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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ultimate Sports Group Plc | LSE:USG | London | Ordinary Share | GB00BYV31355 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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From May 2022 to May 2024
TIDMINSG
RNS Number : 8541Y
Insig AI Plc
09 September 2022
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.
9 September 2022
Insig AI plc
("Insig AI" or the "Company")
Final results for the year ended 31 March 2022
and
Posting of the Annual Report and Accounts and Notice of General Meeting
Insig AI plc (AIM:INSG), the data science and machine learning solutions company and its subsidiaries (the "Group") is pleased to announce its results for the year ended 31 March 2022.
The Group's Annual Report & Accounts, along with the Company's Notice of General Meeting ("GM") will be posted to shareholders later today and will be available shortly on the Group's website: www.insg.ai/investor-relations/ . The GM will be held at 9:45 a.m. on 30 September 2022 at 48 Warwick Street, London, W1B 5AW.
Highlights
-- Loss for the year after income tax GBP4.2 million after charging depreciation and amortisation of GBP2.2 million
-- New Funds Launch division in discussions with asset managers with combined AUM of over $1 trillion dollars: Now targeting GBP4 million per annum run rate of recurring revenues by end of next financial year from this division
-- Forecasting significant jump in second half revenues and for following financial year and beyond
-- A number of contract wins expected by the end of next month
Insig AI's Chief Executive, Colm McVeigh commented: "Over the last year, we have transformed and repositioned the business converting a strong machine learning AI capability into customer focused solutions which form the basis for asset management partnerships, fintech data science high impact projects, and ESG disclosure diagnostic reporting for the corporate market. We anticipate that this will be reflected in strong and sustainable revenue growth."
For further information, please visit www.insg.ai or contact: Insig AI plc Via SEC Newgate Colm McVeigh (CEO) Zeus (Nominated Adviser & Broker) David Foreman / James Hornigold / Danny Philips +44 (0) 20 3829 5000 SEC Newgate (Financial PR) +44 (0) 7540 106 366 Robin Tozer / Richard Bicknell insigai@secnewgate.co.uk
Chairman's statement
The year under review has been one of considerable change for the Company as we have evolved and refined our technology offerings and sales processes to better position us to take advantage of the considerable opportunities available to us in our addressable markets.
When I was appointed Chairman last August, two separate elements of the business became clear. Firstly, that the Company has developed scalable machine learning technology with a skilled, talented and dedicated workforce. Secondly, that the executive team at the time lacked experience in selling scalable software, being more skilled in delivering consultancy and complex projects. The business required commercial focus and leadership. I am pleased to report that under Colm McVeigh, initially as Chief Commercial Officer and now as CEO, this is what we now have. It is common for young businesses to make missteps. What is important is that swift and decisive action is taken. That is what we have done.
As the asset management industry itself increasingly uses technology to deliver competitive differentiation and adapts to evolving standards, we are able to apply our advanced analytical tools, machine learning innovative data gathering and processing in ways that can benefit our target customer base, offering asset managers competitive advantage as well as efficiencies. We apply our deep domain expertise in ESG, data science, machine learning and cloud data infrastructure so our customers can achieve sustainable investment decisions and high impact operational transformation through AI and data solutions.
We have focused our strategy on securing high quality, substantial recurring revenue, prioritising this over more modest one-off contract wins. Whilst the former has a longer sales cycle, if successfully delivered will, we believe, form the bedrock of a valuable business.
Partnership opportunities with asset managers as they launch new funds across the ESG spectrum provide potential revenues that are of a magnitude several times more than the traditional product licence sale. I am pleased to report tangible success in this regard. In February, we announced a landmark agreement with CarVal Investors, L.P. ("CarVal") to develop and launch a new line of high yield ("HY") and investment grade ("IG") ESG scoring tools to be used by CarVal to optimise HY and/or IG portfolios based on ESG considerations. In April, these scoring tools were successfully delivered. We now expect the coming quarters to begin the payback of our considerable investment. Our share of fees are based on CarVal's assets under management ("AUM") raised in connection with these HY and/or IG focused investment pools. We anticipate that as CarVal secures mandates, our fees will increase commensurably and continue for several years.
In July, CarVal was acquired by Alliance Bernstein which we hope will provide further opportunities.
In March, we announced that we were in early stage discussions with a UK based investment manager with the objective of launching an ESG Global Opportunities Equities Fund. The investment manager undertook a detailed review of our entire fintech and machine learning capability. This has included involvement from not only the Head of Equities but also the CEO. I am pleased to report that feedback from the CEO and investigating team was favourable, that discussions continue and indeed have extended beyond a potential fund launch.
In March, we also reported that we were establishing a New Funds Launch division. In recent weeks, we have commenced early stage discussions with two further investment asset managers, with combined AUM of over $1 trillion dollars. Whilst it is important to manage expectations as to the timelines and pathways required to secure such substantial agreements, the transformation in our ability to engage with and hopefully conclude and deliver such agreements augurs well.
Alongside our desire and focus to conclude agreements with other asset managers, we are now targeting recurring revenues of GBP4 million per annum from new fund launches. Taking account of lead times and in particular those of establishing a new fund, we believe that this run rate can be achieved before the end of our next financial year. Of course, our longer-term aspirations are to continue growing revenues substantially beyond this, but we need to remain focused on the more immediate hurdles to overcome, not least securing sufficient working capital and retaining the dedicated and skilled team that Colm, Steve and Warren in particular have put together.
Whilst our fintech capability can be applied to markets beyond ESG disclosures, focus is critical. It is important to realise not only our capability but our capacity. A year ago, our discussions with a number of asset managers were met with the requirement to go away with portfolio details and develop a data base of scores and analysis for their portfolios. Then we had just 200 companies in our database. Now, our repository stands at more than 2,000 companies. Using natural language processing machine readable classifiers, we have an accessible and detailed analysis and scoring of every public disclosure made by these companies dating back several years. Source data can be instantly accessed. As a result, now when we demonstrate our offering, we are able to show portfolio constituents there and then.
Why does this matter? It is because it is all too easy for an asset manager to label a fund "ESG compliant" but to do so, without a methodology that drills down to each element of ESG, exposes the asset manager to a lack of evidence of compliance . This can expose not only a business but also its directors to immense reputational and financial damage. In May 2022, the US Securities and Exchange Commission ("SEC") fined investment adviser BNY Mellon. The SEC stated that at the time of investment, 67 out of 185 investments made by a mutual fund advised by BNY Mellon, allegedly lacked any ESG quality review score. That did not prevent BNY Mellon profiting by charging fees to manage these so called ESG compliant investments. In June 2022, the SEC launched an investigation into the asset management division of Goldman Sachs regarding potential "greenwashing."
Regulatory oversight is not confined to the US. In Europe, a combined 50 officials from BaFin, the German regulator, the federal criminal police office and the public prosecutor's office searched the offices of Deutsche Bank and DWS regarding alleged false ESG claims. In June 2022, DWS's Chief Executive resigned.
Whilst there is no shortage of asset managers who are responsible investors, Insig AI is at the "coal face" of this ESG mine(field) of corporate disclosures. The most reliable, comparable and objective evidence based diagnosis of ESG compliance is how a business sets out and explains its ESG credentials. This is our positioning.
Our close interaction with asset managers allows us to differentiate between those investment advisers who regard responsible investing as both a commercial opportunity as well as being a good corporate citizen and those making such claims but lack the tools to do so. We consider that it will still be a number of years until the global regulatory framework is sufficiently advanced to provide comparable disclosure requirements. A generation ago, international accounting standards required developing and extending. ESG adherence will also adapt to evolving standards of what is regarded as good practice. Until then, we believe that our ESG scoring tools and machine learning based analysis provide an essential measure of ESG corporate conduct.
We are also seeing the emergence of progressive asset managers who are creating innovative ESG high impact thematic funds based on selecting companies whose strategies are to substantially improve their ESG outcomes. For such investment managers, our technologies facilitate deep detailed analysis of company ESG issues, optimisation for financial and ESG outcomes when creating the fund, and in-life management for performance.
The year under review has been transformative. On 10 May 2021, the Company acquired the entire issued share capital of Insight Capital Partners Limited ("Insight"). The business is transitioning from consulting as its sole revenue source to one with a higher quality, recurring value stream, capable of delivering visible and reliable growth over the medium and long term. In the shorter term, this transition has had a disproportionate impact on our results as we have increased our investment in sales and marketing alongside the product development required to secure significant and sustainable revenues.
Financial performance
For the year ended 31 March 2022, we are reporting a total comprehensive loss from all activities of GBP4.2 million which includes depreciation and amortisation of GBP2.2 million and a profit from the Group's school sport coaching facility, Sport in Schools Limited ("SSL") of GBP0.2 million. The Directors are not recommending the payment of a dividend.
Board restructure
During the early part of the year under review, upon the acquisition of Insight, directors David Hillel, David Coldbeck and John Zucker resigned. The Company appointed two new Executive Directors and one new Non-Executive Director. Steve Cracknell, the Chief Executive of Insight 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. In August 2021, Matthew Farnum-Schneider resigned as Executive Chairman and I was appointed as interim Non-Executive Chairman.
Shortly after my appointment, it was clear that changes were required: most importantly, the need to bring greater commercial focus. Having a strong machine learning capability and scalable technology is a necessary condition for success. However, it is an insufficient condition on its own. Hence in November, Colm McVeigh was appointed to the Board, initially as Chief Commercial Officer and in April 2022, as Chief Executive. This has enabled Colm to lead the business, whilst Steve, as Chief Product Officer, is able to focus on product development and delivery.
In December 2021, Peter Rutter stepped down as a director due to his increasing responsibilities and workload as Head of Equities at Royal London Asset Management. In April 2022, we were pleased to announce that Richard Cooper was appointed to the Company's board of directors as an independent non-executive director and chair of the Audit Committee. Richard has over 25 years' experience as a Chief Financial Officer across both publicly-traded and privately-owned companies in a variety of service industries, including gaming and financial services. He is currently CFO of Equals Group plc, an AIM-quoted fintech company.
Acquisition of FDB Systems Limited
In November, the Company announced that it had entered into a conditional share purchase agreement to acquire the entire issued share capital of FDB Systems Limited ("FDB Systems"). FDB Systems specialises in the collection and structuring of financial market data for investors and other capital markets participants. which is the process of transforming raw data so that it can be more easily and effectively used as an input to machine learning, data science and AI processes.
The initial consideration comprised GBP0.3 million cash plus the issue of 7,022,471 ordinary shares at 52.7p per share.
FDB Systems has been successfully integrated allowing the Company to offer a complete end-to-end financial data solution to its customers. FDB Systems no longer operates as a stand alone business and all of its activities have been combined with those of Insig AI. The combination has directed greater focus to Insig AI's existing clients as opposed to exclusively the FDB Systems clients acquired.
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 profit for the year ended 31 March 2022 of GBP0.1 million (15 months ended 31 March 2021: loss GBP0.01 million). Pantheon's results are consolidated into the Group accounts.
Sport in Schools Limited ("SSL")
Profit recognised in the year was GBP0.2 million compared with GBP0.1 million during the comparable pre-Covid 12 months.
Funding
In March 2022, we announced that the Board had decided to secure a long-term revenue agreement based on AUM at the expense of revenues that could have been recognised in the year under review. Whilst this had a detrimental effect on immediate cash flows, the quantum and longevity of receipts is expected to be considerably more than those foregone short term revenues.
The Company ended its financial year on 31 March 2022 with net cash of GBP0.5 million. In March 2022, the Company announced that I was providing an unsecured convertible loan facility of GBP1.0 million. The key terms that the independent directors considered to be fair and reasonable were conversion at the higher of 35p per share and the prevailing share price at the time of conversion and a coupon of 5 per cent. per annum on funds drawn down. The first draw down took place in early May. In June, the Company announced that it had been approached by David Kyte, a long term shareholder with an offer of funding of GBP0.5 million, on the same terms as my own facility. As at 8 September 2022, Group cash was approximately GBP0.12 million and GBP0.31 million remained available for draw down.
The Board recognises that further working capital is required to support the Group over both the short and potentially medium term. The Board notes that despite no adverse news announcements, since the end of May, the share price has halved. Therefore, the Board believes that it would not be in the best interests of all stakeholders to carry out an equity raise in the very short term. Instead, the Board is considering a proposal with regard to a new convertible loan facility from myself of GBP0.75 million. The facility terms include a conversion price of 35p, which represents a premium of 62 per cent. to the current share price, interest of 5 per cent. per annum on amounts drawn down. The facility would also be secured on the Group's shareholding in Sport in Schools Limited. Based upon the board's cash flow projections, which includes the anticipated receipt of a substantial R&D Tax Credit, this facility is expected to provide sufficient working capital through to Q2 (calendar) 2023, by which time, the Company will hopefully have secured and announced substantial contracts providing the necessary visibility of the Company's sales growth trajectory.
Prospects
The corrective action we took is now expected to convert into a number of contract wins: these are anticipated to close before the end of October. Today, we have set out our expectations for revenue from asset management partnerships: a run rate of GBP4 million per annum before the end of our next financial year. We are also now receiving positive feedback from the corporate market, with our ESG proprietary scoring and comparison capabilities assisting disclosure reporting requirements. Of greater significance will be our ability to sell bespoke data science fintech projects which can develop into long term partnerships. We therefore are expecting to report a significant jump up in our second half revenues and for the following financial year and beyond. Despite the current unhelpful macro-economic background, the scale of our opportunity combined with the solutions that we provide, gives us confidence for the future.
Richard Bernstein
Chairman
8 September 2022
Consolidated statement of financial position
Hot Features
Premium
Group Company
---------------------------- ----------------------------
Note 31 March 31 March 31 March 31 March
2022 2021 2022 2021
GBP GBP GBP GBP
-------------------------------- ------ ------------- ------------- ------------- -------------
Non-Current Assets
Property, plant and equipment 11 66,000 3,000 - -
Right of Use Assets 12 38,000 51,000 - -
Intangible assets 13 38,217,000 60,000 - -
Unlisted investments - 1,500,000 - 1,500,000
Investment in subsidiaries 14 - - 39,179,000 220,000
38,321,000 1,614,000 39,179,000 1,720,000
-------------------------------- ------ ------------- ------------- ------------- -------------
Current Assets
Trade and other receivables 15 289,000 397,000 90,000 685,000
Cash and cash equivalents 16 473,000 935,000 61,000 484,000
-------------------------------- ------ ------------- ------------- ------------- -------------
762,000 1,332,000 151,000 1,169,000
-------------------------------- ------ ------------- ------------- ------------- -------------
Total Assets 39,083,000 2,946,000 39,330,000 2,889,000
-------------------------------- ------ ------------- ------------- ------------- -------------
Non-Current Liabilities
Lease liabilities 18 29,000 38,000 - -
Borrowings > 1 year 18 - 204,000 - -
Deferred tax liabilities 19 4,160,000 - - -
-------------------------------- ------ ------------- ------------- ------------- -------------
4,189,000 242,000 - -
Current Liabilities
Trade and other payables 17 809,000 566,000 308,000 304,000
Lease liabilities 18 8,000 8,000 - -
Unsecured convertible
loan notes 18 - 414,000 - 414,000
Borrowings < 1 year 18 - 36,000 - -
817,000 1,024,000 308,000 718,000
-------------------------------- ------ ------------- ------------- ------------- -------------
Total Liabilities 5,006,000 1,266,000 308,000 718,000
-------------------------------- ------ ------------- ------------- ------------- -------------
Net Assets 34,077,000 1,680,000 39,022,000 2,171,000
-------------------------------- ------ ------------- ------------- ------------- -------------
Equity attributable to
owners of the Parent
Share capital 21 3,110,000 2,480,000 3,110,000 2,480,000
Share premium 21 39,077,000 3,040,000 39,077,000 3,040,000
22,
Other reserves 23 326,000 428,000 326,000 428,000
Retained losses (8,383,000) (4,202,000) (3,491,000) (3,777,000)
-------------------------------- ------ ------------- ------------- ------------- -------------
Equity attributable to
shareholders of the parent
parent company 34,130,000 1,746,000 39,022,000 2,171,000
-------------------------------- ------ ------------- ------------- ------------- -------------
Non-controlling interests (53,000) (66,000) - -
-------------------------------- ------ ------------- ------------- ------------- -------------
Total Equity 34,077,000 1,680,000 39,022,000 2,171,000
-------------------------------- ------ ------------- ------------- ------------- -------------
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company Income Statement and Statement of Comprehensive Income. The profit for the Company for the year ended 31 March 2022 was GBP269,000 (15 months ended 31 March 2021: loss of GBP1,050,000).
The Financial Statements were approved and authorised for issue by the Board of Directors on 8 September 2022 and were signed on its behalf by:
Colm McVeigh
Chief Executive Officer
Consolidated Income statement
12 month 15 month
period ended period ended
31 March 31 March
2022 2021
Continued operations Note GBP GBP
------------------------------------------------ ------ --------------- --------------
Revenue 5 1,708,000 1,043,000
Cost of sales 5 (719,000) (798,000)
------------------------------------------------ ------ --------------- --------------
Gross profit 989,000 245,000
Administrative expenses 6 (5,256,000) (1,548,000)
Other gains/(losses) 7 7,000 -
Other income 8 119,000 602,000
Operating loss (4,141,000) (701,000)
Finance income 9 4,000 1,000
Finance costs 9 (14,000) (48,000)
Loss before exceptional item (4,151,000) (748,000)
Exceptional items 10 908,000 (314,000)
------------------------------------------------ ------ --------------- --------------
Loss before income tax (3,243,000) (1,062,000)
Deferred tax 26 (942,000) -
------------------------------------------------ ------ --------------- --------------
Loss for the year after income tax (4,185,000) (1,062,000)
------------------------------------------------ ------ --------------- --------------
Loss for the year attributable to owners
of the Parent (4,198,000) (1,060,000)
------------------------------------------------ ------ --------------- --------------
Profit/(Loss) for the year attributable
to Non-controlling interests 13,000 (2,000)
------------------------------------------------ ------ --------------- --------------
Basic and Diluted Loss Per Share attributable
to owners of the Parent during the period
(expressed in pence per share) 27 (3.55)p (2.67)p
------------------------------------------------ ------ --------------- --------------
12 month 15 month
period ended period ended
31 March 31 March
2022 2021
GBP GBP
------------------------------------------------- ---------------- ---------------
Loss for the year (4,185,000) (1,062,000)
Other Comprehensive Income:
Items that may be subsequently reclassified
to profit or loss
Currency translation differences - -
------------------------------------------------- ---------------- ---------------
Other comprehensive loss for the year,
net of tax - -
------------------------------------------------- ---------------- ---------------
Total comprehensive loss (4,185,000) (1,062,000)
-------------------------------------------------- ---------------- ---------------
Total comprehensive loss attributable
to owners of the Parent (4,198,000) (1,060,000)
-------------------------------------------------- ---------------- ---------------
Total comprehensive profit/(loss) attributable
to Non-controlling interests 13,000 (2,000)
-------------------------------------------------- ---------------- ---------------
Consolidated statement of changes in equity
Retained Non
Share Share Other earnings Controlling
capital premium reserves /(losses) Total Interest Total
Note GBP GBP GBP GBP GBP GBP GBP
-----------
Balance as
at 1 January
2020 2,409,000 1,048,000 326,000 (3,165,000) 618,000 (64,000) 554,000
------------------------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Loss for the
period - - - (1,060,000) (1,060,000) (2,000) (1,062,000)
------------------------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Other
comprehensive
loss for the
period
Items that
may be
subsequently
reclassified
to profit or
loss
---------------- ------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Total comprehensive
loss for the
period - - - (1,060,000) (1,060,000) (2,000) (1,062,000)
------------------------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Issue of new
shares 71,000 1,992,000 - - 2,063,000 - 2,063,000
Equity component
of CLN issued
in period - - 124,000 - 124,000 - 124,000
Share based
payments - - - 23,000 23,000 - 23,000
Share issue
costs - - (22,000) - (22,000) - (22,000)
Total transactions
with owners,
recognised
directly in
equity 71,000 1,992,000 102,000 23,000 2,188,000 - 2,188,000
Balance as
at 31 March
2021 2,480,000 3,040,000 428,000 (4,202,000) 1,746,000 (66,000) 1,680,000
------------------------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Balance as
at 1 April
2021 2,480,000 3,040,000 428,000 (4,202,000) 1,746,000 (66,000) 1,680,000
------------------------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Profit/(Loss)
for the year - - - (4,198,000) (4,198,000) 13,000 (4,185,000)
------------------------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Other
comprehensive
loss for the
year
Items that
may be
subsequently
reclassified
to profit or
loss
Total comprehensive
loss for the
year - - - (4,198,000) (4,198,000) 13,000 (4,185,000)
------------------------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Issue of shares 630,000 36,201,000 - - 36,831,000 - 36,831,000
Equity component
of CLN redeemed
in period - - (124,000) - (124,000) - (124,000)
Share based
payments - - - 17,000 17,000 - 17,000
Share issue
costs - (164,000) 22,000 - (142,000) - (142,000)
Total transactions
with owners,
recognised
directly in
equity 630,000 36,037,000 (102,000) 17,000 36,582,000 - 36,582,000
------------------------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Balance as
at 31 March
2022 3,110,000 39,077,000 326,000 (8,383,000) 34,130,000 (53,000) 34,077,000
------------------------- ----------- ------------ ----------- ------------- ------------- ------------- -------------
Share Share Other Retained Total
capital premium reserves losses equity
Note GBP GBP GBP GBP GBP
Balance as at 1 January
2020 2,409,000 1,048,000 326,000 (2,750,000) 1,033,000
---------------------------------------- ----------- ------------ ----------- ------------- -------------
Loss for the period - - - (1,050,000) (1,050,000)
---------------------------------------- ----------- ------------ ----------- ------------- -------------
Total comprehensive loss
for the period - - - (1,050,000) (1,050,000)
---------------------------------------- ----------- ------------ ----------- ------------- -------------
Issue of new shares 71,000 1,992,000 - - 2,063,000
Share based payments - - - 23,000 23,000
Share issue costs - - (22,000) - (22,000)
Equity component of CLN
issued in the period - - 124,000 - 124,000
Total transactions with
owners, recognised directly
in equity 71,000 1,992,000 102,000 23,000 2,188,000
Balance as at 31 March
2021 2,480,000 3,040,000 428,000 (3,777,000) 2,171,000
---------------------------------------- ----------- ------------ ----------- ------------- -------------
Balance as at 1 April
2021 2,480,000 3,040,000 428,000 (3,777,000) 2,171,000
---------------------------------------- ----------- ------------ ----------- ------------- -------------
Profit for the year - - - 269,000 269,000
---------------------------------------- ----------- ------------ ----------- ------------- -------------
Total comprehensive loss
for the year - - - 269,000 269,000
---------------------------------------- ----------- ------------ ----------- ------------- -------------
Issue of shares 630,000 36,201,000 - - 36,831,000
Equity component of CLN
redeemed in period - - (124,000) - (124,000)
Share based payments - - - 17,000 17,000
Share issue costs - (164,000) 22,000 - (142,000)
Total transactions with
owners, recognised directly
in equity 630,000 36,037,000 (102,000) 17,000 36,582,000
---------------------------------------- ----------- ------------ ----------- ------------- -------------
Balance as at 31 March
2022 3,110,000 39,077,000 326,000 (3,491,000) 39,022,000
---------------------------------------- ----------- ------------ ----------- ------------- -------------
Group Company
---------------------------- ----------------------------
12 month 15 month 12 month 15 month
period period period period
ended 31 ended 31 ended 31 ended 31
March 2022 March 2021 March 2022 March 2021
Note GBP GBP GBP GBP
----------------------------------------- ------ ------------- ------------- ------------- -------------
Cash flows from operating activities
(Loss)/profit before income
tax (4,185,000) (1,062,000) 269,000 (1,050,000)
Adjustments for:
Depreciation and amortisation 2,239,000 20,000 - -
Share based payments 22 17,000 23,000 17,000 23,000
Net finance (income)/costs 13,000 47,000 (58,000) 17,000
Indebtness with subsidiaries
(waived)/written off - - - (193,000)
Investment in subsidiaries written
off - - - 192,000
Provision for deferred tax liabilities 942,000 - - -
Proceeded from R&D tax credits 683,000 - - -
Fair value uplift on unlisted
investment (1,759,000) - (1,759,000) -
Loss on disposal of lease liability (7,000) - - -
Changes in working capital:
(Increase)/Decrease in trade
and other receivables 36,000 (288,000) 52,000 (335,000)
Increase/(Decrease) in trade
and other payables (172,000) 299,000 (57,000) 277,000
Net cash used in operating
activities (2,193,000) (961,000) (1,536,000) (1,069,000)
----------------------------------------- ------ ------------- ------------- ------------- -------------
Cash flows from investing activities
Sale/(Purchase) of property,
plant and equipment 11 (34,000) (2,000) - - Investment in unlisted shares - (1,500,000) - (1,500,000) Acquisition of subsidiaries net of cash acquired 30 (1,529,000) - (1,742,000) - Purchase of intangible assets 13 (2,304,000) - - - Loans granted to subsidiaries - - (3,148,000) - Finance income - 1,000 - 1,000 ----------------------------------------- ------ ------------- ------------- ------------- ------------- Net cash used in investing activities (3,867,000) (1,501,000) (4,890,000) (1,499,000) ----------------------------------------- ------ ------------- ------------- ------------- ------------- Cash flows from financing activities Proceeds from issue of share capital 6,145,000 2,063,000 6,145,000 2,063,000 Transaction costs of share issue (142,000) (22,000) (142,000) (22,000) Proceeds from Borrowings - 740,000 - 500,000 Repayment of borrowings (290,000) - - Repayment of leasing liabilities (115,000) (11,000) - - Finance expense - (10,000) - - Net cash generated from financing activities 5,598,000 2,760,000 6,003,000 2,541,000 ----------------------------------------- ------ ------------- ------------- ------------- ------------- Net decrease/(increase) in cash and cash equivalents (462,000) 298,000 (423,000) (27,000) Cash and cash equivalents at beginning of year 935,000 637,000 484,000 511,000 Cash and cash equivalents at end of year 12 473,000 935,000 61,000 484,000 ----------------------------------------- ------ ------------- ------------- ------------- -------------
Major Non-Cash Transactions:
On 10 May 2021, 44,819,161 new ordinary shares were issued at 59 pence per share, as consideration shares to the owners of Insig Partners Limited for total consideration of GBP26,448,000.
On 10 May 2021, convertible loan notes issued by the Company were converted, resulting in 2,000,000 new ordinary shares issued at 25 pence per share for a total consideration of GBP500,000.
1. General information
Insig AI plc is a public company limited by shares, domiciled and incorporated in England and Wales and its activities are as described in the strategic report on pages 7 to 12.
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. Summary of significant accounting policies
The principal Accounting Policies applied in the preparation of these Consolidated Financial Statements are set out below. These Policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1. Basis of preparation of Financial Statements
The Group and Company Financial Statements have been prepared in accordance with UK-adopted international accounting standards. The Group and Company Financial Statements have also been prepared under the historical cost convention, except as modified for assets and liabilities recognised at fair value on an asset acquisition.
The Financial Statements are presented in Pound Sterling rounded to the nearest pound.
The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group and Company Financial Statements are disclosed in Note 4.
2.2. New and amended standards (i) New and amended standards adopted by the Group and Company
The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 31 March 2022 but did not result in any material changes to the financial statements of the Group or Company.
Of the other IFRS and IFRIC amendments, none are expected to have a material effect on future Group or Company Financial Statements.
(ii) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
Standard Impact on initial application Effective date
-------------------- ------------------------------- -----------------
IAS 8 (Amendments) Accounting estimates 1 January 2023
------------------------------- -----------------
None are expected to have a material effect on the Group or Company Financial Statements.
2.3. Basis of Consolidation
The Consolidated Financial Statements consolidate the financial statements of the Company and its subsidiaries made up to 31 March 2022. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
-- The contractual arrangement with the other vote holders of the investee; -- Rights arising from other contractual arrangements; and -- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within the parent company financial statements. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation.
2.4. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represent amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. Under IFRS 15 there is a five-step approach to revenue recognition which is adopted across all revenue streams. The process is:
-- Step 1: Identify the contract(s) with a customer; -- Step 2: Identify the performance obligations in the contract; -- Step 3: Determine the transaction price; -- Step 4: Allocate the transaction price to the performance obligations in the contract; and -- Step 5: Recognise revenue as and when the entity satisfies the performance obligation.
The Group has two types of revenue streams being machine learning and data services and sports activities.
Machine learning and Data services revenue comprises of:
1. ESG Research Tool
Charged on a licence fee basis and the fees are recognised once the services have been provided to the client over the period of time the work is conducted.
2. Machine Readable Data
Charged on a licence fee basis and the fees are recognised once the services have been provided to the client over the period of time the work is conducted.
3. Bespoke Data Science Solutions
Charged on a project basis and includes work related to data migration, design fees, communication fees and technological services. The fees are recognised once the services have been provided to the client over the period of time the work is conducted.
Sports activities revenue is recognised once performance obligations have been satisfied and work is completed with payment due in advance of the performance obligations. 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.
2.5. Going concern
The preparation of financial statements requires an assessment on the validity of the going concern assumption. The Directors have reviewed projections for a period of at least 12 months from the date of approval of the financial statements as well as potential opportunities. Any potential short falls in funding have been identified and the steps to which Directors are able to mitigate such scenarios and/or defer or curtail discretionary expenditures should these be required have been considered.
In approving the financial statements, the Board have recognised that these circumstances create a level of uncertainty. However, having made enquiries and considered the uncertainties outlined above, the Directors have a reasonable expectation that the Group will continue to be able to raise finance as required over this period to enable it to continue in operation and existence for the foreseeable future. Accordingly, the Board believes it is appropriate to adopt the going concern basis in the preparation of the financial statements.
2.6. Foreign currencies (a) Functional and presentation currency
Items included in the Financial Statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The functional currency of the UK parent entity and UK subsidiaries is Pounds Sterling, The Financial Statements are presented in Pounds Sterling which is the Company's functional and Group's presentational currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
2.7. Intangible assets
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of subsidiary entities at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the statement of comprehensive income and is not subsequently reversed .
For the purpose of impairment testing, goodwill is allocated to each of the Group's cash generating units expected to benefit from synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, associate or jointly controlled entity, the amount of goodwill is included in the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS's has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.
Development costs are expensed in arriving at the operating profit or loss for the year unless the Directors are satisfied as to the technical, commercial and financial viability of individual project. In this situation, the expenditure is recognised as an asset and is reviewed for impairment on an annual basis. Amortisation is provided on all development costs to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates:
Technology assets - 7 years straight line
Customer relationships - 13 years straight line
Databases - 7 years straight line
Any impairment is recognised immediately in the income statement in administrative expenses and is not subsequently reversed.
2.8. Investments in subsidiaries
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.
2.9. Property, plant and equipment
Property, Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates:
Office Equipment - 25% and 10% straight line
Plant and Equipment - 25% and 10% straight line
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. If an impairment review is conducted following an indicator of impairment, assets which are not able to be assessed for impairment individually are assessed in combination with other assets within a cash generating unit.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other (losses)/gains' in the Income Statement.
2.10. Impairment of non-financial assets
Assets that have an indefinite useful life, for example, intangible assets not ready to use, and goodwill, are not subject to amortisation and are tested annually for impairment. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
2.11. Financial Instruments
Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset and the net amount reported in the consolidated statement of financial position and income statement when there is a currently enforceable legal right to offset the recognized amounts and the Group intends to settle on a net basis or realise the asset and liability simultaneously.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company's business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is recognised.
Financial assets
All Group's recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Financial assets that meet the following conditions are measured subsequently at amortised cost using the effective interest rate method:
-- the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
-- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding
The company classifies the following financial assets at fair value through profit or loss (FVPL):
-- debt instruments that do not qualify for measurement at either amortised cost (see above) or FVOCI;
-- equity investments that are held for trading; and
-- equity investments for which the entity has not elected to recognised fair value gains and losses through OCI.
The Group does not hold any financial assets that meet conditions for subsequent recognition at fair value
through other comprehensive income ("FVTOCI").
Impairment of financial assets
The Group recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities
The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics. All purchases of financial liabilities are recorded on trade date, being the date on which the Group becomes party to the contractual requirements of the financial liability. Unless otherwise indicated the carrying amounts of the Group's financial liabilities approximate to their fair values.
The Group's financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at fair value through profit or loss.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method. The Group's financial liabilities measured at amortised cost comprise convertible loan notes, trade and other payables, and accruals.
The effective interest method is a method of calculating the amortised cost of a financial asset/liability and of allocating interest income/expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts/payments through the expected life of the financial asset/liability or, where appropriate, a shorter period.
Convertible loan notes
On issue of a convertible loan, the fair value of the liability component is determined by discounting the contractual future cash flows using a market rate for a non-convertible instrument with similar terms. This value is carried as a liability on the amortised cost basis unless is designated as a Fair Value Through Profit and Loss ("FVTPL") at inception.
Financial instruments designated as FVTPL are classified in this category irrevocably at inception and are derecognised when extinguished. They are initially measured at fair value and transaction costs directly attributable to their acquisition are recognised immediately in profit or loss. Subsequent changes in fair values are recognised in the income statement with profit or loss.
Equity instruments are instruments that evidence a residual interest in the assets of an entity after deducting all of its liabilities. Therefore, when the initial carrying amount of a compound financial instrument is allocated to its equity and liability components, the equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. The value of any derivative features (such as a call option) embedded in the compound financial instrument other than the equity component (such as an equity conversion option) is included in the liability component.
Derecognition of financial liabilities
A financial liability (in whole or in part) is recognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the income statement.
Fair value measurement hierarchy
The Group classifies its financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement (note 7). The fair value hierarchy has the following levels:
-- quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
-- inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (level 2); and
-- inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
The level in the fair value hierarchy within the financial asset or financial liability is determined on the basis of the lowest level input that is significant to the fair value measurement.
2.12. Leases
The Group leases certain property, plant and equipment.
The lease liability is initially measured at the present value of the lease payments that are not paid. Lease payments generally include fixed payments less any lease incentives receivable. The lease liability is discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. The Group estimates the incremental borrowing rate based on the lease term, collateral assumptions, and the economic environment in which the lease is denominated. The lease liability is subsequently measured at amortized cost using the effective interest method. The lease liability is remeasured when the expected lease payments change as a result of new assessments of contractual options and residual value guarantees.
The right-of-use asset is recognised at the present value of the liability at the commencement date of the lease less any incentives received from the lessor. Added to the right-of-use asset are initial direct costs, payments made before the commencement date, and estimated restoration costs. The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in lease liabilities, split between current and non-current depending on when the liabilities are due. The interest element of the finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Assets obtained under finance leases are depreciated over their useful lives. The lease liabilities are shown in Note 18.
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.
2.13. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.14. Equity
Equity comprises the following:
-- "Share capital" represents the nominal value of the Ordinary shares;
-- "Share Premium" represents consideration less nominal value of issued shares and costs directly attributable to the issue of new shares;
-- "Other reserves" represents the merger reserve, revaluation reserve and share option reserve where;
o "Merger reserve" represents the difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange;
o "Revaluation reserve" represents a non-distributable reserve arising on the acquisition of Insig Partners Limited;
o "Share option reserve" represents share options awarded by the group;
-- "Retained earnings" represents retained losses. 2.15. Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available. Should sufficient premium not be available placing costs are recognised in the Income Statement.
2.16. Share based payments
The Group operates a number of equity-settled, share-based schemes, under which the Group receives services from employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third party suppliers' services received in exchange for the grant of the options is recognised as an expense in the Income Statement or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Income Statement and its value is determined by reference to the fair value of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and
-- including the impact of any non-vesting conditions (for example, the requirement for employees to save).
The fair value of the share options and warrants are determined using the Black Scholes valuation model.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.
When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.
2.17. Taxation
No current tax is yet payable in view of the losses to date.
Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when 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 where there is an intention to settle the balances on a net basis.
Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets and liabilities are not discounted.
3. Financial risk management 3.1. Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. None of these risks are hedged.
Risk management is carried out by the management team under policies approved by the Board of Directors.
Market risk
The Group is exposed to market risk, primarily relating to interest rate and foreign exchange. The Group has not sensitised the figures for fluctuations in interest rates and foreign exchange as the Directors are of the opinion that these fluctuations would not have a significant impact on the Financial Statements at the present time. The Directors will continue to assess the effect of movements in market risks on the Group's financial operations and initiate suitable risk management measures where necessary.
Credit risk
Credit risk arises from cash and cash equivalents as well as loans to subsidiaries and outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
Impairment provisions for loans to subsidiaries are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. At year end it was assessed credit risk was low due to future profits forecast therefore no provision was required.
For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. At year end all receivables were less than 60 day outstanding and deemed highly likely to be received therefore no provision was required.
Liquidity risk
In keeping with similar sized groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.
With exception to deferred taxation, financial liabilities are all due within one year.
3.2. Capital risk management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, to enable the Group to continue its activities, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts.
The Group defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future activities and may issue new shares in order to raise further funds from time to time.
4. Critical accounting estimates and judgements
The preparation of the Financial Statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the period.
Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Items subject to such estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, include but are not limited to:
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 assessment are given in Note 13.
Identification of intangible assets
The Company follows the guidance of IAS 36 to determine when impairment indicators exist for its intangible assets. When impairment indicators exist, the Company is required to make a formal estimate of the recoverable amount of its intangible assets.This determination requires significant judgement. In making this judgement, management evaluates external and internal factors, such as significant adverse changes in the technological market, economic or legal environment in which the Company operates as well as the results of its ongoing development programs. Management also considers the carrying amount of the Company's net assets in relation to its market capitalisation as a key indicator.
Share based payment transactions
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.
The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in Note 22.
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.
Intangibles
The allocation of the value of the excess consideration less the net assets acquired are identified as intangible assets arising as part of a business combination; these require judgement in respect of the separately identifiable intangible assets that have been acquired. These judgements are based upon the directors' opinion of the identifiable assets from which economic benefits are derived.
5. Segment information
Business segments are identified according to the different trading activities in the Group.
During the year, the Group's trading segments were machine learning and data services representing revenue of GBP374,000 and its sports and leisure activities, comprising sports tuition at schools representing its revenue of GBP1,334,000 (15 months to 31 March 2021: GBP1,043,000). All revenue was generated in the UK. The prior period had one segment which was sports and leisure activities, therefore no comparative has been provided.
Machine learning Sport in
and Data services Schools Total
31 March 2022 GBP GBP GBP
--------------------------------- -------------------- ----------- -------------
Revenue 374,000 1,334,000 1,708,000
Cost of sales (14,000) (705,000) (719,000)
Administrative expenses (4,697,000) (559,000) (5,256,000)
Other gains/(losses) 7,000 - 7,000
Other income 10,000 109,000 119,000
Finance income 4,000 - 4,000
Finance costs (11,000) (3,000) (14,000)
Exceptional items 908,000 - 908,000
---------------------------------- -------------------- ----------- -------------
Profit/(Loss) before tax
per reportable segment (3,419,000) 176,000 (3,243,000)
---------------------------------- -------------------- ----------- -------------
Additions to intangible
asset 38,217,000 - 38,217,000
---------------------------------- -------------------- ----------- -------------
Reportable segment assets 38,633,000 450,000 39,083,000
---------------------------------- -------------------- ----------- -------------
Reportable segment liabilities 4,780,000 226,000 5,006,000
---------------------------------- -------------------- ----------- -------------
6. Administrative expenses
15 months
Year ended ended
31 March 31 March
2022 2021
GBP GBP
---------------------------------- ------------ -----------
Employee salaries and costs 1,149,000 559,000
Director remuneration 430,000 477,000
Office and expenses 77,000 32,000
Travel & subsistence 30,000 5,000
Professional & consultancy fees 927,000 335,000
IT & Software 71,000 15,000
Subscriptions 175,000 17,000
Insurance 85,000 29,000
Depreciation and amortisation 2,239,000 20,000
Share option expense 17,000 24,000
Other expenses 56,000 35,000
---------------------------------- ------------ -----------
Total administrative expenses 5,256,000 1,548,000
---------------------------------- ------------ -----------
Services provided by the Company's auditor and its associates
During the year, the Group (including overseas subsidiaries) obtained the following services from the Company's auditors and its associates:
Group
--------------------------
Year
ended 15 months
31 March ended 31
2022 March 2021
GBP GBP
------------------------- ----------- -------------
Auditors' remuneration 49,000 21,000
7. Other gain/(losses)
Group
-------------------------
15 months
Year ended ended
31 March 31 March
2022 2021
GBP GBP
---------------------------------------- ------------ -----------
Loss on disposal of Right of Use asset 7,000 -
Other gain/(losses) 7,000 -
---------------------------------------- ------------ -----------
8. Other operating income
Group
-------------------------
15 months
Year ended ended
31 March 31 March
2022 2021
GBP GBP
------------------------------------------------- ------------ -----------
Coronavirus Job Retention Scheme - 575,000
Local Government grants 119,000 20,000
Government support towards CBILS loan interest - 7,000
------------------------------------------------- ------------ -----------
119,000 602,000
------------------------------------------------- ------------ -----------
9. Finance income/costs
Group
-------------------------
15 months
Year ended ended
31 March 31 March
2022 2021
GBP GBP
--------------------------------------------------- ------------ -----------
Interest received from cash and cash equivalents 4,000 1,000
--------------------------------------------------- ------------ -----------
Finance Income 4,000 1,000
--------------------------------------------------- ------------ -----------
Loan interest (14,000) (48,000)
--------------------------------------------------- ------------ -----------
Finance Costs (14,000) (48,000)
--------------------------------------------------- ------------ -----------
10. Exceptional Items
Group
-------------------------
15 months
Year ended ended
31 March 31 March
2022 2021
GBP GBP
------------------------------------- ------------ -----------
Fair value uplift upon acquisition 1,759,000 -
Readmission and acquisition costs (851,000) (314,000)
908,000 (314,000)
------------------------------------- ------------ -----------
11. Property, plant and equipment
Group
Plant
and equipment Total
GBP GBP
---------------------------------- ------------------ --------------
Cost
As at 1 January 2020 104,000 104,000
Additions 2,000 2,000
As at 31 March 2021 106,000 106,000
---------------------------- ------------------------ --------------
As at 1 April 2021 106,000 106,000
Additions 34,000 34,000
Acquired upon acquisition 66,000 66,000
As at 31 March 2022 206,000 206,000
---------------------------- ------------------------ --------------
Depreciation
As at 1 January 2020 96,000 96,000
Charge for the year 7,000 7,000
As at 31 March 2021 103,000 103,000
---------------------------- ------------------------ --------------
As at 1 April 2021 103,000 103,000
Charge for the year 17,000 17,000 Acquired upon acquisition 20,000 20,000 As at 31 March 2022 140,000 140,000 ---------------------------- ------------------------ -------------- Net book value as at 31 March 2021 3,000 3,000 ---------------------------- ------------------------ -------------- Net book value as at 31 March 2022 66,000 66,000 ---------------------------- ------------------------ --------------
All tangible assets shown above are assets in use by the Group's subsidiary undertakings.
12. Right of use Assets
Group
Office
assets Other Total
GBP GBP GBP
---------------------------------- ----------- ---------------- --------------
Cost
As at 1 January 2020 - 154,000 154,000
Additions - - -
As at 31 March 2021 - 154,000 154,000
--------------------------- ------------------ ---------------- --------------
As at 1 April 2021 - 154,000 154,000
Additions 294,000 - 294,000
Acquired upon acqustion 407,000 - 407,000
Disposal (701,000) - (701,000)
As at 31 March 2022 - 154,000 154,000
--------------------------- ------------------ ---------------- --------------
Depreciation
As at 1 January 2020 - 90,000 90,000
Charge for the year - 13,000 13,000
As at 31 March 2021 - 103,000 103,000
--------------------------- ------------------ ---------------- --------------
As at 1 April 2021 - 103,000 103,000
Charge for the year 117,000 13,000 130,000
Acquired upon acqusition 101,000 - 101,000
Disposal (218,000) - (218,000)
As at 31 March 2022 - 116,000 116,000
--------------------------- ------------------ ---------------- --------------
Net book value as at 31
March 2021 - 51,000 51,000
--------------------------- ------------------ ---------------- --------------
Net book value as at 31
March 2022 - 38,000 38,000
--------------------------- ------------------ ---------------- --------------
Right of Use Assets represent leasehold premises from which the Group operates in relation to its sports and leisure activities.
All right of use assets shown above are assets in use by the Group's subsidiary undertakings.
13. Intangible assets
Intangible assets comprise goodwill and development costs.
Assets Goodwill Development Technology Customer Databases Total - Cost and GBP Costs assets relationships GBP GBP Net Book GBP GBP GBP Value ----------------- ------------ ------------- ------------ ---------------- ----------- ------------ Cost As at 1 April 2021 60,000 1,085,000 - - - 1,145,000 Additions - 2,304,000 - - 2,304,000 Acquired from business combination 21,561,000 - 14,081,000 1,207,000 1,094,000 37,943,000 As at year 31 March 2022 21,621,000 1,085,000 16,385,000 1,207,000 1,094,000 41,392,000 ----------------- ------------ ------------- ------------ ---------------- ----------- ------------ Amortisation - - - As at 1 April 2021 - 1,085,000 - - - 1,085,000 Amortisation - - 1,964,000 74,000 52,000 2,090,000 As at 31 March 2022 - 1,085,000 1,964,000 74,000 52,000 3,175,000 ----------------- ------------ ------------- ------------ ---------------- ----------- ------------ Net book value 21,621,000 - 14,421,000 1,133,000 1,042,000 38,217,000 ----------------- ------------ ------------- ------------ ---------------- ----------- ------------
-- Goodwill of GBP60,000 included above relates to the acquisition of Pantheon Leisure Plc which is included at its deemed cost on first time application of IFRS.
-- Goodwill of GBP19,041,000 included above relates to the acquisition of Insig Partners Limited (see Note 30)
-- Goodwill of GBP2,520,000 included above relates to the acquisition of Insig Data (formerly FDB Systems Limited) (see Note 30)
Development costs are predominantly capitalised staff costs associated with enhancements to the technology being developed by Insig Partners Limited. The Group's technology, customer relationships and database technology are acquired from the acquisitions undertaken during the period . During the year a purchase price allocation exercise relating to the purchase of Insig Partners Limited and Insig Data Limited by the Company was completed as per the requirements of IFRS 3 which valued the Group's technology, customer relationships and database technology at GBP16,486,000.
Goodwill is recognised when a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash-generating unit (CGU) level. These CGUs represent the smallest identifiable group of assets that generate cash flows. Our CGUs are deemed to be the assets within the operating units. Each CGU to which goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes.
The total intangible value in use for each CGU, incorporating goodwill and the intangible asset value, is determined using discounted cash flow projections derived from the total historical revenue profile of each identifiable CGU. The assumptions which are applied to each CGU including the useful economic life are set out in Note 2.7.
The key assumptions for the value in use calculations are those regarding growth rates particularly in respect of the growth in revenue and discount rates. The discount rate is reviewed annually to take into account the current market assessment of the time value of money and the risks specific to the cash generating units and rates used by comparable companies. The discount rate used to calculate the value in use is 20%. The long term growth rate used for the terminal value calculation was 2%.
An impairment review of the Group's development costs, technology, customer relationships and database technology is carried out on an annual basis. The recoverable amounts of the cash-generating units 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 elements:
(i) Based on current assessments of the Insig Partners and Insig Data activities made by the Directors they consider that revenues will grow in 2023 and exponentially grow from 2024-2027;
(ii) Operational costs are monitored and controlled
Further, given both acquisitions took place during the financial year at arms length, it is deemed reasonable there has been no diminution in the carrying values. Following their assessment, the Directors concluded that no impairment charge was required at 31 March 2022.
14. Investments in subsidiary undertakings
Company
------------------------------
31 March
31 March 2022 2021
Shares in Group Undertakings GBP GBP
------------------------------------------------- --------------- -------------
Cost
Investment in group subsidiaries - 1,948,000
Investment Insig Partners Limited 31,145,000 -
Investment in Insig Data 4,000,000 -
Shares in companies removed from the Companies
House register - (1,848,000)
Provision for impairment - (100,000)
------------------------------------------------- --------------- -------------
At end of period 35,145,000 -
------------------------------------------------- --------------- -------------
Loans to Group undertakings 4,034,000 220,000
------------------------------------------------- --------------- -------------
Total 39,179,000 220,000
------------------------------------------------- --------------- -------------
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision. Please refer to Note 30 for details of the investments in Insig Partners Limited and Insig Data Limited.
The Company has provided a guarantee in respect of the outstanding liabilities of the subsidiary companies listed below in accordance with Section 479A - 479C of the Companies Act 2006 as these subsidiary companies of the Group are exempt from the requirements of the Companies Act 2006 relating to the audit of the accounts by virtue of Section 479A of this Act.
Subsidiaries
The following companies were subsidiaries at the balance sheet date and the results and year end position of these companies have been included in these consolidated financial statements.
Name of subsidiary Registered office Country of Proportion Nature
address incorporation of ordinary of business
and place of shares held
business (%)
------------------------ ----------------------- ---------------- -------------- -----------------
Insig Partners 30 City Road, London, United Kingdom 100% Artificial
Limited United Kingdom, EC1Y Intelligence
2AB
------------------------ ----------------------- ---------------- -------------- -----------------
Westside Sports 30 City Road, London, United Kingdom 100% Holding
Limited United Kingdom, EC1Y company
2AB
------------------------ ----------------------- ---------------- -------------- -----------------
Insight Capital 30 City Road, London, United Kingdom 100% Artificial
Consulting Limited*** United Kingdom, EC1Y Intelligence
2AB
------------------------ ----------------------- ---------------- -------------- -----------------
Insig Data Limited 30 City Road, London, United Kingdom 100% Artificial
United Kingdom, EC1Y Intelligence
2AB
------------------------ ----------------------- ---------------- -------------- -----------------
Insig AI Corporation 16192 Coastal Hwy, United States 100% Dormant
Lewes, Delaware 19958
------------------------ ----------------------- ---------------- -------------- -----------------
Ultimate Player 30 City Road, London, United Kingdom 100% Dormant
Limited United Kingdom, EC1Y
2AB
------------------------ ----------------------- ---------------- -------------- -----------------
Pantheon Leisure 30 City Road, London, United Kingdom 85.87% Activities
Plc * United Kingdom, EC1Y of head
2AB office
------------------------ ----------------------- ---------------- -------------- -----------------
Sport In Schools 30 City Road, London, United Kingdom 100% Sports coaching
Limited** United Kingdom, EC1Y in schools
2AB
------------------------ ----------------------- ---------------- -------------- -----------------
The Elms Group 30 City Road, London, United Kingdom 100% Dormant
Limited ** United Kingdom, EC1Y
2AB
------------------------ ----------------------- ---------------- -------------- -----------------
* Shares held indirectly through Westside Sports Limited
** Shares held indirectly through Pantheon Leisure Plc
*** Shares held indirectly by Insig Partners Limited
15. Trade and other receivables
Group Company
---------------------- ----------------------
31 March 31 March 31 March 31 March
2022 2021 2022 2021
Current GBP GBP GBP GBP
----------------------------------- ---------- ---------- ---------- ----------
Trade receivables 240,000 79,000 - -
Amounts due from subsidiary
undertakings - - 31,000 382,000
Amounts due from related company - 220,000 - 220,000
Prepayments 8,000 13,000 - 8,000
VAT receivable 25,000 - 59,000 -
Other receivables 16,000 85,000 - 75,000
Total 289,000 397,000 90,000 685,000
----------------------------------- ---------- ---------- ---------- ----------
The ageing of trade receivables is as follows:
As at 31 As at 31
March 2022 March 2021
GBP GBP
---------------- ------------- -------------
Up to 3 months 240,000 -
3 to 12 months - -
Total 240,000 -
---------------- ------------- -------------
16. Cash and cash equivalents
Group Company
---------------------- ----------------------
31 March 31 March 31 March 31 March
2022 2021 2022 2021
GBP GBP GBP GBP
--------------------------- ---------- ---------- ---------- ----------
Cash at bank and in hand 473,000 935,000 61,000 484,000
--------------------------- ---------- ---------- ---------- ----------
17. Trade and other payables
Group Company
---------------------- ------------------------
31 March 31 March 31 March 31 March
2022 2021 2022 2021
GBP GBP GBP GBP
---------------------------- ---------- ---------- ---------- ----------
Trade payables 271,000 10,000 197,000 -
Accruals 185,000 149,000 108,000 22,000
Deferred income 100,000 - - -
Other creditors 70,000 150,000 - 147,000
Taxes and social security 183,000 257,000 3,000 135,000
809,000 566,000 308,000 304,000
---------------------------- ---------- ---------- ---------- ----------
The ageing of trade and other payables is as follows:
As at 31 As at 31
March 2022 March 2021
GBP GBP
----------------- ------------- -------------
Up to 3 months 412,000 309,000
3 to 6 months 114,000 -
6 to 12 months - -
Total 526,000 309,000
------------------ ------------- -------------
18. Loan and borrowings
Group Company
---------------------- ----------------------
31 March 31 March 31 March 31 March
2022 2021 2022 2021
GBP GBP GBP GBP
--------------------------- ---------- ---------- ---------- ----------
Not later than one year:
Bank loan - 36,000 - -
Convertible loan note - 414,000 - 414,000
Right of use liability 8,000 8,000 - -
Later than one year:
Bank loan - 204,000 - -
Right of use liability 29,000 38,000 - -
--------------------------- ---------- ---------- ---------- ----------
Total 37,000 700,000 - 414,000
--------------------------- ---------- ---------- ---------- ----------
Bank loan
On 20 May 2020, the Group was granted 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 originally due by June 2026.
This loan was fully repaid during the year.
Convertible loan notes
In the prior year 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 were 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 was charged on the loan notes.
The net proceeds received from the issue of the convertible loan notes had 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:
GBP
---------------------------------------------- -----------
Proceeds of issue of convertible loan notes 500,000
Equity component (124,000)
---------------------------------------------- -----------
Liability component at date of issue 376,000
Interest charged 38,000
Interest paid -
Liability component at 31 March 2021 414,000
---------------------------------------------- -----------
Further to the reverse takeover of Insig Partners Limited (formerly Insight Capital Partners Limited) during the year the GBP500,000 of issued loan notes were converted into 2,000,000 new ordinary shares as fully paid-up shares. Please refer to Note 21.
19. Deferred tax
An analysis of the deferred tax liability is set out below.
Cost
GBP
----------------------------------------- ---- -----------
Deferred tax liability
As at 31 March 2020 -
----------------------------------------- ---- -----------
Deferred tax liability for development
costs -
----------------------------------------- ---- -----------
As at 31 March 2021 -
----------------------------------------- ---- -----------
Deferred tax acquired on acquisition 3,218,000
Deferred tax liability for intangibles 942,000
------------------------------------------------- -----------
As at 31 March 2022 4,160,000
------------------------------------------------- -----------
20. Financial Instruments by Category Group
31 March 2022 31 March 2021
Amortised Amortised
cost Total cost Total
Assets per Statement of Financial
Position GBP GBP GBP GBP
------------------------------------ ----------- --------- ------------ -----------
Trade and other receivables 258,000 258,000 134,000 134,000
Due from loans - - 220,000 220,000
Cash and cash equivalents 473,000 473,000 935,000 935,000
----------- --------- ------------ -----------
731,000 731,000 1,289,000 1,289,000
----------- --------- ------------ -----------
31 March 2022 31 March 2021
-------------------------
Amortised Amortised
cost Total cost Total
------------
Liabilities per Statement of
Financial Position GBP GBP GBP GBP
Trade and other payables 526,000 526,000 309,000 309,000
Right of use lease liabilities 37,000 37,000 47,000 47,000
563,000 563,000 356,000 356,000
----------- --------- ----------- ------------
Company
31 March 2022 31 March 2021
Amortised Amortised
cost Total cost Total
Assets per Statement of Financial
Position GBP GBP GBP GBP
Trade and other receivables 31,000 31,000 46,000 46,000
Due from subsidiary undertakings 4,034,000 4,034,000 382,000 382,000
Due from loans - - 220,000 220,000
Cash and cash equivalents 61,000 61,000 484,000 484,000
4,126,000 4,126,000 1,132,000 1,132,000
------------ ----------- ----------- -----------
31 March 2022 31 March 2021
Amortised Amortised
cost Total cost Total
Liabilities per Statement of
Financial Position GBP GBP GBP GBP
Trade and other payables 305,000 305,000 169,000 169,000
Loans and borrowings - - 414,000 414,000
305,000 305,000 583,000 583,000
------------ --------- ----------- ---------
The Company's financial instruments comprise cash and cash equivalents, receivables and payables which arise in the normal course of business. As a result, the main risks arising from the Company's financial instruments are credit and liquidity risks. Please refer to Note to 3.1.
21. Share capital and premium
Group and Company Number of shares Share capital
--------------------------- ------------------------
31 March 31 March 31 March 31 March
2022 2021 2022 2021
---------------------- ------------- ------------ ----------- -----------
Ordinary shares 105,675,645 42,661,638 1,056,000 426,000
Deferred shares 22,811,638 22,811,638 2,054,000 2,054,000
Total 128,487,283 65,473,276 3,110,000 2,480,000
---------------------- ------------- ------------ ----------- -----------
Share
Issued at 0.01 pence per Number of capital Share premium Total
share Ordinary shares GBP GBP GBP
------------------------------------ ------------------ ----------- --------------- ------------
As at 31 March 2021 42,661,638 426,000 3,040,000 3,466,000
------------------------------------ ------------------ ----------- --------------- ------------
10 May 2021 - Reserves adjustment
for convertible loan notes - - 42,000 42,000
10 May 2021 - Placing shares
* 9,172,375 92,000 6,053,000 6,145,000
10 May 2021 - Consideration
shares Insig Partners Limited
- 10 May 2021** 44,819,161 448,000 25,996,000 26,444,000
10 May 2021 - Convertible
loan note shares - 10 May
2021*** 2,000,000 20,000 480,000 500,000
10 May 2021 - share issue
costs - - (164,000) (164,000)
18 November 2021 -Consideration
shares Insig Data Limited
**** 7,022,471 70,000 3,630,000 3,700,000
As at 31 March 2022 105,675,645 1,056,000 39,077,000 40,133,000
------------------------------------ ------------------ ----------- --------------- ------------
*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.
** 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 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.
**** On 18 November 2021, the Company issued 7,022,471 ordinary shares at a price of 51 pence per share as part of the consideration for Insig Data Limited for a total of GBP3,700,000
Deferred Shares (nominal value of 0.09 Number of Deferred Share capital pence per share) shares GBP ----------------------------------------- -------------------- --------------- As at 31 March 2021 22,811,638 2,054,000 ----------------------------------------- -------------------- --------------- New shares issued in the period - - ----------------------------------------- -------------------- --------------- As at 31 March 2022 22,811,638 2,054,000 ----------------------------------------- -------------------- ---------------
22. Share based payments
The Company has established a share option scheme for Directors, employees and consultants to the Group. Share options and warrants outstanding and exercisable at the end of the period have the following expiry dates and exercise prices:
Options & Warrants
Exercise
price
in GBP 31 March 31 March
Grant Date Vesting Date Expiry Date per share 2022 2021
----------------- ----------------- --------------- ------------ ----------- -----------
Options
31 January
1 August 2019 2020 31 July 2023 0.20 666,666 666,666
1 August 2019 31 July 2021 31 July 2023 0.20 333,333 333,333
31 January
1 August 2019 31 July 2020 2024 0.40 333,333 333,333
31 January
1 August 2019 31 July 2021 2024 0.40 666,666 666,666
31 January 31 January
1 August 2019 2022 2025 0.60 666,666 666,666
31 January
1 August 2019 2022 31 July 2025 0.60 666,666 666,666
1 August 2019 31 July 2022 31 July 2025 0.60 666,670 666,670
8 March 2022 4 October 2024 7 March 2032 0.48 2,000,000 -
8 March 2022 4 August 2024 7 March 2032 0.48 900,000 -
8 March 2022 4 January 2025 7 March 2032 0.48 150,000 -
8 March 2022 4 March 2025 7 March 2032 0.48 300,000 -
Warrants
5 October 2021 5 October 2021 10 May 2027 0.84 396,582 -
7,746,582 4,000,000
--------------------------------------------------- ------------ ----------- -----------
The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash.
Warrants
2022 2021
Outstanding at beginning of period - 500,000
Exercised - (500,000)
Vested 396,582 -
------------------------------------- --------- -----------
Outstanding as at period end 396,582 -
------------------------------------- --------- -----------
Exercisable at period end 396,582 -
------------------------------------- --------- -----------
The movements in the weighted average exercise price of the warrants were as follows:
2022 2021
Outstanding at beginning of period - -
Granted 0.84 -
------------------------------------- ------ ------
Outstanding as at period end 0.84 -
------------------------------------- ------ ------
Exercisable at period end 0.84 -
------------------------------------- ------ ------
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 were recognised as an expense against profit and loss as at the date of issue in May 2021.
In accordance with IFRS2, the fair value of the warrants issued and recognised as a charge in the accounts for the 12 month period is GBPNil (15 months ended 31 March 2021 - 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.
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. In March 2022, the Company granted options over 3,350,000 ordinary shares to a Director and certain employees. Details of the options are set out below:
2022 2021
------------------------------------- ----------- -----------
Outstanding at beginning of period 4,000,000 4,160,000
Lapsed during period - (160,000)
Exercised - -
Granted 3,350,000 -
------------------------------------- ----------- -----------
Outstanding as at period end 7,350,000 4,000,000
------------------------------------- ----------- -----------
Exercisable at period end 3,333,000 666,666
------------------------------------- ----------- -----------
The movements in the weighted average exercise price of the options were as follows:
2022 2021
------------------------------------- ------ ------
Outstanding at beginning of period 45.0 44.3
Lapsed 45.0 26.6
Exercised - -
Granted 48.0 -
------------------------------------- ------ ------
Outstanding as at period end 46.0 45.0
------------------------------------- ------ ------
Exercisable at period end 46.0 45.0
------------------------------------- ------ ------
The fair value of the equity instruments granted was determined using the Black Scholes 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 and options granted to Directors and employees on the 8 March 2022:
2019 Options 2019 Options 2019 Options 2022 Options
-------------- --------------- --------------- --------------
Granted on: 1 August 1 August 2019 1 August 2019 8 March 2022
2019
Life (years) 3 years 3 years 3 years 10 years
Share price (pence per
share) 17p 17p 17p 27.5p
Exercise price 20p 40p 60p 48p
Shares under option 1,000,000 1,000,000 2,000,000 3,350,000
Risk free rate 0.57% 0.57% 0.57% 0.57%
Expected volatility 43.1% 43.1% 43.1% 43.1%
Vesting period (years) 1 to 3 years 1 to 4 Years 2 to 5 Years 8 to 9 years
Small company discount
factor 35% 35% 35% 35%
Total fair value (pence
per option) 2.5 2.5 0.7 0.02
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 12 month period is GBP17,000 (15 months to 31 March 2021 - GBP23,750). The 2022 options tranche have not been charged yet as they do not vest until 2024-2025.
The weighted average contractual life of options outstanding on 31 March 2022 was 2.4 years (31 March 2021: 3.4 years).
23. Other reserves
Merger
reserve Other reserve Total
GBP GBP GBP
----------------------------- ---------- --------------- -----------
At 31 March 2021 326,000 102,000 428,000
----------------------------- ---------- --------------- -----------
Equity component of
CLN issued in period - (124,000) (124,000)
Share issue costs reversal - 22,000 22,000
Share based payment - - -
At 31 March 2022 326,000 - 326,000
----------------------------- ---------- --------------- -----------
24. Employee benefit expense
Group Company
------------------------- -------------------------
15 months 15 months
Year ended ended Year ended ended
31 March 31 March 31 March 31 March
2022 2021 2022 2021
Staff costs (excluding Directors) GBP GBP GBP GBP
------------------------------------ ------------ ----------- ------------ -----------
Salaries and wages 2,227,000 1,643,000 - -
Social security costs 271,000 108,000 - -
Pension contributions 108,000 29,000 - -
Other employment costs 6,000 - - -
2,612,000 1,780,000 - -
------------------------------------ ------------ ----------- ------------ -----------
The average monthly number of employees for the Group during the year was 119 (15 months ended 31 March 2021: 106) and the average monthly number of employees for the Company was nil (15 months ended 31 March 2021: 2).
Of the above Group staff costs, GBP1,463,000 (15 months ended 31 March 2021: GBPnil) has been capitalised in accordance with IAS 38 as development costs and are shown as an intangible addition in the year.
There were no employees in the Company apart from Directors whose remuneration is disclosed in Note 25.
25. Directors' remuneration
31 March
2022
-------------- ------------- ---------
Share based
Remuneration payments Total
GBP GBP GBP
--------------------------- -------------- ------------- ---------
Executive Directors
Richard Bernstein 22,000 - 22,000
Steven Cracknell 217,000 - 217,000
Warren Pearson 229,000 - 229,000
Colm McVeigh 125,000 - 125,000
Matthew Farnum-Schneider 140,000 17,000 157,000
Non-executive Directors
John Murray 31,000 - 31,000
Peter Rutter 22,000 - 22,000
David Coldbeck 10,000 - 10,000
John Zucker 10,000 - 10,000
David Hillel 16,000 - 16,000
822,000 17,000 839,000
-------------- ------------- ---------
Directors who were appointed during the year:
-- Richard Bernstein -appointed 12 August 2021
-- Colm McVeigh - appointed 9 December 2021
-- Steven Cracknell - appointed 10 May 2021
-- Warren Pearson - appointed 10 May 2021
-- Richard Cooper - appointed 11 April 2022
Directors who resigned during the year:
-- Peter Rutter - resigned 31 December 2021
-- David Coldbeck - resigned 10 May 2021
-- John Zucker - resigned 10 May 2021
-- David Hillel - resigned 10 May 2021
-- Matthew Farnum-Schneider - resigned 12 August 2021
Of the above Group directors' remuneration, GBP375,000 (15 months ended 31 March 2021: GBPnil) has been capitalised in accordance with IAS 38 as development related costs and are shown as an intangible addition in the year. The fair value of the share options issued to Matthew Farnum-Schneider and recognised as a charge in the accounts for the 12 month period is GBP17,000.
31 March
2021
-------------- ------------- ---------
Share based
Remuneration payments Total
GBP GBP GBP
--------------------------- -------------- ------------- ---------
Executive Directors
Matthew Farnum-Schneider 313,000 - 313,000
R Owen 5,000 - 5,000
Non-executive Directors
David Coldbeck 6,000 - 6,000
John Zucker 6,000 - 6,000
David Hillel 9,000 - 9,000
339,000 - 339,000
-------------- ------------- ---------
The remuneration of Directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.
26. Income tax expense
Group
-------------------------
15 months
Year ended ended
31 March 31 March
2022 2021
GBP GBP
-------------------------------------------------- ------------ -----------
Deferred Tax
Fixed assets and short-term temporary difference (538,000) -
Intangibles on business combinations (404,000) -
Total deferred tax (942,000) -
-------------------------------------------------- ------------ -----------
Total income tax expense (942,000) -
-------------------------------------------------- ------------ -----------
No current tax charge arose in the current or prior period.
Group
----------------------------
15 months
Year ended ended
31 March 31 March
2022 2021
GBP GBP
----------------------------------------------------- ------------- -------------
Loss before tax (3,243,000) (1,060,000)
----------------------------------------------------- ------------- -------------
Tax at the applicable rate of 19 % (2021: 19
% ) (616,000) (202,000)
Effects of:
Expenditure not deductible for tax purposes 1,456,000 76,000
Effect of tax rate change on deferred tax acquired 226,000 -
in business combinations
Temporary differences in respect of depreciation
and capital allowances not reflected in deferred
tax - 1,000
Unutilised tax losses not recognised as a deferred
tax asset (2,008,000) 125,000
----------------------------------------------------- ------------- -------------
Tax charge (942,000) -
----------------------------------------------------- ------------- -------------
The Group has unutilised tax losses of approximately GBP11,707,000 (5 months to 31 March 2021 GBP6,610,000) available to carry forward against future taxable profits. No deferred tax asset has been recognised on accumulated tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset.
27. Loss per share
Group
The calculation of the total basic loss per share of (3.55) pence ( 15 months to 31 March 2021 : ( 2.67 ) pence) is based on the loss attributable to equity holders of the parent company of GBP4,198,000 ( 15 months to 31 March 2021 : GBP1,060,000 ) and on the weighted average number of ordinary shares of 118,079,507 ( 15 months to 31 March 2021 : 39,689,000) in issue during the year.
In accordance with IAS 33, basic and diluted loss per share are identical for the Group as the effect of the exercise of share options would be to decrease the loss per share. Details of share options that could potentially dilute earnings per share in future periods are set out in Note 22.
28. Contin gent liabilities
There is an ongoing legal dispute between the Company and a former employee for breach of contract. The damages being sought by the former employee are GBP160,000 plus costs. The Company is defending the claim and has issued a counter-claim.
29. Related party transactions
Loans to Group undertakings
Amounts receivable as a result of loans granted to subsidiary undertakings are as follows:
Company
-----------------------
31 March 31 March
2022 2021
GBP GBP
------------------------------------- ----------- ----------
Insig Partners 3,333,000 220,000
Insig Data (formerly FDB Systems 72,000 -
Limited)
Insight Capital Consulting Limited - -
Pantheon Leisure 539,000 512,000
Westside Sports Limited 90,000 90,000
------------------------------------- ----------- ----------
4,034,000 822,000
------------------------------------- ----------- ----------
Insig Partners Limited
Loans totalling GBP3,113,000 were provided to Insig Partners Limited from Insig AI Plc during the year to cover operating costs (15 months to 31 March 2021: GBP220,000).
Insig Data Limited (formerly FDB Systems Limited)
Loans totalling GBP72,000 were provided to Insig Data from Insig AI Plc during the year to cover operating costs (15 months to 31 March 2021: GBPnil).
Insight Capital Consulting Limited
Loans totalling GBP16,000 were provided to Insight Capital Consulting from Insig Partners Limited during the year to cover operating costs (15 months to 31 March 2021: GBP1,111,000).
Pantheon Leisure Plc
Loans totalling GBP27,000 were provided to Pantheon Leisure from Insig AI Plc during the year to cover operating costs (15 months to 31 March 2021: GBP512,000).
These amounts are unsecured and repayable on demand.
All intra Group transactions are eliminated on consolidation.
Other transactions
The Group defines its key management personnel as the Directors of the Company as disclosed in the Directors' Report.
Following his appointment as Chief Commercial Officer on 9 December 2021, the Company granted Colm McVeigh options over 2 million ordinary shares under the Company's existing share option scheme. He was also paid a consultancy fee of GBP30,000 during the year, prior to his appointment as a Director.
Following the completion of the Company's acquisition of Insig Partners Limited in May 2021 and prior to his appointment as a director in August 2021, a payment of GBP352,629 (including VAT) was paid to Richard Bernstein in accordance with an introduction agreement made between himself and the Company in February 2018 in which he as introducer would become entitled to a fee of 1% of the value from this first acquisition by the Company.
30. Business Combinations
Insig Partners Limited
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. Connected to the acquisition of Insig Partners Limited were changes in directors and change in Company name.
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 has accounted for the acquisition by applying the acquisition method of accounting, rather than applying reverse accounting rules under IFRS 3.
The investment in Insig Partners Limited is recognised at the fair value of the consideration given:
GBP
Initial cash consideration for
9.4% 1,500,000
Fair value uplift of initial cash
consideration 1,759,000
Consideration shares issued (44,819,161) 26,444,000
Additional cash consideration 1,442,000
------------------------------------------- ------------
Total consideration 31,145,000
------------------------------------------- ------------
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 GBP3,259,000. The Group effectively recognised a gain of GBP1,759,000 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.
Details of the fair value of the assets acquired at completion and the consideration payable is as follows:
Book Value Fair Value
GBP GBP
Intangible assets 4,749,000 14,615,000
Cash and cash equivalents 94,000 94,000
Property, plant and equipment 344,000 344,000
Trade & other receivables 869,000 869,000
Trade & other payables (1,040,000) (1,040,000)
Deferred tax (902,000) (2,778,000)
-------------------------------- ------------- -------------
Net assets 4,114,000 12,104,000
-------------------------------- ------------- -------------
Cash 2,942,000
-------------------------------- ------------- -------------
Considerations shares 28,203,000
-------------------------------- ------------- -------------
Fair value of consideration 31,145,000
-------------------------------- ------------- -------------
Goodwill 19,041,000
-------------------------------- ------------- -------------
The fair value of the receivables is considered to equate to the gross contractual amount receivable. The acquired receivable is GBP869,000, of which GBPnil is expected to be uncollectable.
Goodwill of GBP19,041,000 that would arise from the acquisition based on the fair 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. None of the goodwill recognised is expected to be deductible for income tax purposes.
The loss for Insig Partners Limited since the date of acquisition was GBP2,018,000. The full year loss was GBP2,046,000.
Insig Data Limited (formerly FDB Systems Limited)
On 18 November 2021 the Company entered into a conditional share purchase agreement to acquire the entire issued share capital of FDB Systems Limited.
FDB Systems specialises in structuring data, which is the process of transforming raw data so that it can be more easily and effectively used as an input to machine learning, data science and AI processes. In addition, FDB Systems owns FilingDB. FilingDB is the first productised source of global company filings optimised for Natural Language Processing ("NLP") use cases. FilingDB aggregates, parses and structures information including annual reports, interim reports and press releases enabling users to access relevant data more easily.
The investment in FDB Systems has been recognised at the fair value of the consideration given:
GBP
Consideration shares issued (7,022,471) 3,700,000
Cash consideration 300,000
Total Consideration 4,000,000
------------------------------------------ -----------
As part of the acquisition the following contingent consideration based on revenue projections was agreed:
-- Year one deferred consideration of up to GBP760,000 and deferred equity of up to 4,251,442 ordinary shares conditional upon minimum revenue of GBP900,000 being generated by Insig Data during the 12 month period 1 January 2022 to 31 December 2022.
-- Year two deferred consideration of up to GBP900,000 and deferred equity of up to 3,985,727 ordinary shares conditional upon minimum revenue of GBP1,700,000 being generated by Insig Data during the 12 month period 1 January 2023 to 31 December 2023.
Based on the current revenue projections it is considered highly improbable these revenue projections will be met therefore the deferred consideration has not been recognised.
Details of the fair value of the assets acquired at completion and the consideration payable is as follows:
Book Value Fair Value
GBP GBP
Intangibles - 1,769,000
Property, plant and equipment 6,000 6,000
Cash and cash equivalents 119,000 119,000
Trade and other receivables 40,000 40,000
Trade and other payables (12,000) (12,000)
Deferred tax - (442,000)
Net assets 153,000 1,480,000
-------------------------------- ------------ ------------
Cash 300,000
-------------------------------- ------------ ------------
Considerations shares 3,700,000
-------------------------------- ------------ ------------
Fair value of consideration 4,000,000
-------------------------------- ------------ ------------
Goodwill 2,520,000
-------------------------------- ------------ ------------
The Acquisition was funded out of existing cash resources and the issuance of 7,022,471 ordinary shares of the Company.
Should audited third party revenues fail to exceed 75% of target, no more than 33% of deferred consideration will be paid. If audited third party revenues fail to exceed 50% of target, no deferred consideration will be payable.
Goodwill of GBP2,520,000 that would arise from the acquisition based on the book values of Insig Data Limited as set out above None of the goodwill recognised is expected to be deductible for income tax purposes.
Connected to the acquisition of FDB Systems Limited was a change in Company name to Insig Data Limited.
The loss for Insig Data Limited since the date of acquisition was GBP284,759. The full year loss was GBP363,000.
31. Ultimate controlling party
The Directors believe there is no ultimate controlling party.
32. Events after the reporting date
On the 11 April 2022, the Company appointed Richard Cooper to the Board as a Non-Executive Director and Chair of the Audit Committee.
On the 4 May 2022, the Company entered into a formal agreement for a GBP1.0m convertible loan note to be provided by Richard Bernstein, Non-Executive Chairman of the Company. A total of GBP793,334 has been drawn down by the Company.
On 17 June 2022, the Company entered into a convertible loan facility agreement with David Kyte, a long-term shareholder in the Company for GBP500,000. A total of GBP396,66 has been drawn down by the Company.
END
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FR UWOARUSUKRUR
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September 09, 2022 02:01 ET (06:01 GMT)
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