100% owned by Cornerstone Payment Solutions Ltd

                CS Commercial Limited                                                -              100% owned by the Company

                Cornerstone EBT Trustee Limited                               -              100% owned by the Company

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.

Goodwill on acquisition of subsidiaries is separately disclosed in note 7. Goodwill is recognised as an asset, allocated to cash generating units for the purpose of impairment testing and reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.

Going concern

During the period ended 30 June 2021, the Group made a loss of £3,019,256 and as 30 June 2022 the Group's Statement of Financial Position showed a net asset position of £1,240,654, including cash and cash equivalents of £283,075. Post-period end, the Company significantly strengthened its financial position completing a placing on 5 August 2022 raising gross proceeds of approximately £1.085 million.

The Directors believe, having considered all available information, including the cash resources currently available to the Group, (including un-drawn convertible loan notes) and its growth trajectory combined with careful resource management, that the Group will have sufficient funds to meet its expected committed and contractual expenditure for the foreseeable future. Thus, the Directors continue to adopt the going concern basis of accounting in preparing the interim financial report for the period ended 30 June 2022.

2.         Revenue

All of the Group's revenue arises from activities within the UK. Management considers there to be only one operating segment within the business based on the way the business is organised and the way results are reported internally.

Revenue is as follows:

		Unaudited six months to 30 June 2022		Unaudited six months to 30 June 2021		Audited 12 months to 31 Dec 2021
		£		£		£
Total revenue		1,896,073		836,554		2,301,172

3.         Loss from operations

			Unaudited six months to 30 June 2022		Unaudited six months to 30 June 2021		Audited 12 months to 31 Dec 2021
			£		£		£
Loss from operations is stated after charging:
Share-based compensation			2,243,258		234,329		2,338,495
Transaction costs			12,600		195,050		402,515
Expensed software development costs			53,473		28,545		97,556
Depreciation of property, plant and equipment			4,863		1,627		4,293
Amortisation of intangible assets			166,046		57,394		148,094
Short-term (2018 IAS 17 operating) lease                                       rentals			93,363		19,002		86,434

4.         Loss per share

The loss per share of 13.05p is based upon the loss of £3,019,256 (six-months to June 2021: loss of 1,190,370) and the weighted average number of ordinary shares in issue for the period of 23,143,117 (30 June 2021: 18,337,246).

The loss incurred by the Group means that the effect of any outstanding warrants and options would be considered anti-dilutive and is ignored for the purposes of the loss per share calculation.

5.         Share capital

Allotted, called up and fully paid Ordinary shares Share capital No. £ Ordinary shares of £0.01 each as at 1 January 2021 16,588,608 165,886 Issue of new shares of £0.01 each 3,688,974 36,890 Ordinary shares of £0.01 each at 31 December 2021 20,277,582 202,776 Issues of new shares of £0.01 each 3,406,034 34,061 Ordinary shares of £0.01 each at 31 December 2021 23,683,616 236,837

The following changes in the share capital of the Company have taken place in period ended 30 June 2022:          

·   On 27 January 2022, 3,283,034 Ordinary Shares were issued at a price of £0.265 each pursuant to a placing and subscription of the Company's shares; and

·   On 11 April 2022, the Company issued and allotted 123,000 new ordinary shares at a price of £0.265 as consideration for investor relations services.

Options

On 8 March 2022 the Company granted 793,454 options under its equity-settled share-based remuneration schemes for employees with a weighted average exercise price of £0.40 and a vesting period between 2 and 3 years. 

The Black-Scholes model was used for calculating the cost of options. The model inputs for the options issued were:

Share price at grant date               - £0.165

Risk-free rate                                   - 2.1%

Expected Volatility                          - 90.1%

Contractual life                                - 5 years.

During the period 200,000 options granted in prior periods were forfeited (2021: nil) at a weighted average exercise price of £0.50 per share.

Share-based compensation charge

The Group share-based compensation charge for the period ended 30 June 2022 of £2,243,258 (2021: £234,329) consists of £2,138,379 (2021: £nil) in respect of the share-based incentivisation agreement with Robert O'Brien & his team, £67,978 (2021: £73,607) in respect of warrants, £50,297 (2020: £nil) in respect of equity settled share-based payments related to the non-executive Board member's service agreements, and a credit of £13,395 (2021: charge of £160,722) in respect of share options granted under the Company's share option scheme, including the impact of option forfeitures.

6.         Intangible assets

	Internally developed software £		Software costs £		Customer relationships £			Goodwill £		Regulatory licenses £		Total £
COST
As at 1 January 2022	647,485		15,611		-			-		92,520		755,616
Additions	228,484		-		-			-		-		228,484
Arising on acquisition (note 7)	-		-		423,064			1,043,319		-		1,466,383
At 30 June 2022	875,969		15,611		423,064			1,043,319		92.520		2,450,483
AMORTISATION
As at 1 January 2022	162,558		15,611		-			-		-		178,169
Charge for the period	130,790		-		35,256			-				166,046
As at 30 June 2022	293,348		15,611		35,256			-		-		344,215
NET BOOK VALUE
At 30 June 2022	582,621		-		387,808			1,043,319		92,520		2,106,268
At 30 June 2021	370,810		222		-			-		92,520		463,552
At 31 December 2021	484,927		-		-			-		92,520		577,447

7.         Business combinations

The Group acquired 100% of the share capital of Capital Currencies Limited ("Capital Currencies") on 1 February 2022. Capital Currencies is a well-established foreign exchange broker located in Tunbridge Wells, specialising in the provision of currency exchange and international payments. Capital Currencies is authorised and regulated by the FCA as an authorised payment institution permitted to provide payment services.

The acquisition is expected to expand Cornerstone's presence in its core target market and, in line with the Group's stated strategy, increase revenue generated by direct clients. By bringing Capital Currencies' clients onto Cornerstone's technology platform, the Group expects to benefit from the rationalisation of payments to banking partners across the combined organisation as well as recognise other synergistic savings, such as in compliance costs and overheads.  

The recognised amounts of assets acquired and liabilities assumed and the fair value of consideration at the date of acquisition were as follows:

	£
Intangibles		423,064
Tangible fixed assets		14,584
Trade and other receivables		27,842
Cash acquired		58,351
Trade and other payables		(57,939)
Deferred tax liability		(80,382)
Net assets on acquisition		385,520
Goodwill on acquisition		1,043,319
Total consideration		1,428,839
Initial consideration - cash		586,335
Deferred contingent consideration		842,504
Total consideration		1,428,839

8.         Trade and other receivables

		Unaudited as at 30 June 2022		Unaudited as at 30 June 2020		Audited as at 31 Dec 2021
		£		£		£
Trade receivables		94,182		25,395		-
Prepayments and accrued income		71,670		129,989		90,360
Derivative financial assets at fair value		200,653		427,713		322,710
Other receivables		32.525		336		42,525
Taxes and social security		16,186		9,072		37,649
Total trade and other receivables		415,216		592,505		493,244

9.         Trade and other payables

		Unaudited as at 30 June 2022		Unaudited as at 30 June 2021		Audited as at 31 Dec 2021
		£		£		£
Trade payables		505,565		238,282		346,255
Derivative financial liabilities at fair value		171,724		409,540		290,292
Other taxes and social security		237,651		45,831		60,349
Other payables and accruals		609,537		259,370		484,814
Total trade and other payables		1,524,477		953,023		1,181,710

10.      Related party transactions

As at 30 June 2022 an amount of £8,750 remained due to the Group from Terry Everson, a director of Cornerstone Payment Solutions Ltd and a shareholder in Cornerstone (30 June 2020: £8,750).

11.      Events after the reporting date

On 4 August 2022 the Company announced the variation of the share incentive arrangement between the Company and Robert O'Brien & his team. On joining Cornerstone Mr O'Brien & his team were entitled to receive share-based incentivisation based on a multiple of revenue generation and contribution to profit. As a result of his performance ahead of expectations, the terms of the original incentivisation arrangements were varied such that 1) Mr O'Brien was issued a convertible loan note with a value of £2 million and carrying a coupon of 6%, repayable by the Company on 31 July 2025; 2) Mr O'Brien was issued and allotted 4,286,818 new ordinary shares at a price of 10p per share; 3) the three senior members of Mr O'Brien's were allotted and issued 2,100,000 new ordinary shares at a price of 10p per share and 4) the issue of a further 5,113,182 new ordinary shares to Mr O'Brien at a price of 10p per share to be issued following receipt from the FCA of permission for Mr O'Brien to increase his holding to more than 9.9% of the issued share capital of the Company. All shares issued as a result of the settlement are subject to a 12-month lock-in from the date of issue and, for a further period of 12 months thereafter, the disposal of any interests in the shares can only be effected on an orderly market basis through the Company's brokers.

On 5 August 2022 the Company announced it had completed a Placing of 13,230,765 new ordinary shares at a price of 6.5p per share and issued of a new unsecured convertible loan note of £225,000, raising gross proceeds of approximately £1.085 million.  The new loan note has a term of two years and does not bear interest and will automatically convert following receipt from the FCA of permission for the holder of the loan note to increase their shareholding to more than 9.9% of the issued share capital of the Company.

On 24 August 2022 the Company issued and allotted 360,000 new ordinary shares to four Non-Executive Directors ("NED(s)"), the Company Secretary and a former NED at a price of 10.025 pence per share, as part of their annual remuneration. In total, £118,000 was due to paid by the issue of new ordinary shares under this arrangement for the year of service to 31 March 2022. As the Company does not have sufficient share capital authority to issue further shares to NEDs, the remaining amount due, of approximately £81,910, will be settled by the issue of new ordinary shares at a later date priced at the average closing mid-market price for the ten trading days prior to such issue.

On 1 September 2022 the Company entered into an agreement to acquire 100% of the issued share capital of Pangea FX Limited, a specialist FX and treasury consultancy, for total consideration of up to £200,000 (dependent upon future performance). The consideration for the acquisition consists of £25,000 in cash on completion and up to £175,000 in loan notes with the precise value being dependent on the acquired business' performance over a two-year period. The loan notes have a term of two years, bear interest at a rate of 6% and are not convertible.

Post period-end, two dormant companies that were 100% owned by the company, had never traded, and had a book value of £nil within these financial statements, were dissolved; CS Commercial Limited on 16 August 2022 and Cornerstone EBT Trustee Limited on 6 September 2022.

 

END

 

 

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