Insig AI Plc

Final Results, Posting of Report and Notice of AGM

RNS Number : 7607K
Insig AI Plc
06 September 2021
 

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. It forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.  

 

6 September 2021


Insig AI plc

("Insig AI" or the "Company")

 

Final results for the 15 month period ended 31 March 2021

Posting of Annual Report and Accounts and Notice of Annual General Meeting

 

Insig AI plc (AIM:INSG), the data science and machine learning solutions company Insig (formerly Catena Group plc) and its subsidiaries (the "Group") is pleased to announce its results for the 15 months ended 31 March 2021.

 

These results are being released for a 15-month period due to the Company's decision to change its accounting reference date from 31 December to 31 March, as announced on 30 December 2020. Subsequent releases by the Company will return to 12-month annual results and six-monthly interim results.

 

The Group's Annual Report & Accounts, along with the Company's Notice of Annual General Meeting ("AGM") will be posted to shareholders later today and will be available shortly on the Group's website: www.insg.ai/investor-relations/

 

The AGM will be held at 9.00 a.m. on 30 September 2021 at SEC Newgate, Sky Light City Tower, 50 Basinghall Street, London, EC2V 5DE.

 

Highlights:

 

· Group transformed by post-period reverse takeover of AI/machine learning business Insight Capital

· Prior to reverse takeover, reflecting acquisition costs to date, loss after tax £1.06 million for the 15-month period against £0.22 million for the previous 12 months

· Recent identification of new and significant revenue stream with ability to share management and performance fees for assets under management

· Strong demand for ESG offering from asset managers globally

 

Commenting, Insig AI's Chief Executive Steve Cracknell said: "It is the quality of our machine learning products that gives me great confidence that during the coming year we will secure a number of multi-million dollar recurring revenue partnerships. This will be in addition to our product fee licence strategy. These opportunities now enable us to substantially increase our medium and long-term revenue and profit expectations set at the time of the reverse takeover."

 

 

For further information, please visit  www.insg.ai , or contact:

 

Insig AI Plc

Steve Cracknell, CEO 

 Via SEC Newgate

 

Zeus Capital Limited  (Nominated Adviser & Broker)

David Foreman / James Hornigold

 

 

+44 (0) 203 829 5000

SEC Newgate (Financial PR)

Robin Tozer / Tom Carnegie / Richard Bicknell 

+44 (0) 7540 106 366

[email protected]

 

 

Chairman's statement

 

These results are being released for a 15-month period due to the Company's decision to change its accounting reference date from 31 December to 31 March, as announced on 30 December 2020. Subsequent releases by the Company will return to 12-month annual results and six-monthly interim results.

 

The period under review has been a transformative 15 months for the Company. The new strategic focus on artificial intelligence and machine learning, first announced in January 2020, has been successfully implemented with the post-period end acquisition of the entire issued share capital of Insight Capital Partners Limited ("Insight") on 10 May 2021. The reverse takeover and consequent re-admission of the Company's shares to trading on AIM included an equity fundraising of £6.1 million; split between cash consideration for the acquisition and working capital for the enlarged Group. The acquisition followed a March 2020 initial investment in Insight. At the time of the acquisition of Insight, the Company also rebranded as Insig AI Plc to better represent its new focus and ambitions.

 

For the 15 months ended 31 March 2021, we are reporting a total comprehensive loss from all activities of £1,062,000 before tax but after professional fees associated with the subsequent acquisition and admission of £314,000, against a total comprehensive loss of £218,000 in the previous 12 months. The Directors are not recommending the payment of a dividend.

 

The results presented herein represent a period prior to the acquisition of the entire issued share capital of Insight and thus covers the Group's legacy school sport coaching subsidiary, Sport in Schools Limited ("SSL").

 

Pantheon Leisure Plc ("Pantheon")

Insig holds 85.87% of the issued share capital of Pantheon which in turn owns 100% of Sport in Schools Limited ("SSL"). Pantheon as a group made a loss of £13,000 for the 15-month period ended 31 March 2021 (12-months ended 31 December 2019: loss £35,000). Pantheon's results are consolidated into the Group accounts.

 

Sport in Schools Limited

SSL turnover fell 38% in the 15-month period to £1,042,000 (versus £1,683,000 during the previous 12-month period). The decrease is attributable to the Covid-19 pandemic and the resultant school closures. Profit recognised in this period was £42,000 compared with £120,00 during the previous 12-months.

 

With schools re-opening in September 2020, revenues began to recover. However, restrictions on after-school activities continued, alongside temporary school closures in late 2020 and early 2021, as well as operational restrictions placed on schools led to a slower recovery of revenue. The Group mitigated the financial impact of business disruption through closure and by utilising the UK Government's Covid-19 financial assistance schemes including: the Coronavirus Job Retention Scheme, the Retail, Hospitality and Leisure Grant Fund and a Coronavirus Business Interruption Loan of £240,000, repayable over five years. The financial support programmes have broadly insulated the SSL business from the financial impacts enabling it to resume full operations as the Government imposed restrictions eased.

 

With the Government's prioritisation of schools and child education, the provision of sports coaching in schools has returned to levels prior to the pandemic post-period.  Most of the schools with whom SSL work are continuing with sport programmes similar to those in place prior to the pandemic and after-school club activities have begun to return to pre-pandemic levels. There has also been a strong resurgence in holiday camps likely driven by the restrictions on travel resulting in greater demand.  As schools have re-opened and restrictions have ended, revenues have recovered strongly, and we are at last beginning to see a return to profit. The Directors would like to thank the SSL staff and management team for their commitment and industrious work.

 

Board restructure

Pursuant to the acquisition of Insight that completed post period end, the Company appointed two new Executive Directors and one new Non-Executive Director. Steve Cracknell, the Chief Executive of Insight Capital was appointed as Chief Executive of the Company and Warren Pearson was appointed as Chief Technology Officer. Peter Rutter was also appointed as a Non-Executive Director. John Murray has continued his role as Non-Executive Director and post period, on 12 August 2021, Matthew Farnum-Schneider resigned as Executive Chairman and I was appointed as interim Non-Executive Chairman. In addition to these appointments, in February 2021, Ashley Humphrey was appointed to the non-Board position of Chief Financial Officer.

 

Directors David Hillel, David Coldbeck and John Zucker resigned in May 2021 as part of the re-admission of the business. Management would like to thank them for their many years of effective service and stewardship as well as the extensive work they have done in the last year to support the realisation of the Insight acquisition and re-focus of the Company. Last month, Matthew Farnum-Schneider resigned. Management would like to thank him for his extensive work in delivering the realisation of the Insight acquisition.

 

Prospects

Since 31 March 2021, SSL revenues have continued their strong recovery. Provided the restrictions brought about by the Covid 19 pandemic continue to abate and cost cutting measures and further operational efficiencies implemented by SSL management during the pandemic continue, profitability is expected to return to pre-pandemic levels.

 

Regarding the now enlarged Group following the acquisition of Insight Capital, the Board continues to regard the core Insig AI business as being ideally positioned to provide its machine learning data driven solutions to the asset management industry. The vast array of data that needs to be assessed so that optimal decision making can be achieved, including risk mitigation, can be hugely enhanced using machine learning. Machine learning can do in minutes what would take a team of people days.

 

As well as offering its portfolio insight analysis tool, the current growth of Environmental, Social and Governance (ESG) investing across all asset classes has recently resulted in significant client interest for our ESG offering. The enormous scale of the sector is illustrated by the fact that sustainable bond issuance is set to exceed $1 trillion in 2021, more than five times 2018 levels.

 

The task for Insig AI is to fully capitalise on this positioning. Later this month, our ESG product will be released.  Designed to enable asset managers to develop and execute a data-led ESG investing strategy by providing transparent and evidence-based ESG scoring and interrogation, we believe that its scalability can lead to mass customisation of our ESG offering.

 

Around the time of the reverse takeover, it became clear that Insig AI secured the ability and expertise to partner with asset managers as they launch new funds across the ESG spectrum. These partnership opportunities now provide us with potential revenues that are of a magnitude several times more than the traditional licence sale to an asset manager. Therefore, the business is now directing its focus principally to this source of revenue. Converting these large opportunities will be the key driver to our success. We therefore view the future with confidence.

 

 

Richard Bernstein

Chairman

6 September 2021

 

 

 

 

Chief Executive Officer's report

 

Accepting these results are for the period prior to my appointment to the Board and indeed the Company's acquisition of what is now the core Insig AI business, I wanted to take this opportunity to highlight recent achievements made and to discuss the future prospects of the enlarged Group.

 

As set out in the Company's admission document dated 21 April 2021, we have successfully pivoted the now core business of Insig AI from a consultancy business to developing product led solutions. As a result of significant investment, we are now able to take an active partnership approach with clients and in so doing, are able to effectively bolt our AI engine onto their business and help them accelerate the development of new investment strategies, without them having to hire or build this technology in-house. 

 

This approach has now opened an entirely new and significant recurring revenue stream for the business: the potential to earn a share of both management and performance fees for assets under management. This is in addition to our product licence fee strategy.  Combined and if realised, these opportunities far exceed the Board's revenue and profit expectations at the time of the reverse takeover.

 

In terms of market focus, ESG is absolutely core to our business for the foreseeable future with clients wanting to be able to interrogate and evaluate data and execute a data led ESG investment strategy. 

 

We are now seeing growing demand for our Bidirectional Encoder (BERT) Natural Language Procession (NLP) classifiers, cloud-based data infrastructure, machine learning optimisation and analysis tools. The framework and tools we have been developing for the past year have proved their ability to be scaled to meet the multiple and different requirements we are getting from our clients. 

 

I believe that our products are leading edge AI technology.  Since the reverse takeover, we have made significant progress. This is most notably evidenced by our recent announcements which vindicated our decision to prioritise large scale ESG funds at the expense of much more modest short term opportunities.  In addition, the quality of our tools relating to Portfolio Insights and ESG gives me enormous confidence. We must now executive quickly and effectively in order to take full advantage of our position.

 

S Cracknell

Chief Executive

3 September 2021

 

Consolidated statement of comprehensive income for the period ended 31 March 2021

 

 

 

 

15 month

period ended

31 March 2021

 

12 month

period ended

31 December 2019

 

Notes

 

£000

 

£000

 

 

 

 

 

 

Continuing activities

 

 

 

 

 

Revenue

6

 

1,043

 

1,683

Direct costs

 

 

(798)

 

(818)

 

 

 

 

 

 

Gross profit

 

 

245

 

865

 

 

Administrative expenses

 

 

 

 

  (1,548)

 

 

 

 (1,052)

 

 

 

 

 

 

Other operating income

7

 

602

 

-

 

 

 

 

 

 

Operating loss

8

 

(701)

 

(187)

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

1

 

1

Finance costs

11

 

(48)

 

(2)

 

 

 

 

 

 

Loss before exceptional item

 

 

(748)

 

(188)

 

 

 

 

 

 

Exceptional item

9

 

(314)

 

-

Loss before taxation

 

 

(1,062)

 

(188)

 

 

 

 

 

 

 

 

 

 

 

 

Taxation

12

 

-

 

-

Loss after taxation from continuing activities

 

 

(1,062)

 

(188)

 

 

 

 

 

 

Loss for the year from discontinued activities

 

 

 

-

 

 

(30)

Loss for the year and total comprehensive loss

 

 

(1,062)

 

(218)

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Equity holders of the parent company

 

 

 (1,060)

 

 (213)

Non-controlling interests

 

 

(2)

 

(5)

 

 

 

(1,062)

 

(218)

 

 

 

 

 

 

 

Loss per share (basic and diluted)

Loss from continuing activities per share

13

 

(2.67)p

 

(0.53)p

Loss from discontinued activities per share

13

 

-

 

(0.10)p

Loss for the year and total comprehensive loss per share

 

 

(2.67)p

 

(0.63)p

 

 

 

The supporting disclosure notes below form part of these financial statements.

 

Consolidated statement of financial position as at 31 March 2021

 

 

Notes

31 March 2021

 

 31 December

2019

 

 

£000

 

£000

Non-current assets

 

 

 

 

Unlisted investments

16a

1,500

 

-

Goodwill and other intangibles

15

  60

 

60

Property, plant and equipment

17

54

 

72

Total non-current assets

 

1,614

 

132

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

18

397

 

109

Cash and cash equivalents

 

935

 

637

Total current assets

 

1,332

 

746

 

 

 

 

 

Total assets

 

2,946

 

878

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

19

566

 

267

Leasing commitments

19

8

 

8

Convertible unsecured loan notes

19 and 20

414

 

-

Bank loan due within 12 months

19 and 20

36

 

-

Total current liabilities

 

1,024

 

275

 

 

 

 

 

Non-current liabilities

 

 

 

 

Leasing commitments

19 and 20

38

 

49

Bank loan due after 12 months

19 and 20

204

 

-

Total non-current liabilities

 

242

 

49

 

 

 

 

 

Total liabilities

 

1,266

 

324

 

 

 

 

 

 

 

 

 

 

Net assets

 

1,680

 

554

 

 

 

 

 

Equity

 

 

 

 

Share capital

22

2,480

 

2,409

Share premium account

23

3,040

 

1,048

Other reserves

23

102

 

-

Merger reserve

23

326

 

326

Retained earnings

 

(4,202)

 

(3,165)

Equity attributable to shareholders of the parent company

 

1,746

 

618

 

 

 

 

 

Non- controlling interests

 

(66)

 

(64)

 

 

 

 

 

Total Equity

 

1,680

 

554

 

Consolidated statement of changes in equity

 

 

Share

capital

Share

premium

 

 

Other reserves

Merger reserve

Retained earnings

 

 To equity holders of the parent company

Non-controlling interest

 

 

Total

 

£000

£000

£000

£000

£000

 

£000

£000

 

£000

 

Balance at 1 January 2019

2,389

782

 

-

326

(2,980)

 

517

(59)

 

458

 

Adjustment for the adoption of IFRS 16 in relation to leased assets

-

-

 

 

-

-

9

 

9

-

 

9

 

Issue of new shares

20

270

 

-

-

-

 

290

-

 

290

 

Share issue costs

-

(4)

 

-

-

-

 

(4)

-

 

(4)

 

Share based payments

-

-

 

-

-

19

 

19

-

 

19

 

Loss for the year

-

-

 

-

-

(213)

 

(213)

(5)

 

(218)

 

Reserves at 1 January 2020

2,409

1,048

 

-

326

(3,165)

 

618

(64)

 

554

 

Issue of new shares

71

1,992

 

-

-

-

 

2,063

-

 

2,063

 

Share issue costs

-

-

 

(22)

-

-

 

(22)

-

 

(22)

 

Share based payments

-

-

 

-

-

23

 

23

-

 

23

Equity component of convertible loan notes issued in year

-

-

124

-

-

 

124

-

 

124

 

Loss for the period

-

-

 

-

-

(1,060)

 

(1,060)

(2)

 

(1,062)

At 31 March 2021

2,480

3,040

 

102

326

(4,202)

 

1,746

(66)

 

1,680

 

 

 

 

 

 

Parent Company statement of financial position as at 31 March 2021

 

Notes

31 March

2021

 

 

31 December 2019

 

 

£000

 

£000

Non-current assets

 

 

 

 

Unlisted investment

16a

1,500

 

-

Investments in subsidiaries

16b

220

 

506

Total non-current assets

 

1,720

 

506

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

18

685

 

329

Cash and cash equivalents

 

484

 

511

Total current assets

 

1,169

 

840

 

 

 

 

 

Total assets

 

2,889

 

1,346

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

19

304

 

313

Convertible unsecured loan notes

19 and 20

414

 

-

Total current liabilities

 

718

 

313

 

 

 

 

 

Total liabilities

 

718

 

313

 

 

 

 

 

Net assets

 

2,171

 

1,033

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

Share capital

22

2,480

 

2,409

Share premium account

23

3,040

 

1,048

Other reserve

23

102

 

-

Merger reserve

23

326

 

326

Retained earnings

 

(3,777)

 

(2,750)

 

 

 

 

 

Total equity

 

2,171

 

1,033

 

 

Parent Company statement of changes in equity 

 

 

 

Share

capital

Share

premium

Other reserves

Merger reserve

Retained earnings

 

 

Total

 

 

£000

£000

£000

£000

£000

 

£000

 

 

 

 

 

 

 

 

 

 

At 1 January 2019

 

  2,389

782

 

-

326

(2,535)

 

962

 

 

 

 

 

 

 

 

 

 

Issue of new shares

 

20

270

 

-

-

-

 

290

 

 

 

 

 

 

 

 

 

Share issue costs

 

-

(4)

-

-

-

 

(4)

 

Share based payments

 

-

-

 

-

-

19

 

19

 

 

 

 

 

 

 

 

 

Loss for the year

 

-

-

-

-

(234)

 

(234)

 

 

 

 

 

 

 

 

 

 

At 1 January 2020

 

  2,409

1,048

 

-

326

(2,750)

 

1,033

 

 

 

 

 

 

 

 

 

 

Issue of new shares

 

71

1,992

 

-

-

-

 

2,063

 

 

 

 

 

 

 

 

 

Share issue costs

 

-

-

(22)

-

-

 

(22)

 

 

 

 

 

 

 

 

 

Share based payments

 

-

-

-

-

23

 

23

 

 

 

 

 

 

 

 

 

Equity component of convertible loan notes

-

-

124

-

-

 

124

 

 

 

 

 

 

 

 

 

Loss for the period

 

-

-

-

-

(1,050)

 

(1,050)

 

 

 

 

 

 

 

 

 

At 31 March 2021

 

  2,480

3,040

 

 

102

326

(3,777)

 

2,171

 

Consolidated statement of cash flows for the period ended 31 March 2021

 

 

Note

 

 

15 month period ended 31 March 2021

 

12 month

period ended

31 December 2019

 

 

 

 

£000

 

£000

 

 

 

 

 

 

 

Cash flow from all operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before taxation from continuing activities

 

 

 

(1,062)

 

(188)

Loss before taxation from discontinued activities

 

 

 

-

 

(30)

 

 

 

 

(1,062)

 

(218)

 

 

 

 

 

 

 

Adjustments for:

 

 

 

 

 

 

Finance income

 

 

 

(1)

 

(1)

Finance expense

 

 

 

48

 

2

Share based payments

 

 

 

23

 

19

Depreciation

 

 

 

20

 

19

 

 

 

 

 

 

 

Operating cash flow before working capital movements

 

 

 

(972)

 

(179)

 

 

 

 

 

 

 

Increase in receivables

 

 

 

(288)

 

(20)

Increase in payables

 

 

 

299

 

27

 

 

 

 

 

 

 

Net cash absorbed by operations

 

 

 

(961)

 

(172)

 

 

 

 

 

 

 

Taxation

 

 

 

-

 

-

 

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

 

Investment in unlisted shares

 

 

 

(1,500)

 

-

Finance income

 

 

 

1

 

1

Property, plant and equipment acquired

 

 

 

(2)

 

(3)

Net cash absorbed by investing activities

 

 

 

(1,501)

 

(2)

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

Funds from share issues

 

 

 

2,063

 

286

Share issue costs incurred relating to shares issued post year end

 

 

 

(22)

 

-

Funds from  convertible unsecured loan notes issued

 

 

 

500

 

-

Funds from bank loan

 

 

 

240

 

-

Finance expense

 

 

 

(10)

 

(2)

Repayment of leasing liabilities and borrowings

 

 

 

(11)

 

(8)

Net cash from financing activities

 

 

 

2,760

 

276

 

 

 

 

 

 

 

Net increase in cash and cash equivalents in the year

 

28

 

298

 

102

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the year

 

 

 

637

 

535

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the year

 

 

 

935

 

637

 

 

Parent Company statement of cash flows for the period ended 31 March 2021

 

 

Notes

 

 

15 month period ended

31 March 2021

 

12 month

period ended

31 December 2019

 

 

 

 

£000

 

£000

 

 

 

 

 

 

 

Cash flow from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before tax

 

 

 

(1,050)

 

(234)

 

 

 

 

 

 

 

Adjustments for:

 

 

 

 

 

 

Finance income

 

 

 

(21)

 

(19)

Finance expense

 

 

 

38

 

-

Share based payments

 

 

 

23

 

19

Indebtedness with subsidiaries (waived) / written off

 

 

 

(193)

 

82

 

Investments in subsidiaries written off

 

 

 

 

192

 

 

-

 

 

 

 

 

 

 

Operating cash flow before working capital movements

 

 

 

(1,011)

 

(152)

 

 

 

 

 

 

 

Increase in receivables 

 

 

 

(335)

 

(32)

Increase / (decrease) in payables

 

 

 

277

 

(6)

 

 

 

 

 

 

 

Net cash absorbed by operations

 

 

 

(1,069)

 

(190)

 

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

 

Investment in unlisted shares

 

 

 

(1,500)

 

-

Finance income

 

 

 

1

 

1

Net cash (absorbed)/generated from investing activities

 

 

 

(1,499)

 

1

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

Funds from share issues

 

 

 

2,063

 

286

Share issue costs incurred relating to shares issued post year end

 

 

 

(22)

 

-

Funds from 2023 convertible unsecured loan notes

 

 

 

500

 

-

Net increase in cash and cash equivalents in the year

 

28

 

(27)

 

97

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the year

 

 

 

511

 

414

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the year

 

 

 

484

 

511

 

 

 

 

Notes to the group and parent company financial statements

 

1.  General information

Insig AI plc is a public company limited by shares, domiciled and incorporated in England and Wales.   The principal activity of Insig AI Plc during the period was the provision of sports coaching in schools.  Since the completion of the acquisition of Insight on 10 May 2021, the legacy sports coaching business has continued.

 

The Chairman's and Chief Executive Officer's statements provide a review of the business and future prospects.

 

 

These financial statements are prepared in pounds sterling being the currency of the primary economic environment in which the Group operates. Monetary amounts are rounded to the nearest thousand. 

 

 

2.  Basis of Accounting

The consolidated financial statements of the Group and the financial statements of the parent company for the 15-month period ended 31 March 2021 have been prepared under the historical cost convention and are in accordance with International Financial Reporting standards ("IFRS") as adopted by the EU. These policies have been applied consistently except where otherwise stated.

 

In preparing these consolidated financial statements, the Group has applied all standards and interpretations that are effective for accounting periods beginning on or after 1 January 2020.  The adoption of new standards and interpretations in the year has not had a material impact of the Group's financial statements.

 

There are no new standards, amendments or interpretations to existing standards that have been published and that are mandatory for the Group's accounting periods beginning on or after 1 April 2021, or later periods, that have been adopted early and there are no new Standards amendments or interpretations that will materially affect the Group's financial statements.

 

 

3.  Significant accounting policies

 

(a)   Basis of consolidation

The financial statements of the Group incorporate the financial statements of the Company and entities controlled by the Company, which are its subsidiary undertakings, in accordance with IFRS 10.  Control is achieved where the Company has the power to govern the financial and operating policies of its subsidiary undertakings to benefit from their activities.

 

Details of subsidiary undertakings are set out in note 16 B.

 

All intra-group transactions and balances have been eliminated in preparing the consolidated financial statements.

 

(b)  Revenue recognition

Revenue arises from income from sports and leisure activities undertaken by the Group; representing invoiced and accrued amounts for services supplied in the year, exclusive of Value Added Tax.

 

Consideration received from customers in respect of services is only recorded as revenue to the extent that the Group has performed its contractual obligations in respect of that consideration.  Management assesses the performance of the Group's contractual obligations against the sports and leisure activities as they are delivered.

 

Revenue from sports and leisure activities is recognised as the activity is provided, with payment due in advance of the performance obligations.

 

The IFRS 15 practical expedient has been applied whereby the promised amount of consideration has not been amended for the effects of a significant financing component as at the contract inception there are no contracts where the period between transfers of promised services and customer payment is expected to exceed one year.

 

Under the Group's standard contract terms, customers may be offered refunds for cancellation of sports and leisure activities.  It is considered highly probable that a significant reversal in the revenue recognised will not occur given the consistent low level of refunds in prior years.

 

(c)  Government grants

Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income.

 

(d)  Intangible assets

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 subsidiary entities at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the statement of comprehensive income and is not subsequently reversed.

 

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash generating units expected to benefit from synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

 

On disposal of a subsidiary, associate or jointly controlled entity, the amount of goodwill is included in the determination of the profit or loss on disposal.

 

Goodwill arising on acquisitions before the date of transition to IFRS's has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.

 

  Development costs are expensed in arriving at the operating profit or loss for the year unless the Directors are satisfied as to the technical, commercial and financial viability of individual project. In this situation, the expenditure is recognised as an asset and is reviewed for impairment on an annual basis.

 

Any impairment is recognised immediately in the income statement in administrative expenses and is not subsequently reversed.

 

(e)  Plant and equipment

  Plant and equipment is stated at cost less depreciation.  Depreciation is provided at rates calculated to write off the cost less their estimated residual value over their expected useful lives.

 

  The rates applied to these assets are as follows:

 

Plant & equipment

25% & 10% straight line

Motor vehicles

33.3% - straight line

 

(f)  Operating leases

  Assets held under leases are recognised as assets of the Group at the fair value at the inception of the lease or if lower, at the present value of the minimum lease payments.  The related liability to the lessor is included in the Statement of Financial Position as a finance lease obligation.  Lease payments are apportioned between interest expenses and capital redemption of the liability.  Interest is recognised immediately in the Consolidated Income Statement, unless attributable to qualifying assets, in which case they are capitalised to the cost of those assets. 

 

  Exemptions are applied for short life leases and low value assets, with payment made under operating leases charged to the Consolidated Statement of Comprehensive Income on a straight-line basis of the period of the lease.

 

(g)  Deferred taxation

  Deferred taxation is provided in full in respect of timing differences between the treatment of certain items for taxation and accounting purposes.  The deferred tax balance is not discounted.

 

The recognition of deferred tax assets is limited to the extent that the group anticipates making sufficient taxable profits in the future to absorb the reversal of the underlying timing differences.

 

(h)  Trade receivables

  Trade receivables are recognised at fair value.  A provision for impairment of trade receivables is established where there is objective evidence that the company or Group will not be able to collect all amounts due according to the original terms of the receivables.  Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or liquidation and default or delinquency of payments are considered indicators that the trade receivable is impaired.  The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement within administrative expenses.  When a trade receivable is uncollectable it is written off against the allowance account for trade receivables.

 

(i)  Investments

  Investments in subsidiary and other undertakings are stated at cost less provision for impairment in the parent company balance sheet.

 

(j)  Cash and cash equivalents

  Cash and cash equivalents include cash in hand and deposits held at call with banks.  Bank overdrafts are shown as borrowings within current liabilities.

3.  Significant accounting policies (continued)

 

(k)  Financial liabilities and equity

  Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.  An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

 

  Ordinary shares are classified as equity. Incremental costs directly attributable to new shares are shown in equity as a deduction from the proceeds.

 

  Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

 

  Borrowings are recognised initially at fair value, net of transaction costs incurred.  Borrowings are subsequently stated at amortised cost, any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowing using the effective interest method.

 

  Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the date of the statement of financial position.

 

(l)  Compound instruments

The component parts of compound instruments (convertible loan notes) issued by the group are classified separately as financial liabilities and equity in accordance with the substance of the contractual agreement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest rate method until extinguished on conversion or at the instruments maturity date. The equity component is determined by deducting the amount of the liability component from the compound financial instrument as a whole. This is recognised and included in equity and is not subsequently re-measured.

 

4.  Critical accounting judgements and key sources of estimation uncertainty

 

The preparation of the Group's financial statements requires the Directors to make judgements, estimates and assumptions that effect the application of policies and reported amounts in the financial statements. These judgements and estimates are based on the Director's best knowledge of the relevant facts and circumstances. Information about such judgements and estimation is contained in the accounting policies and/or notes to the financial statements.

 

 Deferred tax asset

At the present time the Directors' do not consider that there is sufficient certainty regarding the utilisation of tax losses available in the Group. As a result, no deferred tax asset has been recognised.

 

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill is the deemed cost on first time application of IFRS.

 

Details of the carrying value of goodwill at the period end and the impairment review calculation are given in note 15.

 

 

 

4.  Critical accounting judgements and key sources of estimation uncertainty (continued)

 

Impairment of intangible assets

The carrying value of intangible assets comprising unamortised website costs are determined by reference to an assessment of future income generated by the UltimatePlayer.me platform. Having regard to the Board's decision in 2017 to delay future plans for further website development, all unamortised costs have already been fully impaired.

 

Compound instruments

The allocation of the amount advanced between debt and equity is determined by the prevailing market interest rate for a similar non-convertible instrument. Clearly there is no one market rate that applies and the rate will also be driven by commercial considerations such as the risk perceived by the market in the issuing entity. The Directors have applied an interest rate of 10% as affair assessment of a prevailing market rate.  See note 20 for details of the carrying value.

 

Valuation of share-based payments

The Company has granted options to acquire its shares to a Director. On valuing the fair value of the share options granted and hence the cost charged to profit or loss, judgements are required regarding key assumptions applied. See note 26 for further information relating to the assumptions applied.

 

 

5.  Going concern 

 

The Directors have prepared financial forecasts covering the 12 month period following approval of these financial statements including different scenarios to demonstrate how costs can be managed if forecast revenue were to be delayed such that the Enlarged Group will remain cash positive.

 

The Enlarged Group is currently operating with expenditure exceeding revenues, but has recently signed a major contract already announced by Insig and the customer, which will alleviate, but not eliminate, the rate cash is absorbed. The Company is pursuing several significant sales leads and the Directors have prepared sales forecasts adopting prudent assumptions showing that provided a number of these target customers convert into contracts, additional revenues will produce a positive cash flow for the Company over the next 12 months.

 

Should anticipated sales be delayed or if Covid-19 impacts sales, the Directors will consider implementing measures to reduce costs that would include deferring product development expenditure and they believe that there is sufficient flexibility in the Group's cost structure to manage operating costs within current cash resources.  This position will be carefully managed by the Board and conversion of sales leads and costs closely monitored to ensure that the Group can continue to meet its liabilities as they fall due.

 

So far as the Group's sports coaching business is concerned, the re-opening of schools in September 2020 has meant revenues have begun to recover and forecasts prepared by SSL management show SSL returning to profit and remaining cash positive.

 

Based on the forecasts prepared by the Directors, the Board consider it reasonable to conclude that the Group will be able to continue to operate as going concern. 

 

 

6.  Business segment analysis

Business segments are identified according to the different trading activities in the Group.

 

During the 15-month period, the Group's only trading segment was its sports and leisure activities, comprising sports tuition at schools representing its revenue of £1,042,000 (12 months to 31 December 2019 - £1,683,000) and profit of £42,000. (12 months to 31 December 2019 - £120,000).

 

All revenue was generated in the UK.

 

 

7.   Other operating income

 

 

 

Period ended 31 March

2021

 

Year ended

31 December 2021

 

 

 

£000

 

£000

Coronavirus Job Retention Scheme

 

 

575

 

-

Local Government grants

 

 

20

 

-

Government support towards CBILS loan interest

 

 

7

 

-

 

 

 

602

 

-

 

The Coronavirus Job Retention Scheme is a government grant relating to a wage subsidiary programme introduced in the UK in response to the Covid-19 pandemic. The Group was entitled to the wage subsidy because of reduced operations in the UK resulting from the pandemic. The accounting policy as set out in note 3 to the financial statements; the grant is recognised as other operating income and the related wages and salaries for furloughed employees were recognised in direct costs and administrative expenses in the consolidated statement of comprehensive income.

 

 

8.   Operating loss

 

 

 

 

 

 

Period ended 31 March

2021

 

 

Year ended

31 December 2019

The operating loss is stated after charging

 

 

 

£000

 

£000

 

 

 

 

 

 

 

Auditors' remuneration - audit services

 

 

 

21

 

19

Operating lease rentals - land and buildings

 

 

 

41

 

16

Depreciation of property, plant and equipment 

 

 

 

19

 

19

 

Included in the audit fee for the group is an amount of £9,000 (2019: £7,000) in respect of the Company.

 

The auditors received fees of £3,000 (12 months to 31 December 2019 - £1,000) in respect of the provision of services in connection with advice relating to the Group's interim results, and general advice.

 

 

9.   Exceptional Item

 

During the 15-month period ended 31 March 2021, the Group incurred professional fees of £336,000 in relation to the acquisition of the remaining share capital of Insight.

 

Included in that cost were professional fees of £314,000 attributable to the reverse takeover and readmission to trading on AIM, which are recognised as an exceptional cost in the Consolidated Statement of Comprehensive Income. Fees of £22,000 relating directly to shares issued post year end have been recognised as a deduction from reserves, to be aggregated with other share issue costs post year end. Further information relating to share issue costs and professional fees incurred after date are given in note 29 relating to post balance sheet events.

 

 

10.  Staff Costs

Group Employee and benefits costs were as follows:

 

 

 

 

 

 

 

Period ended

31 March 2021

 

Year ended 31 December 2019

 

 

 

 

 

£000

 

£000

Wages and salaries

 

 

 

 

1,643

 

1,271

Social security costs

 

 

 

 

108

 

74

Pension contributions

 

 

 

 

29

 

22

Share based payment - share options

 

 

 

 

23

 

19

 

 

 

 

 

1,803

 

1,386

 

 

The average numbers of employees, including Directors during the period were

 

 

 

 

 

 

 

  No.

 

 

No.

Directors of the Company

 

 

 

 

5

 

6

Directors of subsidiary undertakings

 

 

 

 

2

 

2

Senior management and operatives

 

 

 

 

4

 

2

Sports coaches

 

 

 

 

98

 

117

Sales

 

 

 

 

1

 

3

Administration  

 

 

 

 

3

 

  3

Average number of personnel in the year

 

 

 

 

113

 

133

 

 

The following amounts were paid for the services of the Directors in the period:

 

Salaries and benefits

 

 

Period ended

31 March 2021

 

Year ended 31 December 2019

 

 

 

£000

 

£000

R L Owen

 

 

5

 

20

M Farnum-Schneider

 

 

313

 

5

G Simmonds

 

 

-

 

3

D Hillel

 

 

9

 

8

J Murray

 

 

-

 

-

J Zucker

 

 

6

 

5

D J Coldbeck

 

 

6

 

5

 

 

 

339

 

46

 

During the period under review R L Owen and G Simmonds, both former Directors of the Company, exercised their rights under warrant instruments to subscribe for shares at 10p and 25p per share giving rise to a national insurance cost to the company of £26,000.

 

There were no Directors' benefits in the 15-month period to 31 March 2021 (12 months to 31 December 2019 - Nil).

 

Defined pension contributions of £2,000 were paid in the 15-month period to 31 March 2021 (12 months to 31 December 2019 - less than £1,000) and related to M Farnum-Schneider.

 

 

 

 

 

 

11.   Finance costs

 

 

 

 

 

Period ended 31 March 2021

 

Year ended 31 December 2019

 

 

 

Note

 

£000

 

£000

Bank loan interest *

 

 

 

 

7

 

-

Effective interest on convertible loan notes

 

 

20

 

38

 

-

Interest on IFRS 16 lease liability

 

 

 

 

3

 

2

 

 

 

 

 

48

 

2

 

*The Group has recognised as a cost the interest borne by Central Government during the period on the CBILS loan granted to its trading subsidiary. The same sum has been included as part of other operating income in note 7.

 

 

12.   Taxation

 

No income tax charge arises based on the loss for the 15-month period to 31 March 2021 (12 months to 31 December 2019 - £nil).

 

The Group has unutilised tax losses of £6,610,000 (2019 - £5,245,000) including £960,000 (2019 - £960,000) in relation to the Company's subsidiary undertakings. Where it is anticipated that future taxable profits will be available to utilise these losses a deferred tax asset or a reduction in deferred tax liability is recognised as appropriate.

 

Factors affecting the tax charge in the period

 

 

 

 

Period ended 31 March

2021

 

Year ended 31 December 2019

 

 

 

 

£000

 

£000

Loss on ordinary activities before taxation

 

 

 

(1,062)

 

(218)

 

 

 

 

 

 

 

Loss on ordinary activities before taxation at the standard rate of UK corporation tax of 19% (2019 19%)

 

 

 

(202)

 

(41)

 

 

 

 

 

 

 

Effects of:

 

 

 

 

 

 

Expenses not deductible for tax purposes

 

 

 

71

 

19

Share based payments

 

 

 

5

 

4

Temporary differences in respect of depreciation and capital allowances not reflected in deferred tax

 

 

 

1

 

1

Unutilised tax losses not recognised as a deferred tax asset

 

 

 

125

 

17

Tax charge/credit

 

 

 

-

 

-

 

 

 

 

 

 

 

 

 

 

13.   Loss per share

 

Basic loss per share has been calculated on the Group's loss attributable to equity holders of the parent company of £1,060,000 (12 months to 31 December 2019 - £213,000) and on the weighted average number of shares in issue during the period, which was 39,689,000 (2019: 34,438,000).

 

Comprehensive loss per share is based on the same number of shares and on the comprehensive loss for the period attributable to the equity holders in the parent company of £1,060,000 (12 months to 31 December 2019 - £213,000).

 

In view of the group loss for the period, share options to subscribe for ordinary shares in the Company are anti-dilutive and therefore diluted earnings per share information is not presented. There were options outstanding at 31 March 2021 on 4,000,000 ordinary shares.

 

Post year end warrants granted and shares issued, referred to in note 29, are also antidilutive and are therefore disregarded for the purposes of calculating a diluted loss per share. 

 

14.   Loss for the financial period

As permitted by Section 400 of the Companies Act 2006, the profit and loss account for the parent company is not presented as part of these financial statements.

 

The consolidated loss for the 15-month period of £1,062,000 (12 months to 31 December 2019 - loss for the year of £218,000) includes a loss of £1,050,000 (12 months to 31 December 2019 - loss of £234,000) dealt with in the accounts of the parent company.

 

 

15.   Goodwill and other intangibles

 

 

Goodwill and other intangibles

31 March 2021

 

 

Website development31 March 2021

 

 

Total

31 March 2021

 

Total

31 December 2019

 

£000

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

 

Cost at 1 January 2020

60

 

587

 

647

 

647

Additions in the period

-

 

-

 

-

 

-

Cost at 31 March 2021

60

 

587

 

647

 

647

 

 

 

 

 

 

 

 

Amortisation at 1 January 2020

-

 

587

 

587

 

587

Impairment

 -

 

-

 

-

 

-

Amortisation at 31 March 2021

-

 

587

 

587

 

587

 

 

 

 

 

 

 

 

Carrying value at 31 March 2021 and 31 December 2019

60

 

-

 

60

 

60

 

 

· Goodwill of £59,954 included above relates to the acquisition of Pantheon Leisure Plc which is included at its deemed cost on first time application of IFRS.

· The Group acquired intangible assets costing £100 in 2013 following the acquisition of a subsidiary. The asset was fully impaired and written off in 2018.

Goodwill acquired in a business combination is allocated, at acquisition, to cash generating units ("CGUs") that are expected to benefit from that business combination. The carrying amount of goodwill relates wholly to the leisure activities business segment.

 

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding forecast revenues and operating costs. Management have considered the following two elements:

 

(i)  Based on current assessments of the Sport in Schools activities made by the Directors they consider that revenues will return to pre-Covid-19 pandemic levels and grow in 2022 and beyond; and

(ii)  Operational costs are monitored and controlled

 

Development costs

Ultimate Player Limited continued to operate the UltimatePlayer.me platform during the year.  As a result of the decision taken by the Board in 2017 to delay future plans for further website development, unamortised development costs were fully impaired and written off in that year.

 

16.  Investments

 

A.  Investment in unlisted company

In March 2020, the company acquired a 9.1% interest in the ordinary share capital of Insight for £1,500,000 in line with the strategy to focus on investing in quality fast growing companies, with an option to increase its holding to 30.2%.  In 2021, the Company began discussions with respect to acquiring the balance of issued share capital of Insig Partners Limited (formerly Insight Capital Partners Limited) which culminated in the acquisition of the remaining 90.1% of the ordinary shares which took place in May 2021. Details relating to this acquisition in May 2021 are set out in public releases and the Company's admission document, summarised information about this post balance sheet event is described in note 29.

 

 

 

 

B.  Investments in subsidiaries

Parent Company

 

 

 

31 March 2021

 

31 December 2019

Cost

 

 

 

£000

 

£000

Shares

 

 

 

1,948

 

1,948

Shares in companies removed from the register at Companies House

 

 

 

  (1,848)

 

-

Loan notes*

 

 

 

220

 

220

At 31 March 2021

 

 

 

320

 

2,168

 

 

 

 

 

 

 

Provision for impairment

 

 

 

 

 

 

At 1 January 2020

 

 

 

1,662

 

1,662

Impairment for companies removed from the Register at Companies House

 

 

 

(1,562)

 

-

At 31 March 2021

 

 

 

100

 

1,662

 

 

 

 

 

 

 

Carrying value at 31 December

 

 

 

220

 

506

 

The costs of shares at 31 March represents the Company's investment in Westside Sports Ltd. This investment has been fully impaired in prior years.

 

*Included in investments is £220,000 of loan notes in Pantheon Leisure Plc which carry an interest coupon of 7.5% and are repayable on demand at par. 

 

The following companies were subsidiaries at the balance sheet date and the results and year end position of these companies has been included in these consolidated financial statements. The registered office for all the companies listed below is at 30 City Road, London EC1Y 2AB.

 

 

Subsidiary undertakings

Description and proportion of share capital owned

Country of incorporation or registration

Nature of business

Westside Sports Limited

Ordinary 100%

England & Wales

Holding company

Ultimate Player Limited

Ordinary 100%

England & Wales

Inactive

Pantheon Leisure Plc *

Ordinary 85.87%

England & Wales

Holding company

Sport in Schools Limited **

Ordinary 85.87%

England & Wales

Sports coaching in schools

The Elms Group Limited **

Ordinary 85.87%

England & Wales

Inactive

 

*  shares held indirectly through Westside Sports Limited

**  shares held indirectly through Pantheon Leisure Plc

 

B.  Investments in subsidiaries (continued)

 

During the year, as part of an exercise to simplify the group structure, the following dormant or inactive companies listed below were removed from the register of companies at Companies House:

 

Westside Acquisitions Limited, Reverse Take-Over Investments Limited, Westsidetech Limited, Football Data Services Limited, Footballfanatix Limited, Football Partners Ltd and Football Directory.co.uk Limited.

 

The carrying value of the investments in the subsidiary companies written off is reported in profit and loss and is offset by inter-company balances waived.

 

 

 

 

17.  Property, plant and equipment

Group

Plant and equipment

 

Right of Use Assets: Property

 

Total

 

£000

 

£000

 

£000

Cost

 

 

 

 

 

At 1 January 2019

101

 

-

 

101

Adjustment for leased assets

-

 

154

 

154

Additions in the year

3

 

-

 

3

Cost at 1 January 2020

104

 

154

 

258

Additions in the period

2

 

-

 

2

At 31 March 2021

106

 

154

 

260

 

 

 

 

 

 

Depreciation

 

 

 

 

 

At 1 January 2019

87

 

-

 

87

Adjustment for leased assets

-

 

80

 

80

Charge for the year

9

 

10

 

19

At 1 January 2020

96

 

90

 

186

Charge for the period

7

 

13

 

20

At 31 March 2021

103

 

103

 

206

 

 

 

 

 

 

Carrying value

 

 

 

 

 

At 31 March 2021

3

 

51

 

54

 

 

 

 

 

 

At 31 December 2019

8

 

64

 

72

 

Right of Use Assets represent leasehold premises from which the Group operates in relation to its sports and leisure activities.

 

All tangible assets shown above are assets in use by the Group's subsidiary undertakings.

 

 

 

 

18.    Trade and other receivables

 

Non-current assets

 

Parent company

As at 31 March 2021, amounts due within one year included £220,000 in loan notes (31 December 2019 - £220,000). The loan notes are convertible into 50 million new shares in Pantheon Leisure Plc at any time before redemption. The loan notes carry an interest coupon of 7.5% and are repayable on demand at par.

 

Pantheon Leisure Plc is a subsidiary undertaking of Insig AI Plc.

 

The loan notes are included in investments referred to in note 16 above.

 

Group

The Group has no receivables from third parties classified as non-current assets.

 

Current assets

 

 

Group

 

Parent Company

 

 

31 March

2021

 

31 December 2019

 

31 March

2021

 

31 December 2019

 

Note

£000

 

£000

 

£000

 

£000

Trade receivables

 

79

 

82

 

 

 

-

Other receivables

 

85

 

22

 

75

 

5

Amounts due from subsidiary undertakings*

 

-

 

-

 

382

 

324

Due from related company**

25

220

 

-

 

220

 

 

Prepayments and deferred expenditure

 

13

 

5

 

8

 

-

 

 

397

 

109

 

685

 

329

 

* Amounts due from subsidiary undertakings are stated net of provisions for irrecoverable amounts which total £1,626,000 (31 December 2019 - £1,537,000).

 

**The Company entered into a loan agreement with Insig Partners Limited on 8 March 2021 under the terms of which the Company agreed to lend Insig Partners Limited up to £400,000 for working capital purposes. The Loan outstanding at 31 March of £220,000 is unsecured and is repayable on demand. The loan attracts interest at a rate of 3 per cent. above the Bank of England's Base Rate which accrues daily and is payable on the repayment date.

 

 The ageing analysis of trade receivables, all of which are due and not impaired is as follows:

 

 

 

 

 

 

 

<3 months

£000

 

>3 months

£000

 

Total

£000

31 March 2021

74

 

5

 

79

31 December 2019

82

 

-

 

82

 

 

 

 

19.   Current and non-current liabilities other payables

 

Due within one year:

 

Group

 

Parent Company

 

 

31 March 2021

 

31 December 2019

 

31 March 2021

 

31 December 2019

 

Note

£000

 

£000

 

£000

 

£000

Trade payables

 

10

 

5

 

-

 

-

Other payables

 

150

 

14

 

147

 

-

Taxes and social security

 

257

 

99

 

135

 

-

Amounts due to subsidiary undertakings

 

-

 

-

 

-

 

287

Accruals and deferred income

 

149

 

149

 

22

 

26

Loans and borrowings

20

450

 

-

 

414

 

-

IFRS 16 lease liability 

27

8

 

8

 

-

 

-

 

 

1,024

 

275

 

718

 

313

 

Due after one year:

 

Group

 

Parent Company

 

 

 

31 March

2021

 

31 December 2019

 

31 March

2021

 

31 December 2019

 

 

£000

 

£000

 

£000

 

£000

IFRS 16 lease liability 

 

38

 

49

 

-

 

-

Loans and borrowings

20

204

 

-

 

-

 

-

 

 

242

 

49

 

-

 

-

          

 

The average credit period taken for trade payables at the end of the year is 7 days (31 December 2019 - 12 days).

 

Further information regarding IFRS 16 lease liabilities is provided in note 24.

 

20.   Loans and borrowings

 

 

Group

 

Parent Company

 

31 March

2021

 

31 December 2019

 

31 March

2021

 

31 December 2019

 

£000

 

£000

 

£000

 

£000

Due within one year:

 

 

 

 

 

 

 

Bank loan

36

 

-

 

-

 

-

Convertible loan note

414

 

-

 

414

 

-

 

Due after one year:

 

 

 

 

 

 

 

Bank loan

204

 

 

-

 

-

 

654

 

-

 

414

 

-

 

  Bank loan

On 20 May 2020, the Group was granted and in June took up a 6 year Coronavirus Business Interruption Loan of £240,000.  Repayments of capital of £4,000 per month commenced in July 2021 with full repayment due by June 2026.

 

  Whist the UK Government has provided the bank with a guarantee, the Group is responsible for repaying the loan in full. Except for the first year of the loan, interest will be payable by the Group based on the bank's margin of 2.99% per annum over base rate.  The loan is secured by a fixed and floating charge over the assets the subsidiary company that is party to the loan.

 

 

20.   Loans and borrowings (continued)

 

  Convertible loan notes 2023

  A loan note instrument dated 3 March 2020 was drawn up creating unsecured convertible loan notes up to a nominal amount of £2,000,000.  Convertible loan notes were issued on 4 March 2020 at an issue price of £500,000.  The notes are convertible into ordinary shares of the Company at any time between the date of issue of the notes and their redemption date. On issue, the loan notes were convertible at 1 share per £0.25 loan note.  The conversion price is at a 9 per cent discount to the share price of the ordinary shares at the date the convertible loan notes were issued.

 

  If the notes had not been converted, they would have been redeemed on 4 March 2023 at par.  No interest is charged on the loan notes.

 

  The net proceeds received from the issue of the convertible loan nots have been split between the financial liability element, representing the net present value of the liability element and an equity component, representing the fair value of the embedded option to convert the financial liability into equity of the Company, as follows:

 

 

 

 

 

 

 

 

£000

Proceeds of issue of convertible loan notes

 

 

 

 

 

 

500

Equity component

 

 

 

 

 

 

(124)

Liability component at date of issue

 

 

 

 

 

 

376

Interest charged

 

 

 

 

 

 

38

Interest paid

 

 

 

 

 

 

-

Liability component at 31 March 2021

 

 

 

 

 

 

414

 

  The equity component of £124,000 has been credited to equity reserve (see Note 23).

 

  The interest expensed for the year is calculated by applying an effective interest rate of 10 per cent to the liability component for the 12 months period since the loan notes were issued.  The liability component is measured at amortised costs.  The difference between the carrying amount of the liability component at the date of issue and the amount reported in the balance sheet at 31 March 2021 represent s the effective interest rate less interest paid to that date.

 

  Further to the reverse takeover of Insig Partners Limited (formerly Insight Capital Partners Limited) post year end, as described in Note 29, the £500,000 of issued loan notes were converted into 2,000,000 New Ordinary Shares as fully paid-up shares.

 

  21.   Deferred tax

There were no deferred tax liabilities or assets recognised by the Group during the current and previous year.
 

 

22.  Issued and fully paid share capital

Ordinary shares

Number of ordinary 1p shares

 

Number of deferred 9p shares

 

£000

At 1 January 2019 

33,561,638

22,811,638

 

2,389

New 1p shares issued in the year

2,000,000

-

 

20

At 1 January 2020 

35,561,638

22,811,638

 

2,409

New shares issued in the period

7,100,000

-

 

71

At 31 March 2021

42,661,638

22,811,638

 

2,480

 

Details in relation to ordinary shares issued in the 15-month period were:

· March 2020, the company raised £1,000,000 from the issue of 4,000,000 1p shares for 25p per share.

· October 2020, the company raised £800,000 from the issue of 1,600,000 1p shares for 50p per share.

· February and March 2021, a further £263,000 was raised from the 2018 A & B warrant holders exercising their rights under warrant instruments granted in 2018 resulting in share issues of 750,000 1p shares for 10p per share and 750,000 shares for 25p per share.

Ordinary shares of 1p each:

Shareholders are entitled to receive dividends or distributions in the event of a winding up with rights to attend and vote at general meetings. 

 

Deferred shares of 9p each:

Shareholders are entitled to receive 0.1p for each £999,999 of dividends or other distributions in the event of a winding up with no rights to attend and vote at general meetings. 

 

At 31 March 2021 the Company's issued shares carry no rights to fixed income.

 

The market price of the Company's shares at 31 March 2021 and at the date the shares were suspended in September 2020 was 59p and the price range during the 15 month financial period was between 20.5p and 59p.

 

23.  Reserves

 

Retained earnings

Retained earnings represent the cumulative retained profit or loss of the Group.

 

Share premium

Share premium is the amount subscribed for share capital more than the nominal value and is a capital reserve required by UK company law.

 

Merger reserve

The merger reserve is a non-statutory reserve and represents the difference between the fair value and nominal value of the shares exchanged for shares on acquisition of Reverse Take-Over Investments Plc which took place in 2003.

 

 

 

23.  Reserves (continued)

 

Other reserves

 

 

 

 

Share issue costs

£000

 

Convertible loan equity

£000

 

Total

Other reserves

£000

At 1 January 2019 and 1 January 2020

 

 

-

 

-

 

-

Share issue costs incurred

 

 

(22)

 

-

 

(22)

Equity component of loan note at date of issue

 

 

-

 

124

 

124

Liability component at 31 March 2021

 

 

(22)

 

124

 

102

 

 

Share issue costs relate to professional fees incurred in the 15 months to 31 March of £22,000 (12 months to 31 December 2019 - £nil) incurred directly in connection with share placings post year end.  These costs have been recognised as a deduction from reserves and are to be aggregated with other issue costs after date which will be offset against the share premium reserve following the share issue after date. Further information relating to share issue costs and professional fees incurred after date are given in note 29.

 

Convertible loan note equity represents the component of convertible debt instruments (see note 20).

 

24.  Obligations under leases

Group

 

For the 15 month period ended 31 March 2021, the following amounts have been recognised under IFRS 16 in relation to property leases:

 

15 months ended

31 March

2021

 

12 months ended

31 December 2019

 

£000

 

£000

'Right-of-use' assets upon adoption of IFRS 16

154

 

154

Depreciation brought forward

90

 

80

Depreciation charged on 'right-of-use' assets recognised

13

 

10

Interest expense recognised on lease liability

3

 

2

Expenses incurred in relation to 'short-term' leases

27

 

21

Obligation at the year end in relation to 'short-term' leases

7

 

3

Total cash outflow in the year in relation to leases

41

 

31

 

 

 

 

25.  Related parties

Details of the remuneration of Directors is given in note 10. In addition to the information given in that note, the following provides further details of related party transactions involving the Company and its Directors.

 

The Directors are the key management personnel of the Group for the period under review.

 

M Farnum-Schneider - former Director

Following his appointment as Director on 1 August 2019, the Company granted options to acquire 4,000,000 ordinary shares in the Company with exercise prices ranging from 20 pence per share to 60 pence per share between 2020 and 2025.  More detailed information is given in note 26 below.

 

G Simmonds - former Director

Following his resignation as a Director on 1 August 2019, his practice continued to receive monthly fees for consultancy services and made payments to him totalling £13,000 (12 months ended 31 December 2019 - £6,000).

 

In February 2021, G Simmonds exercised his rights to acquire shares in the company from his ownership of 125,000 A Warrants and 125,000 B Warrants granted to him in 2018 at 10p and 25p per share respectively. Further details relating to the exercise of these warrants is given in note 10, the terms relating to these warrants are given in note 26 below.

 

R Owen - former Director

In March 2021, R Owen exercised his rights to acquire shares in the company from his ownership of 125,000 A Warrants and 125,000 B Warrants granted to him in 2018 at 10p and 25p per share respectively. Further details relating to the exercise of these warrants is given in note 10, the terms relating to these warrants are given in note 26 below.

 

For the 15 months ended 31 March 2021 R Owen received monthly fees for consultancy services and made payment to him totalling £12,000 (12 months ended 31 December 2019 - £nil).

 

Insig Partners Limited (formerly Insight Capital Partners Limited)

In March 2021, a loan to cover operating costs was provided to Insight Capital from Insi AI PLC totalling £220,000, the terms relating to this loan are given in note 18.  The balance outstanding as at 31 March 2021 was £220,000 (31 December 2019 - £nil).

 

 

 

 

 

 

 

 

26Share-based payment transactions

 

Warrants

In March 2018, the Company issued new warrants to subscribe for shares. 750,000 A Warrants and 750,000 B Warrants were issued exercisable at a price of 10p and 25p respectively per new ordinary share.

 

Warrants are valued using the Black-Scholes option pricing model. The fair value per option granted and the assumptions used in the calculation are as follows:

 

Grant date

13 March 2018

13 March 2018

Share price at grant date

15p per share

15p per share

Exercise price

10p per share

25p per share

Shares under warrant

250,000

250,000

Expected volatility

100.0%

100.0%

Warrant life (years)

3 years

3 years

Expected life (years)

3 years

3 years

Risk-free interest rate

1.25%

1.25%

Fair value per warrant

3.15p

2.8p

 

In accordance with IFRS2, the fair value of the warrants issued and recognised as a charge in the accounts for the 15 month period is £Nil (12 months ended 2019 - £Nil). In arriving at this amount, the expected volatility is based on historical volatility, the expected life is the average expected period to exercise, and the risk-free rate of return is the yield on a zero-coupon UK government bond for a term consistent with the assumed option life.

 

The warrants referred to above were exercised into ordinary shares in February and March 2021 and none are outstanding as at 31 March 2021.

 

Options

In January 2011, the Company adopted an unapproved share option scheme and on 1 August 2019, the Company granted options over 4,000,000 ordinary shares in the Company as part of a Director's compensation agreement.  Details of the options are set out below: 

 

2021

 

2019

 

£000

 

£000

 

 

 

 

Outstanding at start of period/year

  4,160 

 

  308

Granted during the period/year

-

 

4,000

Lapsed during the period/year

(160)

 

(148)

Outstanding at the end of the period/year

4,000

 

4,160

Exercisable at the end of the year

-

 

160

 

The movements in the weighted average exercise price of the options were as follows:

 

2021

 

2019

 

 

 

 

Outstanding at start of the year

44.3

 

26.4

Granted during the year

-

 

45.0

Lapsed during the year

26.6

 

26.2

Outstanding at the end of the year

45.0

 

44.3

Exercisable at the end of the year

-

 

26.6

 

The weighted average contractual life of options outstanding on 31 March 2021 was 3.4 Years (December 2019: 4.5 years).

 

26Share-based payment transactions (continued)

 

The fair value of the equity instruments granted was determined using the Black Scholes Model.  This model was selected as it is an industry standard model.  The only conditions attached to the options is continuing employment.  The inputs into the model for options outstanding at the year-end were as follows:

 

Share options granted on 1 August 2019 to M Farnum-Schneider:

 

Grant date

1 August 2019

1 August 2019

1 August 2019

Share price at grant date

17p per share

17p per share

17p per share

Exercise price

20p per share

40p per share

60p per share

Shares under option

1,000,000

1,000,000

2,000,000

Expected volatility

43.1%

43.1%

43.1%

Option life (years)

3 years

3 years

3 years

Expected life (years)

3 Years

3 Years

3 Years

Vesting period (years)

0.5 to 1 Years

1 to 2 years

2 to 3 Years

Risk-free interest rate

0.57%

0.57%

0.57%

Small company discount factor

35%

35%

35%

Fair value per option

2.5p

2.5p

0.7p

 

The expected volatility is based on historical volatility, the expected life is the average expected period to exercise, and the risk-free rate of return is the yield on a zero-coupon UK government bond for a term consistent with the assumed option life.

 

In accordance with IFRS 2, the fair value of the share options issued and recognised as a charge in the accounts for the 15 month period is £23,750 (12 months to 31 December 2019 - £19,000).

 

27.  Capital management and financial instruments 

The Group is funded by both equity and debt which represents the Group's capital.

 

The Group's objectives when maintaining capital are:

To safeguard the entity's ability to continue as a going concern, so that it can begin to provide returns for shareholders and benefits for other stakeholders; and

To provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

 

The Group sets the amounts of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustment it considering changes in economic conditions and risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust the dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

 

Capital for the Group comprises components of equity - share capital of £2,480,000 (31 December 2019 - £2,409,000), share premium of £3,040,000 (31 December 2019 - £1,048,000), other reserves of £304,000 (31 December 2019 - £326,000), and the retained deficit of £4,164,000 (31 December 2019 - £3,165,000) as well as debt represented by £414,000 of convertible loan notes (31 December 2019 - £nil) and a £240,000 bank loan (31 December 2019 - £nil).

 

During the period ended 31 March 2021 the Group's strategy was to preserve net cash resources by limiting cash absorbed from losses and through good cash management.

 

 

 

27.  Capital management and financial instruments (continued)

 

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provision of the instrument.

 

At 31 March 2021 and 31 December 2019, there were no material differences between the fair value and the book value of the Group's financial assets and liabilities. All financial assets and liabilities are measured at amortised cost.  Relevant financial assets and liabilities are set out below.

 

 

Group

 

 

Company

 

31 March

2021

 

31 December 2019

 

31 March

2021

 

31 December 2019

 

£000

 

£000

 

£000

 

£000

Financial assets

 

 

 

 

 

 

 

Cash and cash equivalents

935

 

637

 

484

 

511

Due from subsidiary undertakings

-

 

-

 

382

 

324

Due from loans

220

 

-

 

220

 

-

Trade and other short- term receivables

134

 

99

 

46

 

-

 

1,289

 

736

 

1,132

 

835

Financial liabilities (which are included at amortised cost)

 

 

 

 

 

 

 

Trade and other short- term payables

159

 

20

 

147

 

-

IFRS 16 lease liabilities

47

 

58

 

-

 

-

Loans and borrowings

654

 

-

 

414

 

-

Due to subsidiary undertakings

-

 

-

 

-

 

287

 

860

 

78

 

561

 

287

 

The Group's financial instruments comprise cash and cash equivalents, receivables, payables, loan obligations that arise directly from its operations

 

Amounts shown in trade and other short-term receivables exclude prepayments and deferred expenditure for the Group of £13,000 (31 December 2019 - £5,000) and VAT recoverable of £30,000 (31 December 2019 - £5,000) for the Group and for the Company of £7,000 (31 December 2019 - £3,000) of short-term receivables and VAT recoverable of £30,000 (31 December 2019 - £2,000).

 

Trade and short-term payables referred to above excludes deferred income and accruals of £149,000 (31 December 2019 - £149,000), and tax and social security creditors of £257,000 (31 December 2019 - £99,000).  For the parent company, trade and short-term payables excludes tax and accruals of £157,000 (31 December 2019 - £26,000).

 

The Group has not adopted a policy of using financial derivatives and does not rely on the use of interest rate hedges.

 

In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments.  There have been no substantive changes to the Group's response to financial instrument risk and the methods used to measure them from previous periods.

 

The main risks arising from the Group's financial instruments are credit and liquidity risks.

 

Credit risk arises from trade receivables where the party fails to discharge their obligation in relation to the instrument. To minimise this risk, management have appropriate credit assessment methods to establish credit worthiness of new customers and monitor receivables by regularly reviewing aged receivable reports. There is no concentration of credit risk other than in respect to cash held on deposit at the company's bank as set out above.

 

27.  Capital management and financial instruments (continued)

 

The amount exposed to risk in respect of trade receivables at 31 March 2021 was £79,000 (31 December 2019 - £82,000).

 

Liquidity risk arises in relation to the Group's management of working capital and the risk that the Company or any of its subsidiary undertakings will encounter difficulties in meeting financial obligations as and when they fall due.  To minimise this risk the liquidity position and working capital requirements are regularly reviewed by management. 

 

The Directors do not consider changes in interest rates have a significant impact on the Group's cost of finance or operating performance.

 

All financial assets are due within one year.  The maturity analysis can be seen in note 18.

 

As the Group's operations are conducted in the United Kingdom, risks associated with foreign currency fluctuations are not relevant.

 

 

28.  Notes to statement of cash flows

 

a)  Analysis of net funds

 

At 1 January

2020

£000

Cash Flow

£000

Non cash movements

£000

At 31 March 2021

£000

Group

 

 

 

 

Cash and cash equivalents

637

298

-

935

Borrowings 

-

(740)

86

(654)

Net funds

637

(442)

86

281

 

 

 

 

 

Company

 

 

 

 

Cash and cash equivalents

511

(27)

-

484

Borrowings

-

(500)

86

(414)

Net funds

511

(527)

86

70

 

 

 

 

28.  Notes to statement of cash flows (continued)

 

(b) Statement of cash flows from discontinued activities - Ultimate Player Limited

 

 

 

 

 

2021

 

2019

 

 

 

 

£000

 

£000

Cash flow from discontinued activities

 

 

 

 

 

 

loss before tax

 

 

 

-

 

(30)

 

 

 

 

 

 

 

Adjustments for:

 

 

 

 

 

 

Increase in debtors

 

 

 

-

 

(1)

Decrease/(Increase) in creditors

 

 

 

(1)

 

30

Cash generated/absorbed from operations

 

 

 

-

 

(1)

 

 

 

 

 

 

 

Investing activities

 

 

 

-

 

-

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

 

-

 

-

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Additional borrowings

 

 

 

-

 

-

Net cash from financing activities

 

 

 

-

 

-

 

Net cash decrease in cash and cash equivalents

 

 

 

 

(1)

 

 

(1)

Cash and cash equivalents at the beginning of the period

 

 

 

1

 

2

Cash and cash equivalents at the end of the period

 

 

 

-

 

1

 

29.  Post balance sheet events

 

During the period ended 31 March 2021, the Company acquired a 9.1 per cent. interest (on a fully diluted basis) of the ordinary shares of Insig Partners Limited (formerly Insight Capital Partners Limited) along with an option to increase the interest owned to 32.5 per cent.

 

On 10 May 2021, the Company acquired the balance of Insig Partners Limited's shares not already owned and obtained control.

 

Insig Partners Limited is a data science and machine learning solutions company that combines quantitative research, machine learning and technology infrastructure to deliver bespoke analytical tools to clients enabling them to extract data from outdated platforms and improve the accessibility and insight locked within.  Machine learning is widely recognised as having the potential to fundamentally benefit performance and profitability in many, if not all, industries.  The investment is in line with the Company's refocused strategy of investing in quality, fast growing companies and is the Company's first step toward a broader strategy to capitalise on growth opportunities in AI and machine learning.

 

In order to facilitate the acquisition of Insig Partners Limited, in May 2021 the Group raised 6.1 million (before expenses) via a placing of 9,172,375 new ordinary shares at 67 pence per share, a 14 per cent. premium to the closing share price of the shares in the Company which was 59 pence per share on 3 September 2020, being the last business day before the Company's ordinary shares were suspended from trading.

 

The funds were used to pay the £1.5 million cash element of the consideration paid to acquire the Insig Partners Limited shares, to settle the further professional costs relating to the acquisition and issue of the shares which were incurred after 31 March 2021 of £667,000 and for general working capital purposes, namely investing in the enlarged Group's team of developers, engineers and sales and marketing employees to accelerate product growth and business development activities. 

 

 

 

29.  Post balance sheet events (continued)

 

In addition to the cash consideration, 44,819,161 new ordinary shares were issued at 59 pence per share, the closing middle market price of 59 pence per Ordinary Share on 3 September 2020 (being the last business day before the Ordinary Shares were suspended) as consideration shares to the owners of Insig Partners Limited.

 

The convertible loan notes issued by the Company in the period (see Note 20) were converted on the same date, resulting in 2,000,000 new ordinary shares issued at 25 pence per share, a 58 per cent. discount to closing share price of the Company of 59 pence per share on 3 September 2020, being the last business day before the Company's ordinary shares were suspended from trading. 

 

The following number of ordinary Shares were admitted to trading on AIM on 10 May 2021:

 

Placing Shares    

  9,172,375

Consideration Shares    

44,819,161

Convertible Loan Note Shares

  2,000,000


Following the issue of the new Ordinary Shares, the Company has 98,653,174 ordinary shares in issue with full voting rights.

 

Share issue costs relating to the placing, readmission to AIM and acquisition were settled by cash consideration of £1,006,000, of which £336,000 was incurred prior to 31 March 2021 (Note 9 and Note 23). The remaining £667,000 paid after date will be allocated between costs arising in relation to the acquisition and readmission to AIM and will be charged as a cost against profit and loss and costs arising in relation to the placing and the element that relates specifically to the placing will be taken directly to equity and offset against the share premium reserve.  £22,000 of costs recognised within other reserves in the year will be offset against the share premium further to the issue of new shares in May 2021.

 

In addition to costs settled by cash, warrants were issued to settle costs of the acquisition, readmission and placing to subscribe for 396,582 ordinary shares in the Company at an exercise price of 83.75p per share. These warrants are exercisable in whole or in part between the first and sixth anniversary following the re-admission of the Company's shares trading on AIM.  The fair value of the warrants issued will be recognised as an expense against profit and loss as at the date of issue in May 2021.

 

Connected to the acquisition of Insig Partners Limited are post year end changes in directors and change in Company name, as detailed in the Directors Report.

 

The acquisition is classified as a reverse takeover under the AIM rules.  The directors have given consideration of the method of accounting to be applied and concluded that it meets the definition of a business combination under IFRS 3 and Insig AI Plc has been identified as the accounting acquirer for the purposes of IFRS 3.  In determining the accounting treatment to be applied, the directors have carefully reviewed the relevant factors to be considered in determining whether a business has been acquired and the change in control, including consideration, inter-alia, of the voting rights held by the former Insig Partners shareholders after the Business combination was completed, the composition of the new Board and rights relating to appointments to the Board.  As a result the Company will reflect an investment in Insig Partners Limited as a wholly owned subsidiary on its Balance Sheet and the Group will account for the acquisition by applying the acquisition method of accounting, rather than applying reverse accounting rules under IFRS 3.

 

 

 

 

 

 

29.  Post balance sheet events (continued)

 

The investment in Insig Partners Limited will be recognised at the fair value of the consideration given:

 

£ 000

Consideration shares issued (44,819,161)   

30,029,000

Cash consideration

  1,500,000

Total consideration

31,289,000

 

 

The value of the consideration shares has been determined in accordance with IFRS 3 applying the acquisition-date fair values of the equity interests issued by the acquirer.  The fair value on the acquisition date is considered to be 67 pence per share, being the price at which the placing shares were issued on the same day.

 

As the Company held an interest in Insig Partners Limited prior to the acquisition in May 2021, the fair value of which amounted to £2,936,000.  The Group effectively recognised a gain of £1,436,000 over the original cost of investment as a result of measuring at fair value its 9 per cent. equity interest in Insig Partners Limited held before the business combination.  The gain will be included in other income in the Company's statement of comprehensive income for the year ending 31 March 2022.

 

The identifiable assets acquired and liabilities assumed upon acquisition comprise:

 

 

Book value

£000

 

Cash   

180,000

 

Financial assets   

1,083,000

 

Property, plant and equipment

345,000

 

Identifiable intangible *

4,749,000

 

Financial liabilities

(2,829,000)

 

Total consideration

3,528,000

 

 

 

 

 

No fair value adjustments are considered necessary at the date of these financial statements other than potentially in relation to identifiable intangible assets as referred to below, this will however be considered further over the twelve months review period permitted to consider whether fair value adjustments are required.

 

The fair value of the receivables is considered to equate to the gross contractual amount receivable.  The acquired receivable is £1,083,000, of which £nil is expected to be uncollectable.

 

Identifiable intangible assets include developed technology that has not yet been assessed for any fair value adjustments that may impact the value of the identifiable intangible asset and deferred tax; in calculating goodwill the book value (which represents amortised cost) as at the date of acquisition has been applied.

 

Goodwill of £27,761,000 that would arise from the acquisition based on the book values of Insig Partners Limited as set out above arises largely from the expected growth in the AI and machine learning industry and collective expertise of the workforce in developing and delivering the Business's product range. The allocation between amounts recognised as goodwill and amounts recognised as other identifiable intangible assets is pending fair value adjustments for the developed technology as noted above.  None of the goodwill recognised is expected to be deductible for income tax purposes.

 

In addition to this acquisition, as part of the growth strategy of the enlarged group, a wholly owned subsidiary has been incorporated in the US, which to date remains inactive.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
FR DKPBBBBKBDCK