TIDMINSG
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 GBP1.06 million for the 15-month period
against GBP0.22 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 Via SEC Newgate
Steve Cracknell, CEO
Zeus Capital Limited (Nominated Adviser
& Broker)
David Foreman / James Hornigold +44 (0) 203 829 5000
SEC Newgate (Financial PR) +44 (0) 7540 106 366
Robin Tozer / Tom Carnegie / Richard Bicknell insigai@secnewgate.co.uk
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 GBP6.1 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 GBP1,062,000 before tax
but after professional fees associated with the subsequent
acquisition and admission of GBP314,000, against a total
comprehensive loss of GBP218,000 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 GBP13,000 for the 15-month period ended 31
March 2021 (12-months ended 31 December 2019: loss GBP35,000).
Pantheon's results are consolidated into the Group accounts.
Sport in Schools Limited
SSL turnover fell 38% in the 15-month period to GBP1,042,000
(versus GBP1,683,000 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 GBP42,000
compared with GBP120,00 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 GBP240,000, 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. A s 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 12 month
period ended period ended
31 March 31 December
2021 2019
===================================== ====== ============== ==============
Notes GBP000 GBP000
====== ============== ==============
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
31 March 31 December
Notes 2021 2019
GBP000 GBP000
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
19 and
Convertible unsecured loan notes 20 414 -
19 and
Bank loan due within 12 months 20 36 -
Total current liabilities 1,024 275
--------- -------------
Non-current liabilities
19 and
Leasing commitments 20 38 49
19 and
Bank loan due after 12 months 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
------------------------------------------------------------------------------------------------------------------
To equity
holders
Other of the
Share Share reserves Merger Retained parent Non-controlling
capital premium reserve earnings company interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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
31 March 31 December
Notes 2021 2019
GBP000 GBP000
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 19 and
notes 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 Share Other reserves Retained
capital premium Merger reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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
15 month 12 month
period ended period ended
31 March 31 December
Note 2021 2019
GBP000 GBP000
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 (22) -
to shares issued post year end
Funds from convertible unsecured 500 -
loan notes issued
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
15 month
period 12 month
ended period ended
31 March 31 December
Notes 2021 2019
GBP000 GBP000
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 192 -
off
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 (22) -
to shares issued post year end
Funds from 2023 convertible unsecured 500 -
loan notes
Net cash from financing activities 2,541 286
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) I ntangible 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 GBP1,042,000 (12 months to 31
December 2019 - GBP1,683,000) and profit of GBP42,000. (12 months
to 31 December 2019 - GBP120,000).
All revenue was generated in the UK.
7. Other operating income
Period ended Year ended
31 March 31 December
2021 2021
GBP000 GBP000
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 Year ended
31 March 31 December
2021 2019
The operating loss is stated after GBP000 GBP000
charging
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 GBP9,000
(2019: GBP7,000) in respect of the Company.
The auditors received fees of GBP3,000 (12 months to 31 December
2019 - GBP1,000) 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 GBP336,000 in relation to the
acquisition of the remaining share capital of Insight.
Included in that cost were professional fees of GBP314,000
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 GBP22,000
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 Year ended
31 March 31 December
2021 2019
GBP000 GBP000
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:
Period
ended Year ended
31 March 31 December
Salaries and benefits 2021 2019
GBP000 GBP000
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
GBP26,000.
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 GBP2,000 were paid in the
15-month period to 31 March 2021 (12 months to 31 December 2019 -
less than GBP1,000) and related to M Farnum-Schneider.
11 . Finance costs
Period ended Year ended
31 March 31 December
2021 2019
Note GBP000 GBP000
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 -
GBPnil).
The Group has unutilised tax losses of GBP6,610,000 (2019 -
GBP5,245,000) including GBP960,000 (2019 - GBP960,000) 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 Year ended
31 March 31 December
2021 2019
GBP000 GBP000
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
GBP1,060,000 (12 months to 31 December 2019 - GBP213,000) 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 GBP1,060,000 (12 months
to 31 December 2019 - GBP213,000).
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 GBP1,062,000
(12 months to 31 December 2019 - loss for the year of GBP218,000)
includes a loss of GBP1,050,000 (12 months to 31 December 2019 -
loss of GBP234,000) dealt with in the accounts of the parent
company.
15. Goodwill and other intangibles
Goodwill
and other
intangibles Website Total Total
31 March development31 31 March 31 December
2021 March 2021 2021 2019
GBP000 GBP000 GBP000 GBP000
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 GBP59,954 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 GBP100 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 GBP1,500,000 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
31 March 31 December
Parent Company 2021 2019
Cost GBP000 GBP000
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 GBP220,000 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.
Description and
proportion of
share capital Country of incorporation
Subsidiary undertakings owned or registration Nature of business
Westside Sports Ordinary 100% England & Wales Holding company
Limited
Ultimate Player Ordinary 100% England & Wales Inactive
Limited
Pantheon Leisure Ordinary 85.87% England & Wales Holding company
Plc *
Sport in Schools Ordinary 85.87% England & Wales Sports coaching in schools
Limited **
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
Right
of Use
Plant and Assets:
Group equipment Property Total
GBP000 GBP000 GBP000
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
GBP220,000 in loan notes (31 December 2019 - GBP220,000). 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 31 December 2019 31 March 31 December 2019
2021 2021
Note GBP000 GBP000 GBP000 GBP000
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 GBP1,626,000 (31
December 2019 - GBP1,537,000).
**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 GBP400,000 for working capital
purposes. The Loan outstanding at 31 March of GBP220,000 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 >3 months Total
GBP000 GBP000 GBP000
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 GBP000 GBP000 GBP000 GBP000
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 31 December 2019 31 March 31 December 2019
2021 2021
GBP000 GBP000 GBP000 GBP000
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 31 December 2019 31 March 31 December 2019
2021 2021
GBP000 GBP000 GBP000 GBP000
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 GBP240,000.
Repayments of capital of GBP4,000 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
GBP2,000,000. Convertible loan notes were issued on 4 March 2020 at
an issue price of GBP500,000. 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 GBP0.25 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:
GBP000
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 GBP124,000 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 GBP500,000 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
Number of Number of
ordinary deferred
Ordinary shares 1p shares 9p shares GBP000
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 GBP1,000,000 from the issue of
4,000,000 1p shares for 25p per share.
-- October 2020, the company raised GBP800,000 from the issue of
1,600,000 1p shares for 50p per share.
-- February and March 2021, a further GBP263,000 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 GBP999,999 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 Convertible Total
costs loan equity Other reserves
GBP000 GBP000 GBP000
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 GBP22,000 (12 months to 31 December 2019 -
GBPnil) 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 12 months
ended ended
31 March 31 December
2021 2019
GBP000 GBP000
'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 GBP13,000 (12 months ended 31
December 2019 - GBP6,000).
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
GBP12,000 (12 months ended 31 December 2019 - GBPnil).
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 GBP220,000, the terms
relating to this loan are given in note 18. The balance outstanding
as at 31 March 2021 was GBP220,000 (31 December 2019 - GBPnil).
26 . Share-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 GBPNil (12 months ended 2019 - GBPNil). 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
GBP000 GBP000
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).
26 . Share-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 17p per share 17p per share 17p per share
date
--------------- -------------- --------------
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 GBP23,750 (12 months to 31 December 2019 -
GBP19,000).
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 GBP2,480,000 (31 December 2019 - GBP2,409,000), share
premium of GBP3,040,000 (31 December 2019 - GBP1,048,000), other
reserves of GBP304,000 (31 December 2019 - GBP326,000), and the
retained deficit of GBP4,164,000 (31 December 2019 - GBP3,165,000)
as well as debt represented by GBP414,000 of convertible loan notes
(31 December 2019 - GBPnil) and a GBP240,000 bank loan (31 December
2019 - GBPnil).
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 31 December 2019 31 March 31 December 2019
2021 2021
GBP000 GBP000 GBP000 GBP000
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 GBP13,000 (31
December 2019 - GBP5,000) and VAT recoverable of GBP30,000 (31
December 2019 - GBP5,000) for the Group and for the Company of
GBP7,000 (31 December 2019 - GBP3,000) of short-term receivables
and VAT recoverable of GBP30,000 (31 December 2019 - GBP2,000).
Trade and short-term payables referred to above excludes
deferred income and accruals of GBP149,000 (31 December 2019 -
GBP149,000), and tax and social security creditors of GBP257,000
(31 December 2019 - GBP99,000). For the parent company, trade and
short-term payables excludes tax and accruals of GBP157,000 (31
December 2019 - GBP26,000).
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 GBP79,000 (31 December 2019 - GBP82,000).
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 Non cash At 31 March
2020 Cash Flow movements 2021
GBP000 GBP000 GBP000 GBP000
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
GBP000 GBP000
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 GBP6.1 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 GBP1.5 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 GBP667,000 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 GBP1,006,000,
of which GBP336,000 was incurred prior to 31 March 2021 (Note 9 and
Note 23). The remaining GBP667,000 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. GBP22,000 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:
GBP 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
GBP2,936,000. The Group effectively recognised a gain of
GBP1,436,000 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
GBP000
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
GBP1,083,000, of which GBPnil 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 GBP27,761,000 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.
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END
FR DKPBBBBKBDCK
(END) Dow Jones Newswires
September 06, 2021 02:00 ET (06:00 GMT)
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