NOTES TO THE FINANCIAL STATEMENTS

 

1.         General information

 

Dianomi plc (the "Company") and its subsidiaries' (together the "Group") principal activity is the delivery of premium native advertising for the financial services, technology, corporate sand lifestyle sectors. The Company was incorporated on 16 August 2002 in England and Wales as a private company limited by shares under the name Data-ID Limited. On 17 December 2002, the Company changed its name to Dianomi Limited. On 17 May 2021, the Company re-registered as a public limited company and changed its name to Dianomi plc.

 

The address of the registered office is 6^th Floor, 60 Gracechurch Street, London, EC3V 0HR and the limited company number is 04513809.

 

2.         Basis of preparation and significant accounting policies

 

2.1.         Basis of preparation

 

These financial statements have been prepared on a going concern basis and in accordance with International Financial Reporting Standards (IFRSs) and the International Financial Reporting Standards Interpretation Committee (IFRS IC) interpretations as adopted by the UK that are effective or issued and early adopted as at the date of these financial statements and in accordance with the provisions of the Companies Act 2006.

 

The profit before interest, tax, depreciation, amortisation, share-based payment charge and exceptional costs (adjusted EBITDA) is presented in the income statement as the Directors consider this performance measure provides a more accurate indication of the underlying performance of the Company and is commonly used by City analysts and investors.

 

The preparation of financial statements requires management to exercise its judgement in the process of applying accounting policies.

 

The presentational and functional currency of the Company is sterling. Results in these financial statements have been prepared to the nearest £1,000.

 

2.2.         Adoption of IFRS

 

This is the first period of account where the Company has prepared its financial statements in accordance with IFRSs as adopted by the UK. The statutory financial statements for the year ended 31 December 2020 were prepared in accordance with FRS 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland (United Kingdom Generally Accepted Accounting Practice - "UK GAAP").

 

The Company's effective IFRS transition date for the purposes of these financial statements was 1 January 2020. The effect of this transition to IFRS on the year-end statements of financial position at 1 January 2020 and 31 December 2020 and the statement of comprehensive income for the year ended 31 December 2020 are set out in note 22.

 

 

 

 

 

 

2.3.       Basis of consolidation

 

The consolidated financial information incorporates the financial information of Dianomi Plc and all of its subsidiary undertakings. Subsidiary undertakings include entities over which the Group has effective control. The Group controls a group when it is exposed to, or has right to, variable returns from its involvement with the Group and has the ability to affect those returns through its power over the Group. In assessing control, the Group takes into consideration potential voting rights.

 

2.4.       Going concern

 

At the time of approving the financial statements, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.

 

At 31 December 2021 the Company had cash and cash equivalents of £10.3 million (2020; £4.7 million) and net current assets of £10.1 million (2020: £4.4 million). The  Group has no debt facilities in place (2020: £1.2 million).

 

The Directors have prepared detailed cash flow forecasts for the next 18 months that indicate the existing activities of the Group do not require additional funding during that period. The forecasts are challenged by various downside scenarios to stress test the estimated future cash position. The Directors are pleased to note that the stress tests did not have a significant impact on the cash flow or cash position of the Group. In addition, current trading is in line with the forecast.

 

 

2.5.       Principal Accounting Policies

 

2.5.1.     Revenue

 

The Group's customers are direct advertisers, affiliate advertisers and advertising agencies with whom the Group will enter into a contract or insertion order.

 

The Group generates revenue by charging advertisers for advertising campaigns delivered through its platform. The customer's total spend on advertising is determined by multiplying an agreed performance metric option, such as cost per mil (CPM), cost per impression (CPI), click (CPC) or action (CPA) with the volumes of units delivered.

 

Revenue is recognised on completion of the performance criteria which, in most cases, is when an internet user clicks through to an advertisement that has been displayed on a web page.

 

Where advanced payments are made in advance of satisfying the performance obligation, these amounts are transferred to deferred revenue (contract liabilities) and recognised when the performance obligation has been met.

 

The Group's standard payment terms require settlement of invoices within 60-90 days of receipt.

 

The Group does not adjust the transaction price for the time value of money as it does not expect to have any contracts where the period between the transfer of the promised services to the client and the payment by the client exceeds one year.

 

 

 

 

2.5.2.     Cost of sales

 

Cost of sales represents the direct expenses that are attributable to the services sold. They consist primarily of payments to publishers under the terms of the revenue share agreements that the Group has with them. Depending on the terms of the revenue share agreements, cost of sales can include commissions where applicable.

 

2.5.3.     Taxation

 

Current tax is the tax currently payable based on the taxable profit for the year.

 

The Group recognises current tax assets and liabilities of entities in different jurisdictions separately as there is no legal right of offset.

 

Deferred tax is provided in full on temporary differences between the carrying amounts of assets and liabilities and their tax bases, except when, at the initial recognition of the asset or liability, there is no effect on accounting or taxable profit or loss under a business combination. Deferred tax is determined using tax rates and laws that have been substantially enacted by the statement of financial position date, and that are expected to apply when the temporary difference reverses.

 

Tax losses available to be carried forward, and other tax credits to the Group, are recognised as deferred tax assets, to the extent that it is probable that there will be future taxable profits against which the temporary differences can be utilised.

 

Changes in deferred tax assets or liabilities are recognised as a component of the tax expense in the statement of comprehensive income, except where they relate to items that are charged or credited directly to equity, in which case the related deferred tax is also charged or credited directly to equity.

 

2.5.4.     Government grants

 

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate.

 

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

 

2.5.5.     Development costs

 

Costs relating to the ongoing support and development of the Group's platform are recognised as an expense in profit and loss as incurred.

 

2.5.6.     Foreign currency translation

 

a)   Function and presentational currency

Items included in the financial information 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 consolidated financial information is presented in 'sterling', which is the Company's functional currency and the Group's presentation currency.

 

 

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

 

b)   Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

     

2.5.7.     Cash and cash equivalents

 

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.

 

2.5.8.     Leases

 

The Group leases property in the UK, US and Australia.

 

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

 

-      Leases of low value assets; and

 

-      Leases with a duration of twelve months or less.

 

These leases are recognised as an expense on a straight-line basis over the term of the lease.

 

Lease liabilities are measured at the present value of contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. This is 3.0 per cent. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

 

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

-      Lease payments made at or before commencement of the lease;

 

-      Initial direct costs incurred; and

 

-      The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations).

 

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

 

No lease modification or reassessment changes have been made during the reporting period from changes in any lease terms or rent charges.

 

 

2.5.9.     Earnings per share

 

The Group presents basic and diluted earnings per share on an IFRS basis. In calculating the weighted average number of shares outstanding during the period, any share restructuring is adjusted to allow comparability with other periods. The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, which arise from share options outstanding.

2.5.10.   Financing income and expenses

 

Financing expenses comprise interest payable, finance charges on shares classified as liabilities and leases recognised in the income statement using the effective interest method, unwinding of the discount on provisions, and not foreign exchange losses that are recognised in the statement of comprehensive income.

 

Financing income includes interest receivable on funds invested.

 

Interest income and interest payable are recognised in the statement of comprehensive income as they accrue, using the effective interest method.

 

2.5.11.   Costs relating to IPO

 

Items which are material because of their size or nature and which are non-recurring are highlighted separately on the face of the consolidated statement of comprehensive income.  The separate reporting of exceptional items helps provide a better picture of the Group's underlying performance.  Items which have been included within this category are the costs relating to the Company's IPO on AIM in May 2021. The costs specifically related to the issue of new shares have been set against share premium. Other IPO costs which relate to listing both new and existing shares have been allocated on a 50/50 basis between exceptional P&L costs and share premium.

Costs relating to the IPO are excluded from the headline profit measures used by the Group and are highlighted separately in the consolidated statement of comprehensive income as management believe that they need to be considered separately to gain an understanding the underlying profitability of the trading businesses.

2.5.12.   Employee Benefits

 

Post-retirement benefits 

 

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

 

The contributions are recognised as an expense in administrative expenses in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.

Share-based payments

 

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Statement of Financial Position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

 

The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the group keeping the scheme open or the employee maintaining any contributions required by the scheme).

 

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

 

Where equity instruments are granted to persons other than employees, profit or loss is charged with the fair value of goods and services received.

 

2.6.   Standards issued but not yet effective

 

At the date of authorisation of these financial statements, there is expected to be no material impact to the Group financial statements from IFRSs, IFRICs or other standards or interpretations that have been issued but which are not yet effective.

 

At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

 

·      IAS 1 Presentation of liabilities as current or non-current

 

·      IAS 1 Disclosure of accounting policies

 

·      IAS 8 Definition of accounting estimates

 

The new standards, listed above, are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

 

 

2.7.       Alternative performance measures

 

In order to provide better clarity to the underlying performance of the Group, adjusted EBITDA and adjusted earnings per share are used as alternative performance measures. These measures are not defined under IFRS. These non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance, but have been included as the Directors consider adjusted EBITDA and adjusted earnings per share to be a key measures used within the business for assessing the underlying performance of the Group's ongoing business across periods. Adjusted EBITDA excludes from operating profit non-cash depreciation, share-based payment charges and non-recurring exceptional costs. Adjusted EPS excludes from profit after tax share-based payment charges and non-recurring exceptional items and their related tax impacts. Please refer to note 7 for reconciliations to Alternative Performance Measures ("APMs").

3.      Revenue

 

        Revenue arises from:

		Year to  31 Dec 2021	Year to 31 Dec 2020
		£000	£000
EMEA		7,149	4,836
U.S.A.		27,451	21,879
APAC		1,182	1,715
		======================================================	======================================================
		35,782	28,430
		======================================================	======================================================

 

4.      Operating segments

 

The Group is operated as one global business by its executive team, with key decisions being taken by the same leaders irrespective of the geography where work for clients is carried out. The Directors consider that the geographies where the Group operates have similar economic and operating characteristics and the products and services provided in each region are all related to premium native advertising. Management therefore consider that the Group has one operating segment. The Group report is presented and measured to the Board as a single segment and is consistent with the financial statements.  As such, no additional disclosure has been recorded under IFRS 8.

 

 

5.      Other operating income

 

		Year to  31 Dec 2021	Year to 31 Dec 2020
		£000	£000
Other operating income		-	38
		======================================================	======================================================
		-	38
		======================================================	======================================================

 

 

Other operating income in the year ended 31 December 2020 related to a grant Dianomi Pty Ltd received from the Australian government as financial support during the Covid-19 pandemic.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.      Administrative expenses

 

			Year to  31 Dec 2021	Year to 31 Dec 2020
			£000	£000
Direct staff costs			4,702	3,966
IT and software costs			834	677
Legal and professional			905	620
Rent			106	148
Insurance			90	56
Depreciation - leased assets			154	104
Foreign exchange losses/(gains)			90	(1)
Share-based payments			2,854	-
Other administrative expenses			529	369
			======================================================	======================================================
			10,264	5,939
			======================================================	======================================================

During the year the Group obtained the following services from the Company's auditors as detailed below:

 

		Year to  31 Dec 2021	Year to 31 Dec 2020
		£000	£000
Audit fees		75	48
Other services:
Tax compliance		11	12
Accounts preparation		-	8
Transfer pricing advice		12	-
Agreed upon procedures on interim results		19	-
		======================================================	======================================================
		117	68
		======================================================	======================================================

 

 

7.      Reconciliations to Alternative Profit Measures

 

In order to provide better clarity to the underlying performance of the Group, Dianomi uses adjusted EBITDA and adjusted earnings per share as alternative performance measures. These measures are not defined under IFRS. These non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance, but have been included as the Directors consider adjusted EBITDA and adjusted earnings per share to be key measures used within the business for assessing the underlying performance of the Group's ongoing business across periods. Adjusted EBITDA excludes non-cash depreciation charges, share-based payment charges and non-recurring exceptional costs from operating profit. Adjusted EPS excludes share-based payment charges and non-recurring exceptional items and their related tax impacts from profit after tax.

 

 

 

 

 

 

 

 

The table below sets out the reconciliation of the Group's adjusted EBITDA and adjusted profit before tax from profit before tax.

 

		Year to  31 Dec 2021	Year to 31 Dec 2020
		£000	£000
		======================================================	======================================================
(Loss)/ profit before tax		(618)	2,040
		======================================================	======================================================
Adjusting items:
Costs relating to the IPO		637	115
Share-based payments		2,854	-
		======================================================	======================================================
Adjusted profit before tax		2,873	2,155
		======================================================	======================================================
Depreciation		154	103
Net finance expense		41	98
		======================================================	======================================================
Adjusted EBITDA		3,068	2,356
		======================================================	======================================================

 

The table below sets out the reconciliation of the Group's adjusted profit after tax to adjusted profit before tax.

 

		======================================================	======================================================
Adjusted profit before tax		2,873	2,155
		======================================================	======================================================
Tax credit/ (charge)		122	(534)
Tax impact of adjusting items		(677)	(23)
		======================================================	======================================================
Adjusted profit after tax		2,318	1,598
		======================================================	======================================================

 

Adjusted profit after tax is used in calculating adjusted basic and adjusted diluted EPS. Adjusted profit after tax is stated before adjusting items and their associated tax effects. Adjusted EPS is calculated by dividing the adjusted profit after tax for the period attributable to Ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Adjusted diluted EPS is calculated by dividing adjusted profit after tax by the weighted average number of shares adjusted for the impact of potential ordinary shares. Potential Ordinary shares are treated as dilutive when their conversion to Ordinary shares would decrease EPS. Please refer to note 11 for further detail.

 

 

 

 

 

 

 

 

 

 

 

8.      Finance income and expenses

 

	Year to 31 Dec 2021	Year to  31 Dec 2020
	£000	£000
Interest received	5	7
	----------------------------------------------	----------------------------------------------
Total finance income	5	7
	============================================	============================================
Loan note interest	44	101
On lease liability	2	4
	----------------------------------------------	----------------------------------------------
Total finance expense	46	105
	============================================	==============================================

 

 

9.      Taxation

 

	Year to 31 Dec 2021	Year to 31 Dec 2020
	£000	£000
UK corporation tax
Current tax on income for the year	-	-
Adjustments in respect of prior periods	-	-
	----------------------------------------------	----------------------------------------------
	-	-
	=================================================	=================================================
Foreign tax
Foreign tax on income for the year	553	534
	-----------------------------------------------	-----------------------------------------------
Total current tax	553	534
	=================================================	=================================================
Deferred tax
Origination and reversal of timing differences	(675)	-
	-----------------------------------------------	-----------------------------------------------
Total deferred tax	(675)	-
	=================================================	=================================================
	----------------------------------------------	----------------------------------------------
Taxation on profit on ordinary activities	(122)	534
	=================================================	=================================================

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of tax expense

 

The tax assessed on the profit on ordinary activities for the year is lower than (2020: higher than) the standard rate of corporation tax in the UK of 19% (2020: 19%).

 

	Year to 31 Dec 2021	Year to 31 Dec 2020
	£000	£000
(Loss)/ profit on ordinary activities before taxation	(618)	2,040
	=======================================================	======================================================
(Loss)/ profit on ordinary activities multiplies by standard rate of corporation tax in the UK of 19% (2020: 19%)	(118)	388
Effects of:
Expenses not deductible for tax purposes	657	96
Foreign tax	225	144
Difference in tax rates	(96)	(17)
Deferred tax not recognised	(790)	(77)
	=======================================================	======================================================
Tax on profit	(122)	534
	=======================================================	======================================================

 

 

10.    Deferred Tax

 

Deferred Tax Asset

 

	As at 31 Dec 2021	As at 31 Dec 2020
	£000	£000
Tax losses	675	-
	----------------------------------------	----------------------------------------
	675	-
	=============  ===========================	========================================

 

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. There is a potential additional deferred tax asset of £1.3 million in respect of tax losses of £5.1 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.    Earnings per share

The Group presents non-adjusted and adjusted basic and diluted earnings/loss per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit/loss for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Share numbers for 2020 have been adjusted to reflect the share reorganisation which took place in May 2021

Diluted EPS takes into consideration the Company's dilutive contingently issuable shares. The weighted average number of ordinary shares used in the diluted EPS calculation is inclusive of the number of share options that are expected to vest subject to performance criteria as appropriate, being met.

The (loss) / profit and weighted average number of shares used in the calculations are set out below:

 

	Year to 31 Dec 2021	Year to 31 Dec 2020
	£000	£000
(Loss)/ profit attributable to the ordinary equity holders of the Group used in calculating basic and diluted EPS	(496)	1,506
Basic (loss)/ earnings per ordinary share (p)	(1.77)	6.05
Diluted (loss)/ earnings per ordinary share (p)	(1.77)	5.45

 

 

	Year to 31 Dec 2021	Year to 31 Dec 2020
Adjusted basic and diluted EPS	£000	£000
Reconciliation of earnings used in calculating adjusted EPS:
(Loss) / profit attributable to the ordinary equity holders of the Group used in calculating basic and diluted EPS	(496)	1,506
Adjusting items:
Share-based payments	2,854	-
Costs relating to the IPO	637	115
Tax impact of adjusting items	(677)	(23)
	======================================================	======================================================
Profit attributable to the ordinary equity holders of the Group used in calculating adjusted basic and diluted EPS	2,318	1,598
Adjusted basic earnings per ordinary share (p)	8.27	6.41
Adjusted diluted earnings per ordinary share (p)	7.65	5.78

 

 

		Year to 31 Dec 2021	Year to 31 Dec 2020
Weighted average number of ordinary shares used as the denominator in calculating non-adjusted and adjusted basic EPS		28,024,038	24,913,036
Weighted share option dilution impact		2,264,678	2,716,169
		======================================================	======================================================
Weighted average number of ordinary shares used as the denominator in calculating non-adjusted and adjusted diluted EPS		30,288,716	27,629,205

 

 

       

12.    Trade and other receivables

 

	As at 31 Dec 2021	As at 31 Dec 2020	As at 1 Jan 2020
	£000	£000	£000
Current
Trade receivables	7,169	5,240	3,522
Prepayments	59	52	40
Loan receivable	97	154	165
Other receivables	70	74	192
Derivative financial instruments measured at fair value through profit or loss	-	386	858
	----------------------------------------------	----------------------------------------------	----------------------------------------------
	7,395	5,906	4,797
	============================================	==============================================	==============================================

 

All of the trade receivables were non-interest bearing and receivable under normal commercial terms. The directors consider that the carrying value of trade and other receivables approximates to their fair value.

 

      The loan receivable balances relate to a loan owed from Buckingham Gate Financial Services Limited, a shareholder and related party. The loan accrues annual interest at 4%.

 

The expected credit loss on trade and other receivables was not material at the current or prior year end. For analysis of the maximum exposure to credit risk, please refer to note 22.

 

The impairment loss recognised in the income statement for the period in respect of bad and doubtful trade receivables was £17k (2020: £nil).

 

 

 

 

 

 

 

The ageing of trade receivables is detailed below:

 

        As at 31 December 2021

	< 30 days	< 60 days	< 90 days	< 180 days	> 180 days	Total
	£000	£000	£000	£000	£000	£000
Gross carrying amount	3,920	1,459	889	407	494	7,169
	===============================================	==============================================	============================================	============================================	==============================================	=================================================

 

 

        As at 31 December 2020

	< 30 days	< 60 days	< 90 days	< 180 days	> 180 days	Total
	£000	£000	£000	£000	£000	£000
Gross carrying amount	3,377	948	436	215	264	5,240
	===============================================	============================================	============================================	============================================	==============================================	=================================================

 

As at 1 January 2020

	< 30 days	< 60 days	< 90 days	< 180 days	> 180 days	Total
	£000	£000	£000	£000	£000	£000
Gross carrying amount	1,849	843	547	237	46	3,522
	===============================================	==============================================	============================================	============================================	==============================================	=================================================

 

13.    Cash and cash equivalents

 

	As at 31 Dec  2021	As at 31 Dec 2020	As at 1 Jan 2020
	£000	£000	£000
Cash at bank and in hand	10,278	4,722	2,842
	============================================	==============================================	==============================================

       

        Cash at bank earns interest at floating rates based on daily bank deposit rates.

 

 

14.    Trade and other payables

 

	As at 31 Dec  2021	As at 31 Dec 2020	As at 1 Jan 2020
	£000	£000	£000
Current liabilities
Trade payables	3,780	2,359	1,665
Other taxes and social security costs	228	63	107
Contract liabilities	376	263	229
Other payables and accruals	3,697	2,586	1,551
Derivative financial instruments measured at fair value through profit or loss	-	365	847
	----------------------------------------------	----------------------------------------------	----------------------------------------------
	8,081	5,636	4,399
	============================================	=============================================	=============================================

 

The fair value of trade and other payables approximates to book value at each year end. Trade payables are non-interest bearing and are normally settled monthly.
 

 

15.    Loans and borrowings

 

	As at 31 Dec 2021	As at 31 Dec 2020	As at 1 Jan 2020
	£000	£000	£000
Non-current liabilities
Other loans	-	1,250	1,250
	--------------------------------------------	--------------------------------------------	--------------------------------------------
	-	1,250	1,250
	==========================================	====================================	====================================

 

In 2018 the Group issued loan notes totalling £1,250,000 to BGF Investments LP ("BGF"), a shareholder and related party. The loan notes accrued annual interest at 8% and were repayable in 4 equal, bi-annual instalments starting 31 December 2023, however the loan notes were repaid in full following the Company's admission to trading on AIM in May 2021.

 

16.  Financial instruments

 

The Group's and Company's financial instruments may be analysed as follows:

 

	As at 31 Dec 2021	As at 31 Dec 2020	As at 1 Jan 2020
	£000	£000	£000
Financial assets
Derivative financial instruments measured at fair value through profit or loss	-	386	858
Financial assets measured at amortised cost:
Cash at bank and in hand	10,278	4,722	2,842
Trade receivables	7,169	5,240	3,522
Loan receivable	97	154	165
Other receivables	70	74	91
	===============================================	===============================================	===============================================
	17,614	10,576	7,478
	===============================================	===============================================	===============================================
Financial liabilities
Derivative financial instruments measured at fair value through profit or loss	-	365	847
Financial liabilities measured at amortised cost:
Trade payables	3,780	2,359	1,665
Other payables and accruals	3,697	2,586	1,551
	===============================================	===============================================	===============================================
	7,477	5,310	4,063
	===============================================	===============================================	===============================================

 

The Group's income, expense, gains and losses in respect of financial assets measured at fair value through profit or loss realised a fair value loss of £21k (2020: gain of £9k).

 

Hedge against volatility of foreign exchange rates

 

In order to hedge against the potential volatility of unfavourable foreign exchange rates, during 2020 and 2019, the Group entered into various forward contract agreements with Silicon Valley Bank.

 

As at 1 January 2020, the Group had three forward contract agreements yet to reach their settlement date and as such were fair valued generating a fair value gain of £11,491. These contracts closed in 2020 resulting in the reversal of the fair value gain.

 

As at 31 December 2020, the Group had one forward contract agreement yet to reach its settlement date and as such was fair valued generating a fair value gain of £20,612. The net fair value gain for 2020 was £9,121.

 

The contract yet to reach its settlement date as at 31 December 2020 closed in 2021 resulting in the reversal of the fair value gain of £20,612.

 

 

17.  Financial risk management

 

The Group and Company is exposed to a variety of financial risks through its use of financial instruments which result from its operating activities. All of the Group's financial instruments are classified as loans and receivables. The Group does not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the Group is exposed are described below:

 

      Credit risk

      Generally the Group's and Company's maximum exposure to credit risk is limited to the carrying amount of the financial assets recognised at the reporting date, as summarised below:

 

	As at 31 Dec  2021	As at 31 Dec  2020		As at 1 Jan 2020
	£000	£000		£000
Trade receivables	7,169	5,240		3,522
Other receivables	167	228		357
	--------------------------------------------------	-----------------------------------------------		-----------------------------------------------
	7,336	5,468		3,879
	================================================	==============================================		==============================================

 

        Credit risk is the risk of financial risk to the Group and Company  if a counter party to a financial instrument fails to meets its contractual obligation. The nature of the Group's and Company's debtor balances, the time taken for payment by clients and the associated credit risk are dependent on the type of engagement.

 

      The Group's and Company's trade and other receivables are actively monitored. The ageing profile of trade receivables is monitored regularly by Directors. Any debtors over 60 days are individually reviewed by Directors every month and explanations sought for any balances that have not been recovered.

 

      Unbilled revenue is recognised by the Group and Company only when all conditions for revenue recognition have been met in line with the Group's accounting policy.

     

      The Directors are of the opinion that there is no material credit risk at group level.

 

        Liquidity risk

        Liquidity risk is the risk that the Group will encounter difficulty in meeting its obligations associated with its financial liabilities. The Group seeks to manage financial risks to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.

 

      The tables below analyses the Group's financial liabilities into relevant maturity groupings based on their contractual maturities.

 

      The amounts disclosed in the tables are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, because the impact of discounting is not significant.

 

Contractual maturities of financial liabilities at 31 December 2021

	Less than 6 months	6-12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total contractual cashflows	Carrying amount (assets)/ liabilities
	£000	£000	£000	£000	£000	£000	£000
Trade and other payables	8,081	-	-	-	-	8,081	8,081
	============================================	============================================	============================================	============================================	============================================	============================================	============================================
Total	8,081	-	-	-	-	8,081	8,081
	============================================	============================================	============================================	============================================	============================================	============================================	============================================

       

Contractual maturities of financial liabilities at 31 December 2020

	Less than 6 months	6-12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total contractual cashflows	Carrying amount (assets)/ liabilities
	£000	£000	£000	£000	£000	£000	£000
Trade and other payables	5,636	-	-	-	-	5,636	5,636
Loan borrowings	-	-	-	1,250	-	1,250	1,250
Lease liabilities	79	78	-	-	-	157	157
	============================================	============================================	============================================	============================================	============================================	============================================	============================================
Total	5,715	78	-	1,250	-	7,043	7,043
	============================================	============================================	============================================	============================================	============================================	============================================	============================================

 

Contractual maturities of financial liabilities at 1 January 2020  

	Less than 6 months	6-12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total contractual cashflows	Carrying amount (assets)/ liabilities
	£000	£000	£000	£000	£000	£000	£000
Trade and other payables	3,522	-	-	-	-	3,522	3,522
Loan borrowings	-	-	-	1,250	-	1,250	1,250
Corporation tax payable	1	-	-	-	-	1	1
	============================================	============================================	============================================	============================================	============================================	============================================	============================================
Total	3,523	-	-	1,250	-	4,803	4,803
	============================================	============================================	============================================	============================================	============================================	============================================	============================================

 

 

 

        Interest rate risk

        As at 31st December 2021 the Group has no interest rate risk exposure as following the IPO, the loan notes in issue to BGF were repaid in full.

 

As at 1 January 2020 and 31 December 2020 the Group was not exposed to interest rate risk as the only loan facilities that the Group had in place were loan notes, which were subject to a fixed rate of interest of 8% per annum. The balance on the loan notes was £1,250,000 as at 31 December 2020.         

 

      Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily US Dollars and Australian Dollars. The Group monitors exchange rate movements closely and occasionally enters into forward contract agreements to hedge against the potential volatility of unfavourable foreign exchange rates. The Group ensures adequate funds are maintained in appropriate currencies to meet known liabilities. The Group also has trade receivable balances in foreign currency and monitors the potential effect of any exchange rate movements on these balances.

 

      The Group's exposure to foreign currency risk at the end of the respective reporting period, expressed in Currency Units, was as follows:

 

	As at 31 Dec 2021 £000
	USD	CAD	EUR	AUD	INR	SGD
Cash & cash equivalents	7,486	84	731	727	914	225
	As at 31 Dec 2020 £000
	USD	CAD	EUR	AUD	INR	SGD
Cash & cash equivalents	4,210	464	116	747	914	168
	As at 1 Jan 2020 £000
	USD	CAD	EUR	AUD	INR	SGD
Cash & cash equivalents	2,212	136	123	629	954	-

 

        The Group is exposed to foreign currency risk on the relationship between the functional currencies of the Group companies and the other currencies in which the Group's material assets and liabilities are denominated. The table below summaries the effect on profit and loss had the functional currency of the Group weakened or strengthened against these other currencies, with all other variables held constant.

 

	As at 31 Dec 2021	As at 31 Dec 2020	As at 1 Jan 2020
	£000	£000	£000
10% weakening of functional currency	191	400	222
	==================================================	====================================================	====================================================
10% strengthening of functional currency	(156)	(400)	(222)
	==================================================	====================================================	====================================================

 

        The impact of a change of 10% has been selected as this has been considered reasonable given the current level of exchange rates and the volatility observed both on a historical basis and market expectations for future movements.

       

Fair value of financial instruments

      The fair values of all financial assets and liabilities approximates their carrying value.

 

Capital risk management policy

 

The Group's capital management objectives are:

·      to ensure the Group's ability to continue as a going concern in order to continue to provide returns for shareholders and benefits for other stakeholders

·      maintain an optimal capital structure to reduce the cost of capital

 

The Group considers its capital comprises share capital plus all reserves, which amounted to £10.1net cu million as at 31 December 2021 (2020: £3.3 million). 

 

The Group has no debt facilities in place as at 31 December 2021 (2020: £1.25 million). Management assesses the Group's capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

 

 

18.  Related party disclosures

 

In 2018, BGF acquired shares in the Company alongside which the Group issued loan notes totalling £1.25 million to BGF. The loan notes accrued annual interest at 8% and were repaid in full following the Company's admission to trading on AIM in May 2021.

 

Transactions with BGF are disclosed below:

	Year ended 31 Dec 2021	Year ended 31 Dec 2020	Year ended 1 Jan 2020
	£000	£000	£000
Annual fee	50	53	55
Interest on loan notes	42	101	100
	--------------------------------------------------	-----------------------------------------------	-----------------------------------------------
	92	154	155
	================================================	==============================================	==============================================

 

The annual fee due to BGF as at 31 December 2021 is £27k (2020: £16k). Up until the Company's IPO in May 2021, the annual fee related to a management fee payable by the Company under the terms of the investment agreement between BGF and the Company whereby BGF could appoint a representative to the Board. Following the Company's IPO, the annual fee relates specifically to Matthew Singh's (a representative of BGF) services as a Non-Executive Director.

Interest on loan notes due as at 31 December 2021 is £nil (31 December 2020: £30k, 1 January 2020: £25k). As at 31 December 2021, BGF held £nil loan notes (1 January 2020 and 31 December 2020: £1,250k).

The Group received revenues of £76k (2020: £54k) from Buckingham Gate Financial Services Limited, a company that is controlled by the shareholders of the Company. As at 31 December 2021 there were trade receivables from Buckingham Gate Financial Services Limited of £7k (31 December 2020: £16k, 1 January 2020: £28k). The Group also has a loan receivable from Buckingham Gate Financial Services Limited of £97k as at 31 December 2021 (31 December 2020: £154k, 1 January 2020: £165k), details of which are set out in note 16. Interest receivable of £5k accrued in the year ended 31 December 2021 (2020: £7k).

 

19.  Share capital

Ordinary Shares		Issued Shares Number			Nominal Value £			Issued Amount £
As at 1 January 2020 and 31 December 2020		18,345			0.01			184
As at 1 January 2021		18,345			0.01			184
Bonus issue		3,100,305			0.01			31,003
Redesignation of A, B and C ordinary shares to Ordinary Shares		1,859,514			0.01			18,595
Subtotal		4,978,164			0.01			49,782
Subdivision of ordinary shares		24,890,820			0.002			49,782
Issue of shares pursuant to exercise of options		3,305,650			0.002			6,611
Issue of shares pursuant to placing		1,831,501			0.002			3,663
As at 31 December 2021			30,027,971			0.002			60,056

 

A ordinary shares		Issued Shares Number				Nominal Value £		Issued Amount £
As at 1 January 2020 and 31 December 2020		10,361				0.01		104
As at 1 January 2021		10,361				0.01		104
Bonus issue		1,751,009				0.01		17,510
Redesignation to Ordinary Shares		(1,761,370)				0.01		(17,614)
As at 31 December 2021		-						-
B ordinary shares			Issued Shares Number		Nominal Value £		Issued Amount £
As at 1 January 2020 and 31 December 2020			602		0.01		6
As at 1 January 2021			602		0.01		6
Bonus issue			101,738		0.01		1,017
Redesignation to Ordinary Shares			(80,124)		0.01		(801)
Redesignation to deferred shares			(22,216)		0.01		(222)
As at 31 December 2021			-				-

 

 

Share capital (continued) C ordinary shares	Issued Shares Number	Nominal Value £	Issued Amount £
As at 1 January 2020, 30 June 2020 and 31 December 2020	106	0.01	1
As at 1 January 2021	106	0.01	1
Bonus issue	17,914	0.01	179
Redesignation to Ordinary Shares	(18,020)	0.01	(180)
As at 30 June 2021	-		-

 

Deferred shares	Issued Shares Number	Nominal Value £	Issued Amount £
As at 1 January 2020 and 31 December 2020	-		-
As at 1 January 2021	-		-
Redesignation of B ordinary shares	22,216	0.01	222
Repurchase of deferred shares	(22,216)	0.01	(222)
As at 31 December 2021	-		-

 

 

On 6 May 2021, £49,709.66 of the available £1,084,776 of the Company's share premium account was capitalised through the issue of bonus ordinary shares of £0.01 each, A ordinary shares of £0.01 each ("A Shares"), B ordinary shares of £0.01 each ("B Shares"), and C ordinary shares of £0.01 each ("C Shares") to existing shareholders pro rata to their holdings of ordinary shares of £0.01 each, A Shares, B Shares and/or C Shares. The capitalisation resulted in an issued share capital of 3,118,650 ordinary shares of £0.01 each, 1,761,370 A Shares, 102,340 B Shares and 18,020 C Shares.

 

A new set of interim articles of association was adopted by the Company to reflect its re-registration as a public limited company and the Company's name was changed to Dianomi plc.

 

Immediately prior to the Company's admission to trading on AIM ("Admission") taking place, the A Shares and C Shares were re-designated as ordinary shares of £0.01 each in the capital of the Company on the basis of one ordinary share of £0.01 per A Share or C Share then in issue.

 

 

 

Immediately prior to Admission taking place, the 102,340 B Shares in issue after the bonus issue described above were re-designated as 80,124 ordinary shares of £0.01 each and 22,216 deferred shares of £0.01 each in the capital of the Company.

 

Immediately after the re-designation of shares described above, each ordinary share of £0.01 was sub-divided into five ordinary shares of £0.002 each.

 

Immediately on Admission taking place on 24 May 2021, all of the deferred shares of £0.01 each were repurchased by the Company for an aggregate consideration of £1.00 to be satisfied in cash.

 

Furthermore, on Admission 1,831,501 new ordinary shares of £0.002 pence were issued pursuant to the placing, raising gross proceeds of £5 million for the Company.

 

20.  Share-based payments

 

      The Group operates an equity-settled share-based remuneration scheme for employees. All UK employees are eligible to participate in the long term incentive scheme, the only vesting condition being that the individual remains an employee of the Group over the ten year vesting period.

 

The number of options and weighted average exercise price in the table below have not been adjusted to reflect the share capital reorganisation in May 2021 as described in Note 24.

 

		Weighted average exercise price (pence)	Number			Weighted average exercise price (pence)		Number
		Dec 21	Dec 21			Dec 20		Dec 20
Outstanding at the beginning of the period		1.0	3,627				1.0	2,927
Granted during the period		225.9	1,982,926				1.0	700
Exercised/ lapsed during the period		0.2	(392,166)				1.0	-
		--------------------------------------------	-----------------------------------------------				----------------------------------------------	----------------------------------------------
Outstanding at the end of the period		273	1,594,387				1.0	3,627
	==========================================			==============================================	============================================			============================================

 

       

      Of the total number of options outstanding at the end of the period, Nil (31 Dec 20: Nil) had vested and were exercisable at the end of the year with a weighted average exercise price of 273p (31 Dec 20: 1.0p).

 

Certain options granted under the existing option schemes in place prior to Admission were due to lapse on 17 May 2021, and all but two of these lapsing options were replaced with equivalent options. Of the two other lapsing options, one of these was replaced with an option over a greater number of ordinary shares. All of the options granted under the existing option schemes in place prior to Admission were exercised immediately on Admission.

 

 

 

 

On Admission, new option schemes were established and a total of 1,640,926 options were granted under these new option schemes with an exercise price of 273p. During the year, 46,539 options lapsed as a result of employees leaving the Company.

 

The Black-Scholes option pricing model was used to value the equity-settles share-based payment awards as it was considered that this approach would result in materially accurate estimate of the fair value of the options granted.

 

The inputs into the model were as follows:

 

	Post-IPO Option Scheme		Pre-IPO Option Scheme*
Weighted average share price at grant date (£)		2.73	414
Weighted average exercise price (£)		2.73	0.01
Volatility (%)		44.00%	30.28%
Weighted average vesting period (years)		3	10
Risk free rate (%)		0.76%	0.25%
Expected dividend yield (%)		-	-

 

* The share price and exercise price have not been adjusted for the share capital reorganisation which took place immediately before the IPO

The share-based remuneration expense comprises:

 

	As at 31 Dec 2021	As at 31 Dec 2020
	£000
Equity-settled schemes	2,854	-
	==========================================	==========================================

 

 

21.  Reserves

 

Share Capital 

Share capital represents the nominal value of share capital subscribed.

 

Share Premium

Share premium represents the funds received in exchange for shares over and above the nominal value, offset by costs incurred on the raise of equity.

 

Capital redemption reserve 

The capital redemption reserve is a non-distributable reserve into which amounts are transferred following the redemption or purchase of the Company's own shares.

 

Foreign currency translation reserve The foreign currency translation reserve represents exchange differences that arise on consolidation from the translation of the financial statements of foreign subsidiaries.

 

Retained earnings 

The retained earnings reserve represents cumulative net gains and losses recognised in the statement of comprehensive income.

 

Share option reserve

The share-based payment reserve represents amounts accruing for equity settled share options granted plus the fair value of share options exercised upon IPO.

 

 

22.  First time adoption of IFRS

 

These financial statements, for the year ended 31 December 2021, are the first the Group has prepared in accordance with IFRS. For periods up to and including the year ended 31 December 2020, the Group prepared its financial statements in accordance with local generally accepted accounting principles (FRS 102).

 

Accordingly, the Group has prepared financial statements that comply with IFRS applicable as at 31 December 2021, together with the comparative period data for the year ended 31 December 2020, as described in the summary of significant accounting policies. In preparing the financial statements, the Group's opening statement of financial position was prepared as at 1 January 2020, the Group's date of transition to IFRS.

 

The principal adjustment arising was to recognise a property lease (previously treated as an operating lease) as a right of use asset and corresponding lease liability as required by IFRS 16. The tables below set out the adjustments made by the Group in restating its FRS 102 financial statements, including the statement of financial position as at 1 January 2020 and the financial statements as of, and for, the year ended 31 December 2020.

 

Group reconciliation of equity as at 1 January 2020 (date of transition to IFRS)

 

		FRS 102 as at 1 Jan 2020	IFRS Adjustments	IFRS as at 1 Jan 2020
	Note	£000	£000	£000

 

Current assets
Trade and other receivables		4,796	-	4,796
Cash and cash equivalents		2,842	-	2,842
		---------------------------------------------------	---------------------------------------------------	---------------------------------------------------
Total current assets		7,638	-	7,638
Total assets		7,638	-	7,638

 

Current liabilities
Trade and other payables		(4,399)	-	(4,399)
Corporation tax payable		(1)	-	(1)
		---------------------------------------------	-----------------------------------------------------	-----------------------------------------------------
Total current liabilities		(4,400)	-	(4,400)
		---------------------------------------------	-----------------------------------------------------	-----------------------------------------------------
Non-current liabilities
Loans and borrowings		(1,250)	-	(1,250)
		-----------------------------------------------------	-----------------------------------------------------	-----------------------------------------------------
Total non-current liabilities		(1,250)	-	(1,250)
		-----------------------------------------------------	-----------------------------------------------------	-----------------------------------------------------
Total liabilities		(5,650)	-	(5,650)
		====================================================	====================================================	====================================================
Net assets		1,988	-	1,988
		====================================================	====================================================	====================================================
Equity
Share capital		-	-	-
Share premium account		1,085	-	1,085
Share options reserve		-	-	-
Foreign currency translation reserve	(c)	-	(374)	(374)
Capital redemption reserve		-	-	-
Retained earnings	(c)	903	374	1,277
		====================================================	====================================================	====================================================
Total equity attributable to the owners of the company		1,988	-	1,988
		====================================================	====================================================	====================================================

 

Group reconciliation of equity as at 31 December 2020

		FRS 102 as at 31 Dec 2020	IFRS Adjustments	IFRS as at 31 Dec 2020
	Note	£000	£000	£000

Non-current assets

Right-of-use asset	(a)	-	154	154
		------------------------------------------------------	---------------------------------------------------	---------------------------------------------------
Total current assets		-	154	154

 

Current assets

Trade and other receivables		5,906	-	5,906
Cash and cash equivalents		4,722	-	4,722
		------------------------------------------------------	---------------------------------------------------	---------------------------------------------------
Total current assets		10,628	-	10,628
Total assets		10,628	154	10,782

 

Current liabilities
Trade and other payables		(5,636)	-	(5,636)
Corporation tax payable		(427)	-	(427)
Lease liabilities	(a)	-	(157)	(157)
		-----------------------------------------------------	-----------------------------------------------------	-----------------------------------------------------
Total current liabilities		(6,063)	(157)	(6,220)
		-----------------------------------------------------	-----------------------------------------------------	-----------------------------------------------------
Non-current liabilities
Loans and borrowings		(1,250)	-	(1,250)
		-----------------------------------------------------	-----------------------------------------------------	-----------------------------------------------------
Total non-current liabilities		(1,250)	-	(1,250)
		-----------------------------------------------------	-----------------------------------------------------	-----------------------------------------------------
Total liabilities		(7,313)	(157)	(7,470)
		====================================================	====================================================	====================================================
Net assets		(3,315)	(3)	3,312
		====================================================	====================================================	====================================================
Equity
Share capital		-	-	-
Share premium account		1,085	-	1,085
Share options reserve		-	-	-
Foreign currency translation reserve	(c)	-	(556)	(556)
Capital redemption reserve		-	-	-
Retained earnings	(c)	2,230	553	2,783
		====================================================	====================================================	====================================================
Total equity attributable to the owners of the company		3,315	(3)	3,312
		====================================================	====================================================	====================================================

 

 

Group Reconciliation of Total Comprehensive Income for the year ended 31 December 2020

 

		FRS 102 Year ended 31 Dec 2020	IFRS Adjustments	IFRS Year ended 31 Dec 2020
	Note	£000	£000	£000
Revenue		28,430	-	28,430
Cost of sales		(20,285)	-	(20,285)
		---------------------------------------------------	---------------------------------------------------	-------------------------------------------------------
Gross profit		8,145	-	8,145

 

Administrative expenses	(b)	(6,055)	115	(5,939)
Costs relating to the IPO	(b)	-	(115)	(115)
Other operating income		38	-	38
Fair value movements		9	-	9
	----------------------------------------------------		-----------------------------------------	-----------------------------------------------------
Operating (loss)/profit		2,138	-	2,138
Depreciation	(a)	-	103	103
Costs relating to the IPO	(b)	-	115	115
		-----------------------------------------------	-----------------------------------------	----------------------------------------------------
Adjusted EBITDA		2,138	218	2,356

 

Finance income		7	-	7
Finance expense	(a)	(102)	(3)	(105)
		-------------------------------------------------	-----------------------------------------	-----------------------------------------------------
Profit on ordinary activities before taxation		2,043	(3)	2,040

 

Taxation		(534)	-	(534)
		-------------------------------------------------	-----------------------------------------	-----------------------------------------------------
Profit for the year		1,509	(3)	1,506
Other comprehensive loss items that may be reclassified subsequently to profit or loss Currency translation differences		(182)	-	(182)
		-------------------------------------------------	-------------------------------------------------	---------------------------------------------------
Total comprehensive income for the year attributable to the owners of the company		1,327	(3)	1,324

 

 

Notes to the reconciliation of equity as at 1 January 2020 and 31 December 2020 and total comprehensive income for the year ended 31 December 2020.

 

a) Leases

Under FRS 102, a lease is classified as a finance lease or an operating lease. Operating lease payments are recognised as an operating expense in the statement of profit or loss on a straight-line basis over the lease term. Under IFRS, a lessee applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets and recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

 

At the date of transition to IFRS, the Group applied the transitional provision and measured lease liabilities at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate at the date of transition to IFRS. Right-of-use assets were measured at the amount equal to the lease liabilities adjusted by the amount of any prepaid or accrued lease payments.

 

The transition to IFRS did not result in any adjustment to the opening balances at 1 January 2020 but resulted in an adjustment to the Right of Use asset and lease at 31 December 2020 of £154k and £157k respectively. The net impact to retained earnings for 2020 was £3k.

 

b) Costs relating to the IPO

Costs incurred in 2020 relating to preparation for the Company's IPO have been separated out on the statement of comprehensive income.

 

c) Translation reserve

The Group included its foreign currency translation reserves in retained earnings under FRS 102; on transition to IFRS these reserves have been reclassified to a foreign currency reserve.

 

d) Cash flows

Lease payments have moved from operating activities to financing activities.

 

27.  Ultimate controlling party

 

There is no ultimate controlling party as at 31st December 2021 nor was there as at 31 December 2020.

 

28.  Events after the balance sheet date

 

There have been no material events.

 

29.  Contingent liabilities and contingent assets

The Group had no contingent liabilities or contingent assets at 31 December 2021 (1 January 2020 and 31 December 2020: £nil).

 

30.  Capital Commitments

The Group's capital commitments at 31 December 2021 are £nil (1 January 2020 and 31 December 2020: £nil).