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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Skillcast Group Plc | LSE:SKL | London | Ordinary Share | GB00BNLXS042 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.00 | -2.86% | 34.00 | 33.00 | 35.00 | 35.00 | 34.00 | 35.00 | 2,750 | 10:05:27 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Schools & Education Svcs,nec | 9.83M | -412k | -0.0046 | -73.91 | 30.42M |
From May 2022 to May 2024
TIDMSKL
RNS Number : 4449X
Skillcast Group PLC
26 April 2023
The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended.
26 April 2023
Skillcast Group PLC
("Skillcast", the "Group" or the "Company")
Results for the twelve months ended 31 December 2022
Skillcast (AIM: SKL), the provider of content and technology for digital compliance transformation, is pleased to announce its audited results for the twelve months ended 31 December 2022.
Highlights
Hot Features
Premium
Change (2022 v
2022 2021 2021 )
------------------------------ --------- --------- ---------------
Revenue GBP9.8m 8.4m +17%
Gross margin (%) 70.1% 70.5% -0.4pps
Annualised recurring revenue
(ARR)* GBP6.8m GBP5.8m +16%
Adjusted (LBITDA)/EBITDA* -GBP0.3m +GBP1.1m n/a
Basic (loss)/EPS (pence) -0.460p +0.467p n/a
Total dividend per share
(pence) 0.447p 0.447p 0%
Cash in bank GBP7.7m GBP7.9m -2%
Free cash flow GBP0.3m +GBP1.1m -76%
------------------------------- --------- --------- ---------------
-- Total revenues up 17% at GBP9.8 million (2021: GBP8.4 million)
o Revenue increase was driven by strong growth in recurring subscription revenues, up 28% at GBP6.7 million (2021: GBP5.2 million)
o Annualised recurring revenue (ARR)* up 16% to GBP6.8 million (December 2021: GBP5.8 million) predominantly from new client acquisitions
o Recurring subscriptions contributed to 68% of total revenues (2021: 62%)
o Professional services revenues steady at GBP3.1 million (2021: GBP3.2 million)
-- Gross margin remained strong at 70.1% (2021: 70.5%) -- Adjusted LBITDA of GBP0.3 million (2021: Adjusted EBITDA GBP1.1 million)
o Investment in product development, commercial and organisational structure to support ambitious growth plans led to a small loss in profit as intended at IPO
o All research and development is expensed
o New Chief Financial Officer and Chief People Officer appointed
o Headcount increased by 26% in the year to 111 (2021: 88)
-- Strong net cash position at 31 December 2022: GBP7.7 million (31 December 2021 net cash: GBP7.9 million), representing c. 8.6 pence per ordinary share in the Company
o Improved working capital helped to offset the planned accelerated investment
o Free cash flow of GBP0.3 million (2021: GBP1.1 million) despite EBITDA loss
-- Basic LPS -0.460 pence per share (2021: EPS +0.467 pence) -- Total dividend of 0.447 pence per share (2021: 0.447 pence)
o Final dividend proposed: 0.279 pence
o Interim dividend paid: 0.168 pence
-- Operational highlights:
o Total client numbers grew to over 1,000
o Significant progress in headcount growth to support growth strategy
o Maintained excellent customer service records (Feefo Platinum Service Award 4.9/5.0) while achieving growth targets
o Expanded marketing activity with face-to-face events and launched Skillcast Connect in November 2022
o Successfully migrated all client hosting to the cloud (completed March 2023) as intended and outlined at IPO
o ESG progress: achieved carbon neutral status
Current trading and outlook
We have entered the new financial year with a strong sales and product pipeline. We are well prepared to capitalise on the demand for digital compliance transformation and drive sustainable growth of our subscriber base.
We are starting to see the fruits of our post-IPO investments. We are attracting new customers with higher annual contract values, and our ARR at the end of Q1 2023 was 22% up year on year at GBP7.2 million (March 2022 ARR: GBP5.9 million).
We expect further improvements this year, led by the launch of our multi-lingual Global Risk and Compliance libraries in March and other content and SaaS product launches later this year. We have migrated all our clients to our new cloud-hosting platform, giving us a more scalable infrastructure for further growth.
Whilst not immune to the recent banking and wider economic concerns, we remain well diversified with over 1,000 clients and 45% of revenues coming from non-financial services customers.
Trading since the period end has continued to increase on the prior year, driven by growing subscription revenues, and remains consistent with achieving market expectations.
Vivek Dodd, Chief Executive Officer of Skillcast, said:
"Skillcast enables companies to digitise and consolidate their compliance processes, thereby reducing costs, improving their employee experience and helping build more ethical, inclusive and resilient workplaces. With companies facing inflationary pressures as well as regulatory demands, the need for this compliance transformation is greater than ever.
"We are pleased with the 28% growth in our subscription revenue in 2022, which raised the total revenue growth to 17% and meant that subscription revenue as a proportion of total revenue increased to 68% (2022: 62%).
"Since our IPO in December 2021, we have made substantial improvements to our content and technology products and have maintained our 4.9/5.0 customer service rating. We have successfully attracted and retained top talent in key roles.
"Trading in the first half of the year has started well , and the pipeline of new prospective customers is strong. Despite the macroeconomic uncertainties in our markets in the UK and the EU, we remain on track to meet market expectations by offering cost-saving, risk-reducing compliance solutions to our customers."
*Further details on the calculation of adjusted EBITDA and ARR are set out in the Financial Review below
Enquiries:
Skillcast Group plc +44 (0)20 7929 5000 Richard Amos, Chairman Vivek Dodd, Chief Executive Officer Richard Steele, Chief Financial Officer Allenby Capital Limited (Nominated Adviser & Broker) +44 (0)20 3328 5656 James Reeve, Piers Shimwell (Corporate Finance) Jos Pinnington, Tony Quirke (Sales and broking)
Chairman's Statement
Introduction
I am pleased to introduce this Annual Report to shareholders, which reviews the first full financial year since our admission to trading on AIM. I am delighted to report that we have achieved considerable success over that year, with progress on all the strategic, financial and operational challenges we set ourselves.
Results and Dividend
We achieved a strong set of financial results for the year ended 31 December 2022, with all key financial metrics either ahead of or in line with our expectations at our IPO in December 2021. Revenue of GBP9.8 million was some 17% up on the prior year overall (2021: GBP8.4 million), and within that, the strategically important subscription-as-a-service (SaaS) revenue was up 28%. As anticipated, profitability has been impacted by the investment program we committed to at the time of the fund-raise to provide the workforce capacity and technology to drive sustainable growth. As such, adjusted EBITDA has reduced, as expected, to a loss of GBP0.3 million in the year (2021: adjusted EBITDA GBP1.1 million). Importantly, through proactive working capital management, the cash balance at the year-end decreased by only GBP0.2 million to GBP7.7 million (31 December 2021: GBP7.9 million).
The Board's stated policy is to maintain the full-year dividend at least at the recent historical level for the foreseeable future. We see that as an important financial discipline for a business with repeatable revenues that provide strong cash generation. Accordingly, at the AGM on 20 June, the Board will propose a final dividend per share of 0.279 pence. Combined with an interim dividend per share of 0.168 pence that was paid in November, this will take the full-year dividend to GBP400,000 (2021: GBP400,000) with the full-year dividend per share to 0.447 pence (2021: 0.447 pence).
Strategy
Skillcast's strategy remains as set out when we came to the AIM market in 2021. Our purpose is to enable companies to build ethical and resilient workplaces, and our vision is to be the leading provider of digital training and technology for staff compliance. We provide an integrated platform with engaging, customisable e-learning content, policy attestation hubs, registers for recording activities like CPD undertaken or gifts and hospitality received and the tools to monitor and administer all of the above.
Companies face an ever-increasing burden of compliance and, at the same time, are facing a real need to find efficiencies in the current cost-pressured environment. We believe these conditions provide a strong driver for growth in the digital compliance transformation market, which offers companies a genuine solution to these challenges. With Skillcast's experience in developing content and technology, we are uniquely placed to offer companies an easy-to-adopt, low-cost, high-value solution to the considerable challenges that businesses face.
We remain focused primarily on growing recurring subscription-based revenues by supporting existing clients with a range of products, and by acquiring similar new customers. We mainly target new clients in regulated industries where the burden of compliance is at its highest, although our services are equally applicable to all companies that have a need for efficient workplace compliance solutions. And whilst we can support companies of all sizes, our 'sweet spot' is medium-sized enterprises whose compliance requirements are increasingly complex but not large enough to warrant full bespoke solutions.
People and Organisation
The last twelve months have seen significant growth in headcount as we expanded the Skillcast team to drive the sustainable growth we delivered - our headcount increased from 88 to 111. I want to take this opportunity to welcome all of our new joiners and thank them and our existing staff for their hard work and success over the last year.
That increase in staff numbers has coincided with a very tight labour market and, of course, challenges and pressures all employees feel given the current economic climate. I want to pay tribute to Vivek and the executive team for how they handled the challenges that this presented and for the caring and compassionate solutions they have put in place to support the staff over the last year.
Shareholder Engagement
The one dark shadow over the year has been the share-price performance since flotation, which has been disappointing, particularly given the positive progress made on strategic, operational and financial targets. We recognise that the drivers of the reduction are much more related to market sentiment for SaaS-based technology businesses than for Skillcast specifically and are grateful for the support we have received from shareholders in this regard. We are following their advice to focus on driving the business and not reacting to the share price.
However, we recognise our responsibility to actively manage shareholder engagement activities to ensure that we communicate effectively with as wide a range of investors as possible. We have already instigated a plan to present the company more widely at investor events and plan a more active communication campaign over the next year. We welcome the opportunity to speak with existing and prospective investors and look forward to welcoming shareholders to our AGM on 20 June.
Current Trading and Outlook
We have entered the new financial year with a strong sales and product pipeline. We are well prepared to capitalise on the demand for digital compliance transformation and drive sustainable growth of our subscriber base.
We are starting to see the fruits of our post-IPO investments. We are attracting new customers with higher annual contract values, and our ARR at the end of Q1 2023 was 22% up year on year at GBP7.2 million (March 2022 ARR: GBP5.9 million).
We expect further improvements this year, led by the launch of our multi-lingual Global Risk and Compliance libraries in March and other content and SaaS product launches later this year. We have migrated all our clients to our new cloud-hosting platform, giving us a more scalable infrastructure for further growth.
Whilst not immune to the recent banking and wider economic concerns, we remain well diversified with over 1000 clients and 45% of revenues coming from non-financial services customers.
Trading since the period end has continued to increase on the prior year, driven by growing subscription revenues, and remains consistent with achieving market expectations.
Richard Amos
Non-Executive Chairman
25 April 2023
CEO's Review
I am pleased to present Skillcast's Annual Report for 2022, our first full year since the IPO in December 2021. It was a transformational year in which we recruited talent in key roles and shaped our strategy and organisational structure to position us for the next phase of revenue growth.
We strengthened our leadership team by appointing our full-time Chief Financial Officer, Richard Steele, and our Chief People Officer, Sharon Mulligan. We also used funds raised at the IPO to accelerate hiring talent in other key growth roles and for the move to cloud computing on Microsoft Azure. These initiatives led our overheads to grow faster than our revenues in 2022. We expect the gap between growth rates of revenue and overheads to narrow in 2023.
Purpose and vision
We run Skillcast with the purpose of enabling our customers to build ethical and resilient workplaces. Our vision is to become the leading provider of digital training and technology for staff compliance. Our strategic objectives reflect this vision. We are developing significant additional revenue streams with new products that widen our market in the UK and improve our product fit with the needs of companies in the EU. We are driving our brand awareness with our SkillcastConnect community and enhancing our RegTech tools with market research and insights.
We have implemented an organisational structure required to deliver our growth goals with clear roles and responsibilities. Our growth strategy for 2023 prioritises developing our existing talent, bringing in expertise in key areas and driving organic performance by focusing on customer success and experience.
Business model
Skillcast provides technology and content for companies to digitise their staff compliance training, record-keeping and monitoring to reduce costs and improve employee compliance experience. Further, by integrating these processes on a single platform, Skillcast helps customers make further efficiency gains and reduce the risk of compliance gaps.
The Skillcast off-the-shelf ("OTS") course libraries include Global Compliance and Global Risk libraries, available in multiple languages for multinational companies and Essential Compliance, FCA and Insurance Compliance libraries for companies in the UK.
The Skillcast technology includes a Learning Management System ("LMS"), a Policy Hub for authoring policies and obtaining employee attestations, Anonymous Surveys for obtaining honest and unreserved employee feedback, Staff Declarations for collecting disclosures and self-assessments from employees, Compliance Registers for recording activities such as gifts, hospitality, personal account dealing, whistleblowing, Training 360 for recording in-person training, mentoring, and consultations, Events Management for managing live training events, and SMCR 360 to help financial firms manage all aspects of Senior Managers and Certification Regime ("SM&CR") compliance. These technology tools are provided on a single integrated platform that helps companies to simplify their process, provide a consistent user experience and reduce the risk of compliance gaps.
The course libraries and the technology are provided on annual subscriptions to simplify the procurement process and enable customers to provide training and compliance tools to their staff with minimal effort and on short notice. The OTS courses and certain technology elements can be customised to fit each company's unique requirements.
Skillcast enables customers to manage their staff compliance burden efficiently by assigning them a designated Customer Success Manager ("CSM"). In 2022, for the fifth year in a row, Skillcast received a Feefo Platinum Trusted Service Award based on verified ratings and reviews by current customers.
High-quality revenues
Staff compliance is a non-discretionary cost for companies we serve, and 68% of our revenues came from content and technology subscriptions (2021: 62%), with the rest from professional services.
Subscriptions provide us with high-quality annual recurring revenues (ARR), which grew organically at 16% to GBP6.7 million in December 2022 (December 2021: GBP5.8 million).
Revenue from professional services, mainly from bespoke e-learning development for customers and customisation of OTS courses, was steady at GBP3.1 million (2021: GBP3.2 million).
Our total revenue increased by 17% to GBP9.8 million (2021: GBP8.4 million), and an adjusted EBITDA loss of GBP0.3 million (2021: GBP1.1 million). The Adjusted EBITDA loss was expected as we accelerated investment in talent and technology.
We typically contract with clients annually and invoice for the subscriptions upfront. This gives us high revenue visibility over the coming twelve months, and healthy cash flows from operations. Our free cash flow was +GBP0.3 million (2020: GBP1.1 million).
Growth initiatives
Our focus in 2023, as in previous years, is on growing the size of our ARR book. We believe Skillcast has a tremendous growth opportunity by helping companies digitise their staff compliance to reduce costs, improve employee experience and reduce the risk of breaches in the face of ever-growing regulations.
Our business model of recurring annual subscriptions provides a stable base we can build upon with product upsells and new customer acquisitions. Our investments over the past year enabled us to start 2023 with a flurry of new product launches.
On 1 February 2023, we launched our FastTrack product, which, when added to our OTS courses, enables experienced employees to demonstrate their compliance understanding with a pre-assessment and opt for a shorter version of the course. This improves employee acceptance of compliance training and saves staff time while ensuring full compliance.
On 1 March 2023, we launched our Global Compliance and Global Risk courses, which open up the market for multinational companies, particularly in Europe, that need their courses to be based on global best practices and be available in multiple languages.
In the coming months, we will launch other content and technology products that help with upsells and new customer acquisitions.
We will also launch a new self-service plan in 2023 to supply compliance training to small UK businesses. We already serve this market segment, but we believe that we can substantially increase our penetration of this segment with the new service plan that is more affordable, easy to manage and customised for industry sectors.
Migration of our application to Microsoft Azure has enhanced our service's speed, reliability and security, helping us maintain our reputation as trustworthy custodians of our customers' data. It also provides the scalability we need to support future growth in the customer base.
We have created Microsoft Azure AD gallery apps to help customers implement single sign-on and user provisioning. We have also added integrations with other applications, including Slack, HiBob, Workday, PeopleHR, BambooHR, Degreed, Skillsoft, and Harvard ManageMentor.
ESG
Our business and products exist to support the ESG goals of our corporate customers. We help them build inclusivity, integrity and compliance in the workplace, and by digitising many activities that previously required travel, we help them reduce energy consumption and carbon emissions. In doing so, we are also conscious of our own environmental and social performance.
We are proud to have achieved Carbon Neutral status in 2022 by measuring and offsetting our emissions and are committed to reducing our carbon emissions further. We have operated as a Living Wage employer since 2019. We are investing in developing skills and decision-making in our diverse workplace.
We believe that our employees' innovation, customer focus, teamwork and aspiration are the key to achieving our corporate vision.
Vivek Dodd
Chief Executive Officer
25 April 2023
Financial Review
Revenues for the year ended 31 December 2022 increased by 17% to GBP9.8 million (2021: GBP8.4 million), driven by new subscription customers, with ARR** climbing 16% on the year to GBP6.7 million (2021: GBP5.8 million). As a consequence of our planned investment programme, adjusted LBITDA* was a loss of GBP0.3 million (2021: EBITDA +GBP1.1 million). Improved working capital helped maintain net cash at year-end of GBP7.7 million, 2% below last year (2021: GBP7.9 million), and generate positive free cash flow of GBP0.3 million (2021: GBP1.1 million).
Key Performance Indicators
Key performance indicators (KPIs) are tracked through monthly reviews against targets approved by the Board.
2022 2021 % change
GBP'000 GBP'000
---------------------------------------------------- --------- --------- ---------
Revenue 9,830 8,408 +17%
Software-as-a-service revenue (SaaS revenue) 6,690 5,227 +28%
Gross Margin 70.1% 70.5% -0.4 pts
**Adjusted (LBITDA)/EBITDA -316 1,055 n/a
*Annual recurring (SaaS) revenue (ARR) as at 31.12 6,751 5,818 +16%
Churn (as a percentage of ARR) 12% 8% +4pts
Deferred revenue from subscriptions 3,213 2,695 +19%
Cash at 31 December 7,704 7,856 -2%
---------------------------------------------------- --------- --------- ---------
Free cash flow 271 1,117 -76%
---------------------------------------------------- --------- --------- ---------
Number of employees at 31 December 111 88 +26%
---------------------------------------------------- --------- --------- ---------
*and** defined later in the financial report in Alternative Performance Measures section
Revenue
Total revenues of GBP9.8 million were 17% up on the comparable period last year (2022: GBP8.4 million), driven by software-as-a-service ("SaaS") subscription revenues, predominantly from new clients. Subscription revenues typically accrue from twelve-month contracts, invoiced up front, for our compliance e-learning libraries and compliance technology. During 2022, subscription revenue growth helped grow the proportion of revenues from subscriptions to 68% (2021: 62%) of total revenues. 91% of subscription revenues were derived from our core e-learning products, with the remaining 9% of subscription revenues delivered from our suite of "Regtech" products (2021: 7%).
Subscription ("SaaS") revenues grew 28% to GBP6.7 million (2021: GBP5.2 million). The growth in subscription revenues was driven by a combination of new clients and product upsells/more users.
*Annual recurring revenue (ARR), our key performance indicator to measure subscription sales progress, grew by 16% to GBP6.8 million over the past 12 months (2022: GBP5.8 million). New sales lifted ARR by 25% from December 21, offset by a net retention rate of 90%, which included 12% churn. 2022 churn was elevated due to the loss of three EU-based clients. Underlying churn, excluding these clients, remained below 10%, in line with prior years. The Group launched two global libraries that improve the product fit with our remaining EU clients and reduce their churn risk.
Revenue from professional services was GBP3.1 million, which was 1% below the same period last year (2021: GBP3.2m), in line with our strategy to maintain these lower margin revenues at consistent absolute levels.
Total client numbers grew to over 1000 in 2022 with 45% of revenues coming from sectors other than financial services.
Gross profit
Gross Margin fell 0.4 percentage points to 70.1% (2021: 70.5%). Transitional costs impacted the fall while clients were migrated from server-hosted sites to more resilient cloud-hosted sites.
Investing for growth
Total overheads before exceptional IPO-related costs in the prior year of GBP0.9 million grew by GBP2.4 million to GBP7.4 million (2021: GBP5.0 million) as the Group invested in driving future growth as intended. Most of this investment was in people as the Group accelerated hiring to improve future growth. On 31 December 2022, the total headcount had increased to 111 (31 December 2021: 88). Total average headcount increased in 2022 by 27% to 100 (2021: 78). The largest area of growth was in the sales and marketing function with an average of 12 more heads during the period.
**Adjusted EBITDA/LBITDA
As anticipated, and due to the increased investment, the Group delivered an adjusted loss of earnings before interest, tax, depreciation and amortisation (LBITDA) of GBP0.3 million in 2022 (2021: +GBP1.1 million). This profit performance reflects the intended investment programme, supported by the fundraising in December 2021.
Tax
The Group reported a loss before tax of GBP0.6 million in the year and consequently was not liable for any corporation tax in its UK or Malta jurisdictions.
The Group had unutilised tax losses carried forward of approximately GBP1.3 million as of 31 December 2022 (2021: GBP0.7 million) due predominantly to research and development credits. These are expected to increase in 2023 through trading losses and further research and development claims. Given the varying degrees of uncertainty as to the timescale of the utilisation of these losses, the Group has not recognised the potential deferred tax assets associated with these losses.
In Malta, a withholding tax rebate of GBP136,983, due to Inmarkets Group Ltd regarding dividends declared by Inmarkets International Ltd for 2021, is reflected as a tax credit in 2022. The rebate is based upon dividends declared by Inmarkets International Ltd and paid to Inmarkets Group Ltd during 2022. Its settlement depends upon all necessary tax returns filed and accepted by the relevant authorities.
No rebate was received in 2022 by Inmarkets Group Ltd (2021: GBP355,178) in relation to dividends declared by Inmarkets International Ltd. The balance due to the Inmarkets Group Ltd for all Maltese tax rebates as at 31 December 2022 was GBP854,903.
Earnings per share (EPS)
Following the share issue in December 2021 at the time of the IPO, no ordinary shares were issued in 2022, and the basic loss per share was -0.460 pence on 89.5m shares (2021 EPS: +0.467 pence).
Dividends
With a business backed by recurring revenues that provide strong cash generation, the Board is committed to paying dividends. The Board is recommending a final dividend of 0.279 pence per share which, together with the 0.168 pence interim dividend paid in October 2022, gives a total dividend of 0.447 pence. The final dividend will be paid on 21 July 2023 to shareholders on the register on 30 June 2023.
The Board's policy is to at least maintain the total aggregate annual dividend of GBP400,000, consistent with previous years, for the foreseeable future.
Balance sheet and cash flow
Net assets at 31 December 2022 were GBP6.6 million (31 December 2021: GBP7.2 million). The GBP0.6 million reduction in the year was due to the GBP0.4 million reduction in comprehensive income in the year from planned investments and GBP0.4 million of dividend payments, partly offset by GBP0.2 million increase in the share option reserve.
Non-current assets of GBP0.9 million at 31 December 2022 represented no material change on the prior year. The Group does not capitalise any intellectual property additions to its products' content or technology, opting to expense them as they are incurred. The Group expenses all product and technology development. Non-current assets reflect computer hardware and software and office furniture and fittings, and the right of use value of its office leases in London and Malta in accordance with IFRS 16. During the year, the Group extended the lease on its Malta office to September 2028.
Current assets, excluding cash, were GBP3.3 million at 31 December 2022 (31 December 2021: GBP3.8 million). This predominantly includes trade receivables which, despite the 17% growth in revenue during the year, fell 17% to GBP2.1 million at 31 December 2022 (31 December 2021: GBP2.6 million) due to improved credit control. Debtor days at 31 December 2022 were 48 (31 December 2021: 66) as a result of a significant reduction in overdue debt. Debtors more than 60 days overdue represented 20% of trade receivables at 31 December 2022 (31 December 2021: 41%). A further GBP0.9m of trade receivables is due from the Maltese tax authorities relating to withholding tax rebates on dividends declared from Inmarkets International Ltd and payable to Inmarkets Group Ltd.
Total liabilities at 31 December 2022 of GBP5.3 million showed no net movement during the year, mainly comprising trade payables, deferred revenue and the liability on the London and Malta office leases. Deferred revenue reflects the unrecognised revenue of signed contracts. The majority of this balance relates to subscription revenues which, at 31 December 2022, were GBP3.2 million, 19% higher than at the same time in the previous year (31 December 2021: GBP2.7 million).
The Group has no bank debt and at 31 December 2022, held cash of GBP7.7 million (31 December 2021: GBP7.9 million). Free cash flow during the year remained positive at GBP0.3m (2021: GBP1.1m) despite the Group generating a loss, after the planned accelerated investment, primarily due to reduced trade receivables.
Alternative Performance Measures
The Group elects to report certain financial measures not defined or recognised under IFRS, including adjusted EBITDA and EPS and Annual Recurring Revenue (ARR) defined below.
**Adjusted EBITDA/LBITDA
The Group elected to adjust its EBITDA from continuing operations for non-recurring costs in connection with its IPO in December 2021. It also elected to adjust EBITDA by reversing the IFRS treatment of depreciation of property leases and the share-based payment charges included in adjustments in the 2021 report. The Group now accepts these are recurring items, and no longer elects to adjust. There were no adjusting items in the twelve months ended 31 December 2022.
2022 2021 2021
GBP'000 GBP'000 GBP'000
Audited Re-stated Audited
LBITDA/EBITDA from continuing operations (316) 360 360
IPO costs 0 876 876
Reversal of IFRS treatment of depreciation
of property lease (198)
Share-based payment 17
Adjusted LBITDA/EBITDA (316) 1,237 1,056
*Annual Recurring Revenue (ARR)
ARR is also used to assess the performance and the trend of subscription revenue. ARR is calculated by multiplying the Monthly Recurring Revenue ("MRR") by twelve. MRR is defined as the subscription revenue recognised in a month, excluding any retrospective upward adjustments arising at the end of the contract where there have been more subscribers than a client originally contracted for, less any contract losses (Churn) or downward adjustments arising on contract renewal. The Directors consider that the ARR, derived from software-as-a-service (SaaS) sales, is a key measure of the performance of the business. The ARR increased 16% in the year to GBP6.8 million at 31 December 2022.
Richard Steele
Chief Financial Officer
25 April 2023
Consolidated statement of profit or loss and other
comprehensive income
For the year ended 31
December
2022
Note 2022 2021
GBP GBP
Revenue 4 9,830,431 8,408,056
Cost of sales (2,942,092) (2,476,708)
Gross profit 6,888,339 5,931,348
Administrative expenses (7,442,068) (5,853,792)
Operating profit (553,729) 77,556
EBITDA 3 (316,314) 360,345
Adjustment items 3 - 695,472
----------------------------------- ------------------------------
Adjusted EBITDA 3 (316,314) 1,055,817
------------------------------ ----- ----------------------------------- ------------------------------
Other Income 3,013 1,650
Finance income 15,996 393
Finance expense (21,307) (18,953)
Profit before tax 5 (556,027) 60,646
Income tax rebate 7 144,237 316,984
Profit after tax and total
comprehensive income (411,790) 377,630
=================================== ==============================
Earnings per share:
Basic 17 -0.460p 0.467p
Diluted 17 N/A 0.465p
------------------------------ ----- ----------------------------------- ------------------------------
EPS Basic Adjusted 17 -0.460p 1.328p
------------------------------ ----- ----------------------------------- ------------------------------
Consolidated statement
of financial position
As at 31
December
Note 2022 2021
GBP GBP
Assets
Non-current
assets
Property, plant
and equipment 10 254,288 276,697
Right-of-use
assets 11 616,024 582,517
Deferred tax
assets 15 11,999 4,745
882,311 863,959
Current assets
Trade and other
receivables 8 3,330,574 3,798,823
Cash and cash equivalents 9 7,704,003 7,856,126
11,034,577 11,654,949
TOTAL ASSETS 11,916,888 12,518,908
============================== ================================
Issued capital and reserves
attributable to owners
Share capital 16 89,459 89,459
Share premium
reserve
Share Premium 3,490,541 3,490,541
Share Option
Reserve 20 223,331 17,000
Retained earnings 2,812,695 3,624,369
Total equity 6,616,026 7,221,369
------------------------------ --------------------------------
Liabilities
Current liabilities
Trade and other
payables 12 1,199,370 1,440,550
Contract liability 13 3,437,764 3,037,184
Current lease
liabilities 188,586 182,366
Income tax
payable 14 16,320 176,134
4,842,040 4,836,234
Non-current
liabilities
Long-term lease
liabilities 458,822 461,305
458,822 461,305
Total liabilities 5,300,862 5,297,539
--------------------------------
TOTAL EQUITY AND
LIABILITIES 11,916,888 12,518,908
============================== ================================
Consolidated
statement
of changes in
equity
For period ended
31 December
2022
Share Share
Share Premium Option Retained Total
capital Paid Reserve earnings equity
01 January 2021 2,000 - - 3,874,738 3,876,738
Comprehensive
Income
for the period
Profit - - - 377,630 377,630
Total
comprehensive
Income
for the period - - - 377,630 377,630
Total
contributions by
and distributions
to owners
Capitalisation of
Profit
and Loss 78,000 - - (78,000) -
Shares issued on
admission
to AIM 9,459 3,490,541 - - 3,500,000
Share Option
Reserve - - 17,000 - 17,000
Dividends - Prior
Year (400,000) (400,000)
Dividends - Current
Year - - - (150,000) (150,000)
Total
contributions by
and
distributions to
owners 87,459 3,490,541 17,000 (628,000) 2,967,000
31 December 2021 89,459 3,490,541 17,000 3,624,368 7,221,368
============================= ============================= ============================= ============================= =============================
01 January 2022 89,459 3,490,541 17,000 3,624,368 7,221,368
Comprehensive
Income
for the period
Profit - - - (411,790) (411,790)
Total
comprehensive
Income
for the period - - - (411,790) (411,790)
Total
contributions by
and distributions
to owners
Share Option
Reserve - - 206,331 - 206,331
Dividends - Prior
Year (249,592) (249,592)
Dividends - Current
Year - - - (150,292) (150,292)
Total
contributions by
and
distributions to
owners - - 206,331 (399,884) (193,553)
31 December 2022 89,459 3,490,541 223,331 2,812,694 6,616,025
============================= ============================= ============================= ============================= =============================
Consolidated statement
of cash flows
For the year ended 31
December
2022 2021
GBP GBP
Cash flows from operating
activities
Profit before tax (556,027) 60,646
Adjustments for:
Depreciation of property,
plant and equipment 88,405 84,668
Amortisation of
right-of-use
assets 149,010 198,121
Finance income (15,996) (393)
Share based payment 206,331 17,000
Finance expense 21,307 18,953
(106,970) 377,345
Decrease in trade and
other
receivables 468,248 (324,474)
Increase in trade and other
payables,
including contract
liabilities 159,399 1,456,609
Cash generated from
operations 520,677 1,509,480
Income taxes paid (22,831) (10,629)
Net cash flows from
operating
activities 497,846 1,498,851
----------------------------------------- -------------------------------------
Investing activities
Purchases of property,
plant
and equipment (65,995) (242,612)
Interest received 15,996 393
Net cash used in
investing
activities (49,999) (240,569)
----------------------------------------- -------------------------------------
Financing activities
Principal paid on lease
liabilities (178,779) (133,007)
Dividends paid (399,884) (550,000)
Share Issued - 3,500,000
Interest paid on lease
liabilities (21,307) (18,953)
Net cash from/(used) in
financing activities (599,970) 2,798,040
----------------------------------------- -------------------------------------
Net increase in cash and
cash equivalents (152,123) 4,056,322
Cash and cash equivalents
at
beginning of period 7,856,126 3,799,804
Cash and cash equivalents
at end of period 7,704,003 7,856,126
========================================= =====================================
Notes to the consolidated financial statements
1 General Information
Skillcast Group PLC ('Company') is registered in the United Kingdom with registration number 12305914 and is limited by shares. Its registered office is at 80 Leadenhall Street, London, England, EC3A 3DH. The Company is the ultimate parent of Inmarkets Ltd, Inmarkets Group Ltd and Inmarkets International Ltd.
This report and financial statements reflect the consolidated activities and transactions of the Company and other group companies ('Group').
Up to the 28 July 2021 the Company was a private limited company. On the 28 July 2021 the Company re-registered as a public company as Skillcast Group PLC. The Company did this in preparation of admission to the AIM market of the London Stock Exchange. On 1 December 2021 the Company's ordinary shares were admitted in trading on AIM.
The Company is primarily involved in providing management services to other entities in the group. The Group provides software and content subscriptions and related professional services to enable companies to transform their staff compliance. Operating from its two bases, in London and Malta, the Group helps companies across a broad spectrum of industry sectors in the UK, EU and in the rest of the world, to train their staff and demonstrate compliance with various laws, regulations, and standards that are relevant for their business.
2.1 Basis of preparation and statement of compliance
The Financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 2022 or 2021 but is derived from the 2022 accounts.
A copy of the statutory accounts for the year to 31 December 2022 is available on the Company's website and will be delivered to the Registrar of Companies following the Company's AGM. The auditors have reported on those accounts, their report was (i) Unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2021 nor 2022.
Whilst the financial statements from which this announcement is derived have been prepared in accordance with UK-adopted International Accounting Standards and applicable law, this announcement does not itself contain sufficient information to comply with the UK-adopted International Accounting Standards. The Annual Report, containing full financial statements that comply with UK-adopted International Accounting Standards, will be sent to shareholders later in May 2023.
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Therefore, in the preparation of the 2022 financial statements they continue to adopt the going concern basis These financial statements have been prepared in accordance with UK adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006. They have been prepared under the historical cost convention and on a going concern basis.
The financial statements are presented in Pounds Sterling, which is the Group's presentation currency.
2.2 Changes in Accounting Policies and Disclosures
The Company has adopted all of the new or amended UK adopted International Accounting Standards and Interpretations that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted for the annual reporting period ended 31 December 2022. The Company has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
2.3 Summary of significant accounting policies
Revenue recognition
Software as a Service (SaaS) subscriptions
The Group provides subscriptions to its right of access of content and technology products to clients for subscription periods ranging from six tothat are typically twelve months.
Revenue is recognised evenly over the contractual period of the subscription as the client simultaneously receives and consumes the benefits of the Group's services.
The balance of the revenue which has not been recognised at the reporting date is deferred as a contract liability in current liabilities, until it is due to be recognised as revenue.
Where a contract includes multiple performance obligations, the transaction price is allocated to each performance obligation based on the stand-alone selling prices.
Professional services
The Group provides customised and standard content to its clients provided under fixed-price contracts which is generally non-recurring revenue.
Fixed price contracts are recognised on the percentage of completion method unless the outcome of the contract cannot be reliably determined, in which case contract revenue is only recognised to the extent of contract costs incurred that are recoverable. This is because either the Group is creating an asset with no alternative use to it and the contract contains the right to payment for work completed to date, or the client is simultaneously receiving and consuming the benefits of the Group's services as it performs.
Business development costs incurred as part of a bid or tender process are expensed as incurred. There are no material costs incurred during the period between the contract being awarded and service delivery commencing.
For fixed-price contracts, the client pays the fixed amount based on a payment schedule. If the services rendered by the Group exceed the payment, an amount recoverable on contract assets is recognised. Conversely, if the payments exceed the services rendered, a liability is recognised.
Amounts recoverable on contracts are included in current assets and represent revenue recognised on account.
Segmentation
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision-maker (which takes the form of the Board of Directors of the Group), in order to allocate resources to the segment and to assess its performance. The Directors of the Group consider the Group is organised as one business unit and all assets, liabilities, revenues and expenditure are retained and recorded as such. However, the Group does segment revenue by type of revenue, namely SaaS subscriptions and Professional Services, and on a geographic basis.
Foreign currencies
The financial statements are presented in the Company's functional currency, Pounds Sterling, being the currency of the primary economic environment in which the Group operates. Transactions denominated in currencies other than the functional currency are translated at the rates of exchange ruling on the date of transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are re-translated to the functional currency at the exchange rate ruling at year end. Exchange differences arising on the settlement and on the re-translation of monetary items are dealt with in the statement of comprehensive income, except in the case of significant exchange differences arising on investing or financing activities, which are classified within investment income, investment losses or finance costs as appropriate.
Taxes
Current and deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the current and deferred tax is also dealt with in other comprehensive income or in equity, as appropriate.
Current tax is based on the taxable result for the period. The taxable result for the period differs from the result as reported in profit or loss because it excludes items which are non-assessable or disallowed and it further excludes items that are taxable or deductible in other periods. It is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.
Current tax assets and liabilities are offset when the Group has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to set off its current tax assets and liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
In Malta, Inmarkets Group Ltd is able to reclaim a proportion of the corporation tax paid by its subsidiary, Inmarkets International Ltd, as long as it meets certain criteria laid down by the Maltese tax authorities. The criteria include that the relevant corporation tax has been paid by Inmarkets International Ltd and that dividends to Inmarkets Group Ltd have been declared by Inmarkets International and are payable to non-Maltese tax resident shareholders. It is Group policy to reclaim Maltese corporation tax to the fullest extent permissible and to recognise this income in Inmarkets Group Ltd based upon dividends declared, or that will be declared once tax returns are completed, for the financial year. The reclaimed corporation tax is presented as netted off with the income tax expense and in other receivables.
3 EBITDA and adjusted
EBITDA
The Group elected to adjust its EBITDA from continuing operations
for non-recurring costs in connection with its IPO in December
2021. It also elected to adjust EBITDA by reversing the IFRS
treatment of depreciation of property leases and share-based
payment charges. The Group now accepts these are both recurring
items and no longer elects to adjust for them.
As adjusted Audited
2022 2021 2021
GBP GBP GBP
Operating profit (553,729) 77,556 77,556
Depreciation 88,405 84,668 84,668
Amortisation 149,010 198,121 198,121
EBITDA (316,314) 360,345 360,345
Rent equivalent - (198,005)
Non-recurring expenditure - 876,477 876,477
Share-Based Payments - 17,000
Adjusted EBITDA (316,314) 1,236,822 1,055,817
---------------------------- ---------------------- ---------------------------
Due to the nature of the calculation of EBITDA and adjusted
EBITDA, the reported figures may not be comparable to other
companies with similar measures.
4 Revenue
2022 2021
GBP GBP
Major product lines
Software as a Service (SaaS)
subscriptions (i) 6,689,710 5,227,229
Professional services
(ii) 3,140,721 3,180,827
9,830,431 8,408,056
---------------------------- ---------------------------
(i) SaaS subscriptions - The Group provides subscriptions
to its content and technology products to the customer for
subscription periods that are typically twelve months . The
revenue is recognised evenly over the period of subscription.
This revenue includes subscriptions to: (a) Skillcast Portal
- the Group's integrated compliance management application
that comes with a broad range of tools, namely SELMS, Policy
Hub, Compliance Declarations, Surveys, Compliance Registers,
Training 360, Events Management and SMCR 360; and (b) the
Skillcast OTS course libraries, namely Essentials, FCA Compliance,
Insurance Compliance and Risk.
(ii) Professional services - The Group provides customised
and standard content to its clients under fixed-price contracts.
This non-recurring revenue includes: (a) bespoke e-learning
development projects for large corporates; (b) translations
of those bespoke courses; (c) customisation of OTS courses
for subscription clients; and (d) other content and technology
consultancy.
2022 2021
GBP GBP
Geographic split
UK 7,627,351 5,716,503
Europe 1,344,694 1,693,379
Rest of world 858,386 998,175
9,830,431 8,408,056
---------------------- ------------------------
Non-current assets in which they are
based are shown below:
Property, plant, and
equipment
UK 197,744 205,003
Malta 56,544 71,694
254,287 276,697
---------------------- ------------------------
Right of use assets
UK 365,968 465,188
Malta 250,056 117,329
616,024 582,517
---------------------- ------------------------
5 Profit before taxation
The profit before taxation is stated after charging the following
amounts:
2022 2021
GBP GBP
Staff cost (CoS) 1,846,407 1,536,011
Subcontracted services
(CoS) 797,125 865,251
Staff costs (Admin) 4,835,911 3,173,390
Directors' compensation 848,496 565,345
Professional fees 215,534 228,735
Depreciation and amortisation
expense 237,415 282,789
Fees payable to the Company's auditor for
the audit of Parent and Subsidiaries 73,870 87,483
Expenses related to the Admission
into AIM 0 876,477
------------------------------------------ ---- -------------------- ----------- ---------------------- ------------ ------------------------
Included in the prior year expenses related to the admission into AIM was payments made to Crowe UK LLP, who are engaged as the Company's auditors, of GBP110,000. There were no non-audit fees incurred by Crowe UK LLP in 2022.
6 Staff costs and employee
information
2022 2021
GBP GBP
Salaries & wages 6,488,702 4,609,966
Social security costs 718,605 499,630
Pension 102,924 70,043
Share-based payment
expenses 206,331 17,000
Other payroll costs 14,252 6,107
7,530,814 5,202,746
---------------------- ------------------------
The Group companies contribute towards the state pension in accordance
with local legislation. The only obligation of the companies is to
make the required contributions. Costs are expensed in the period
in which they are incurred.
Number of staff
The average number of persons employed by the Group during the year
was 100, and at December 2022 the number of persons employed was 111,
analysed by category as follows:
At 31 At 31 Average Average
December December
2022 2021 2022 2021
Directors 7 7 7 5
Administration 2 1 2 1
Client Service 23 19 21 18
Operations/Production 24 21 23 19
Sales & Marketing 33 21 27 19
Finance 4 4 4 3
Technology 18 15 17 13
111 88 100 78
========== ========== ====================== ========================
Key management personnel
The remuneration of key management personnel (considered to be
the Directors and Senior Management) is GBP1,267,456 (2021: GBP988,699)
and is set out below in aggregate for each of the categories specified
in IAS24: Related Party Disclosures. Compensation has been disclosed
in this note, while further information can be found in the remuneration
report of the annual report and accounts.
2022 2021
Directors Senior Total Directors Senior Management Total
Management
GBP GBP GBP GBP GBP GBP
---------- ----------------------------------- ---------- ---------- ----------------------------------- --------
Wages and
Salaries 820,346 93,757 914,103 493,345 59,432 552,777
Social
Security 114,772 2,384 117,156 63,280 2,173 65,453
Pension 11,597 - 11,597 6,600 - 6,600
Share-based
payment
expenses 20,743 9,174 29,917 915 634 1,549
Consultancy
fees 55,190 139,493 194,683 224,130 138,190 362,320
1,022,648 244,808 1,267,456 788,270 200,429 988,699
========== =================================== ========== ========== =================================== ========
Chris Backhouse resigned as a Director on 11 May 2022 and Richard
Steele joined as a Director on 11 May 2022. Chris Backhouse is
a director in Enterprise FD Ltd. The Company made payments to Enterprise
FD Ltd for financial director and related services of GBP55,190
in the year ended 31 December 2022 (2021: GBP152,130). Morten Damsleth,
whose remuneration is included in Senior Management above, is the
owner of Monad IKE. The Company made payments to Monad IKE for
operations director and related services of GBP139,493 (2021: GBP138,190).
Vivek Dodd, Director, ceased being a consultant and became employed
as of 1 October 2021. Prior to him becoming employed the Company
paid GBP72,000 to him as a consultant in 2021.
The Company made contributions to defined contribution personal
pension schemes for four Directors in the period (2021: three).
7 Income tax
expense
2022 2021
GBP GBP
Current tax on profits
for the year - 169,798
Deferred tax
expense (7,254) 367
Withholding taxes credit on intercompany
dividends (136,983) (487,149)
(144,237) (316,984)
----------------------------------- -------------------------------
A reconciliation of the current income tax expense applicable to
the profit before taxation at the statutory rate to the current income
tax expensed at the effective tax rate of the Company is as follows:
2022 2021
GBP GBP
Profit(loss) before
taxation (556,027) 60,646
----------------------------------- ----------------------------------
Tax calculated at applicable UK
statutory tax rate of 19% (105,645) 11,523
Tax effects of:
-Expenses not deductible
for tax purposes 52,481 195,150
-Taxable losses carried
forward 491,791 234,361
-Withholding tax credit on intercompany
dividends (136,983) (487,149)
-Research and Development
Credits (520,000) (112,691)
-Differing tax rates due to trade in
different jurisdictions 9,002 (125,230)
-Other adjustments 65,117 (32,948)
Current income tax (144,237) (316,984)
=================================== ==================================
The Company provides for income taxes on the basis of its income for
financial reporting purposes, adjusted for items that are not assessable
or deductible for income tax purposes in accordance with the regulation
of domestic tax authorities.
The effective rate of tax for the year ended 31 December 2022 was
-26% (2021: -525%). This effective tax rate is a combination of the
following items:
* the tax rates and tax regimes in the UK and Malta in which the businesses
of the Company operate;
* the diverse tax treatments of deferred consideration amounts applied
in each jurisdiction;
* the tax loss carry forward regulations in different jurisdictions.
The tax rates applicable in the jurisdictions are:
* UK: The applicable statutory tax rate for 2021/20 is 19%
* Malta: Income taxes are due at 35% of taxable income.
In 2022 a withholding tax rebate of GBP136,983 (2021: GBP487,149)
is netted against the income tax expense. The rebate relates to withholding
taxes on dividends declared by Inmarkets International Limited to
the Inmarkets Group Limited.
As of the end of the period the Post 1 April 2017 loss carry forward
was GBP1,218,613, and the Pre 1 April 2017 loss carry forward was
GBP69,877 for the Company.
8 Current assets - trade
and other receivables
2022 2021
GBP GBP
Trade receivables 2,120,467 2,569,083
Less: Allowance for expected
credit losses (92,514) (125,286)
2,027,953 2,443,797
---------------------------- ---------------------------
Prepayments and contract
assets 387,669 415,073
Maltese withholding
tax 854,903 825,213
Other receivables 60,049 114,740
1,302,621 1,355,026
---------------------------- ---------------------------
As of 31 December 2022, trade receivables totalled GBP2,120,467
(2021: GBP2,569,083) were past due but not impaired. These primarily
relate to customers for whom there is considered a low risk of
default. An allowance of GBP92,514 (2021: GBP125,286) have been
set up to offset credit risks.
During the year no withholding tax rebates were received by the
Company (2021: GBP355,178). Of the GBP854,903 owing at 31 December
2022 GBP226,846 has been filed and expected to be paid by 31 December
2023. The claim for the remaining balance is in the process of
being filed.
9 Current assets - cash
and cash equivalents
2022 2021
GBP GBP
Cash at bank 7,704,003 7,853,451
Cash at hand - 2,675
7,704,003 7,856,126
----------------------------------- ------------------------------
2022 2021
GBP GBP
Geographic
split
United Kingdom 4,935,131 5,359,938
Malta 2,768,872 2,496,188
7,704,003 7,856,126
----------------------------------- ------------------------------
2022 2021
GBP GBP
Cash Held by Currency
(in Pound Sterling)
Pound Sterling 7,592,698 7,492,134
Euro 57,925 350,138
US Dollar 53,380 13,854
7,704,003 7,856,126
----------------------------------- ------------------------------
Non-current assets - property,
10 plant, and equipment
Reconciliations of the written down values at the beginning and end
of the current and previous financial year are set out below:
Computer Furniture Office Leasehold Total
Software and Fixtures Equipment Improvements
& Hardware
Balance at 1
January
2021 70,386 45,069 3,298 - 118,752
Additions 66,747 49,713 1,705 124,447 242,612
Disposals - - - - -
Depreciation
expense (49,613) (11,602) (2,712) (20,741) (84,668)
Balance at 31
December
2021 87,520 83,180 2,291 103,706 276,696
------------------------ ------------------------ ------------------------ --------------------------- ------------------------
Balance at 1
January
2022 87,520 83,180 2,291 103,706 276,696
Additions 53,452 12,064 479 - 65,995
Disposals - - - - -
Depreciation
expense (53,644) (12,600) (1,420) (20,741) (88,404)
Balance at 31
December
2022 87,328 82,645 1,350 82,965 254,287
------------------------ ------------------------ ------------------------ --------------------------- ------------------------
Non-current assets -
11 Right-of-use assets
Reconciliations of the written down values at the beginning and end
of the current and previous financial periods are set out below:
Leasehold Car leases Total
property
Balance at 1 January
2021 247,003 16,350 263,353
Additions 517,284 - 517,284
Disposals - - -
Amortisation expense (189,174) (8,946) (198,121)
Balance at 31 December
2021 575,113 7,404 582,517
------------------------ ------------------------ ------------------------
Balance at 1 January
2022 575,113 7,404 582,517
Additions 182,516 - 182,516
Disposals - - -
Amortisation expense (146,978) (2,031) (149,010)
Balance at 31 December
2022 610,651 5,373 616,024
------------------------ ------------------------ ------------------------
The Group leases its offices, typically for a period of several years,
with an option to extend (see note 21). On renewal, the terms of
the lease are renegotiated. Prior to 2019, the Group recognised expenditure
related to office rents in relation to the period to which it related.
From 2019 it recognised right-of-use assets in accordance with IFRS
16. On 23rd May 2021, the Company's UK Subsidiary moved to a new
office located at the 3rd Floor, Leadenhall Street, London, UK, the
present value of this lease was calculated at GBP517,284. The new
lease will expire on the 23rd May 2026. On 20th September 2022, the
Company's Malta Subsidiary renegotiated its lease with its landlord,
essentially modifying the old lease. The present value of this lease
modification was calculated at GBP406,715. The modified lease's Initial
Term will expire on 30th September 2025, with an Extended Term then
expiring on 30th September 2028.
12 Current liabilities - trade
and other payables
2022 2021
GBP GBP
Trade payables 186,783 180,452
Accruals 550,987 444,141
Amount due to shareholders 450 450
Sales and payroll taxes 433,466 758,094
Wages & Pension payable 27,684 57,413
1,199,370 1,440,550
------------------------------- -------------------------------
13 Current liabilities -
Contract liability
2022 2021
GBP GBP
Deferred revenue - Subscriptions 3,212,733 2,695,496
Deferred revenue - Professional
Services 225,031 341,688
Deferred revenue 3,437,764 3,037,184
--------------------------- ---------------------------
Contract liabilities represent subscription revenue that has
not been recognised at the reporting date, as performance obligations
remain. Subscription revenue is recognised over the subscription
period, which is generally 12 months. Contract liabilities from
Professional Service contracts are recognised on a percentage
of completion at the end of the reporting period as per IFRS15.
14 Current liabilities -
Income tax
2022 2021
GBP GBP
Corporation tax payable 16,320 176,134
---------------------------- ---------------------------
15 Non-current liabilities
- Deferred tax
The deferred tax (liability)/asset
for the year is analysed as follows. 2022 2021
GBP GBP
At beginning of the period 4,745 5,112
Credited to statement of
comprehensive
income 7,254 (367)
At end of the period 11,999 4,745
------------------------------ ------------------------------
Deferred tax asset
Temporary differences - on
non-current
assets due to accelerated tax
depreciation 11,999
------------------------------
Deferred tax liability - on
non-current
assets due to accelerated tax
depreciation 4,745
------------------------------
Equity - issued capital
16
2022 2021
GBP GBP
Number 89,459,460 89,459,460
Par value per share 0.10p 0.10p
Total 89,459 89,459
----------------------- -----------------------
All the shares in the Company are fully paid up. On 28 July 2021 the
Company re-registered as a public company. Prior to re-registration,
the company's shares were reclassified as Ordinary Shares, and the company
capitalised GBP78,000 of retained profit in order to meet the minimum
capital value for these shares required of a public company. The shares
were also consolidated into 1 share for every 10 in issue. On 1 December
2021 9,459,460 additional shares were issued upon the Company's admission
to the Alternative Investment Market.
Ordinary shares entitle the holder to participate in dividends and the
proceeds on the winding up of the Company in proportion to the number
of, and amounts paid, on the shares held. On a show of hands, every
member present at a meeting in person or by proxy shall have one vote
and upon a poll, each share shall have one vote.
Earnings per share
17
Earnings per share (EPS) is calculated on the basis of profit attributable
to equity shareholders divided by the weighted average number of shares
in issue for the year.
Diluted earnings per share have been calculated on the same basis
as above, except that the weighted average number of ordinary shares
that would be issued on the conversion of the dilutive potential ordinary
shares as calculated using the treasury stock method (arising from
the Company's share option scheme and warrants) into ordinary shares
has been added to the denominator.
2022 2021
GBP GBP
Profit before
tax -556,027 60,646
Tax 144,237 316,984
-------------- -------------
Profit after
tax -411,790 377,630
Non-recurring expenditure 0 695,472
Adjusted earnings -411,790 1,073,102
-------------- -------------
Weighted average number of ordinary
shares
Basic 89,459,460 80,788,288
Effect of dilutive potential ordinary
shares 3,843,507 402,500
Diluted average number of
shares 93,302,967 81,190,788
-------------- -------------
Earnings per share:
Basic -0.460p 0.467p
Diluted N/A 0.465p
Adjusted earnings
- Basic -0.460p 1.328p
Adjusted earnings - Diluted N/A 1.322p
--------------------------------------------------- ----- -------------- -------------
The Group elected to adjust its EBITDA from continuing operations
for non-recurring costs in connection with its IPO in December 2021.
It also elected to adjust EBITDA by reversing the IFRS treatment of
depreciation of property leases and share-based payment charges. The
Group now accepts these are both recurring items and no longer elects
to adjust for them.
Basic per share of -0.460p (2021: 0.467p) has been impacted by non-core
operating expenses. Tax on adjusted earnings is the same figure as
that shown on the consolidated statement of comprehensive income,
given that the majority of the adjusting items in the earnings per
share calculation above are also adjusted for when calculating the
Company's tax expense.
Dividends
18
2022 2021
Pence GBP Pence GBP
per per
share share
Dividend declared - Final
2021 0.279p 249,592
Dividend declared - Interim
2022 0.168p 150,292
Dividend declared - Final
2020 0.500p 400,000
Dividend declared - Interim
2021 0.188p 150,000
-------------------------- -----------------------
Dividend declared per share 0.688p 0.500p
Dividend declared per share
- diluted 0.688p 0.500p
During the period under review, the Group generated a loss before
tax of -GBP554,812 (2021: GBP60,646). A final dividend of GBP249,592
(0.279p) was declared and paid with regards to the year ended 2021
and GBP150,292 (0.168p) interim dividend was declared and paid with
regards to the year ended 2022. The Group's policy is to at least
maintain dividend payments.
The Board became aware of a breach of procedure concerning compliance
with the Companies Act 2006 in relation to the payment of the interim
dividend of GBP150,000 for 2021 financial year of the Company that
was paid in October 2021. This dividend was paid to Shareholders
when the Company had sufficient reserves. However, the Company's
relevant accounts for the purposes of the Companies Act 2006, namely
those filed for the year ended 31 December 2020, did not show sufficient
distributable reserves and no interim accounts had been filed at
Companies House to confirm the adequacy of reserves at the time
of the declaration and as required by the Act.
To satisfy the steps required to rectify this breach of procedure,
a resolution was passed at the Company's General Meeting on 22 June
2022. The Company has put in place the necessary controls and processes
to ensure that a similar issue will not recur.
The Board is proposing a final dividend of 0.279p per share. In
combination with the interim dividend, if confirmed by the shareholders
at the AGM, this will represent a total dividend for the year of
GBP399,884 (2021: GBP399,592) or 0.447p per share based upon the
number of shares currently in issue. If further approved by shareholders
at the AGM on 20 June 2023, the final dividend will be paid on 21
July 2023 to shareholders on the register at the close of business
on 30 June 2023.
19 Share options and
warrants
Share options
The share option scheme, adopted by the Company after admission
to AIM on 1 December 2021, was established to reward and incentivise
the executive management team and staff for delivering share price
growth. The option schemes are equity settled.
The share scheme is administered by the Remuneration Committee.
360,000 options were granted during 2022 (2021: 4,483,000) with
a weighted average fair value of 28 pence (2021: 37 pence). 410,000
options lapsed during 2022 (2021: n/a) with a weighted average fair
value of 37 pence (2021: n/a) These fair values were based on the
Company's share price at the date of grant. Out of the 4,163,000
outstanding options (2021: 4,483,000), 1,018,250 options were exercisable
(2021: 0).
A charge of GBP206,331 (2021: GBP17,000) has been recognised in
the consolidated statement of comprehensive income for the year
relating to these options.
Options are exercisable in accordance with the contracted vesting
schedules; if an employee leaves the employment of the Company prior
to the options vesting, then unless otherwise agreed, the share
options will lapse.
Details of the share options outstanding at the year-end are as
follows:
Number WAEP* Number WAEP*
2022 2022 2021 2021
------------------------- ---------- --------------------------------------- --------- --------------------------------------- ----------------------------------
Outstanding at
1 January as per
2021 Reporting 4,830,000 37p - 0p
Adjustment to 2021
Grants -110,000
Granted during the
year 360,000 24p 4,830,000 37p
Exercised during
year - 0p - 0p
Lapsed during year 410,000 37p - 0p
Outstanding at 31
December 4,670,000 37p 4,830,000 37p
Thereof exercisable
at 31 December 1,018,250 37p - 0p
* Weighted average
exercise price
The weighted average remaining contractual life of the options outstanding
at the statement of financial position date is 8.9 years.
20 Share options and warrants
Share options - continued
Details of the share options outstanding at the year-end are as
follows:
Number WAEP* Number WAEP*
2022 2022 2021 2021
--------------------------- -------- ------------------------------------- ------ ------------------------------------- ----------------------------
Outstanding at 1 January
as per 2021 Reporting 4,830,000 37p - 0p
Adjustment to 2021 Grants -110,000
Granted during the year 360,000 24p 4,830,000 37p
Exercised during year - 0p - 0p
Lapsed during year 410,000 37p - 0p
Outstanding at 31 December 4,670,000 37p 4,830,000 37p
Thereof exercisable at
31 December 1,018,250 37p - 0p
* Weighted average
exercise
price
Share options granted are valued under the Black-Scholes model.
All options granted vest equally over 4 years. A dividend yield
was assumed based on the Group's stated policy of paying GBP400,000
per annum. A 50% expected volatility has been assumed. Options
in the prior year were granted with an excerise price of 37 pence
at the time of the IPO equal to the IPO price of 37pence. Options
granted in the year have an exercise price of 24 pence, being the
share price at the date of grant.
21 Financing cash
flows
A reconciliation of the financing
cash flow is set out below:
2022 2021
GBP GBP
Lease liability
At 1 January 643,671 259,394
Additions 182,516 517,284
Interest expense 21,307 18,953
Lease payments -200,086 -151,960
Disposal -
At 31 December 647,409 643,671
----------------------------- -------------------------------
Dividend liability
At 1 January - -
Dividends declared 399,884 550,000
Dividend payments -399,884 -550,000
At 31 December 0 0
----------------------------- -------------------------------
Changes to Equity
Capital Raised
(Admission
into AIM) 0 3,500,000
Share Option
Reserve* 206,331 17,000
At 31 December 206,331 3,517,000
----------------------------- -------------------------------
Net financing
payments -393,639 2,815,040
Financing per
statement
of cash flows -599,970 2,798,040
*The difference between the Net financing payments and Financing per
statement of cash flows is due to the non-cash movement of share option
reserves.
A final dividend of GBP249,592 was declared and paid in 2022 with regards
to the year ended 31 December 2021 and GBP150,292 interim dividend
was also declared and paid for the year ended 31 December 2022.
22 Events after the
reporting
period
Apart from the final dividend declared as disclosed in note 19, no
other matter or circumstance has arisen since 31 December 2022 that
has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
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END
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