This announcement contains inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

 

 

Location Sciences Group PLC

("Location Sciences" or the "Company" or the "Group")

 

Audited Results for the year ended 31 December 2022

 

 

Location Sciences (AIM: LSAI), announces its audited results for the year ended 31 December 2022.

 

 

Financial Performance

 

·      Revenues from the Verify division in 2022 were £110,856 compared to £167,940 in 2021 representing a 33.99% decrease in revenues year-on-year, reflecting the continued headwinds faced by the business during the year

 

·      Administrative costs excluding depreciation and amortisation for the year to 31 December 2022 £723,149 (2021: £801,432)

 

·      Loss before exceptional items, amortisation and depreciation for the year to 31 December 2022 £641,651 (2021: £699,468)

 

·      Loss per share from continuing operations decreased from 0.076p in 2021 to 0.029p in 2022

 

 

Financial Position at Year End

 

·          Net assets were £4,330,452 (2021: £5,178,571)

 

·          Net current assets were £4,195,778 (2021: £4,641,080)

 

·          Cash and cash equivalents of £4,125,571 (2021: £4,378,825)

 

·          Borrowings were £Nil (2021: £Nil)

 

·          Potential deferred tax asset of £5,423,000 (2021: £3,977,000)

 

 

 

A copy of this announcement and the Company's report & accounts are available on the Company's website https://www.locationsciencesgroup.ai/investor-relations/

 

For further information please contact:

 

Location Sciences Group PLC                                                                                                      via Allenby Capital

Simon Wilkinson, Chairman

 

Allenby Capital Limited (Nominated Adviser)                                                                    Tel: +44 (0)20 3328 5656

David Hart

Vivek Bhardwaj

 

Turner Pope Investments (TPI) Ltd (Broker)                                                                       Tel: +44 (0)20 3657 0050

James Pope

Andy Thacker

 

 

CHAIRMAN'S REPORT FOR THE YEAR ENDED 31 DECEMBER 2022

 

Dear Shareholders,

 

I write to you today to present the Chairman's statement for the Location Sciences Group PLC 2022 report and accounts. It is with a mix of challenges and opportunities that I update you on the progress we made during the past year.

 

The year 2022 marked a significant turning point for Location Sciences Group PLC as we undertook a thorough review of our strategic options. Amidst market volatility and evolving industry dynamics, we recognised the need to reevaluate our strategies and ensure the long-term viability of our company.

 

Financially, the year presented its share of challenges, with a decline in revenue compared to the previous year. However, I am pleased to report that we entered 2022 with a solid financial foundation. The successful fundraise in 2021 provided us with ample resources, enabling us to pursue our strategic objectives and navigate the complex business landscape.

 

Furthermore, in our pursuit of strategic optimisation, we took decisive action to streamline our operations. The disposal of our Insights business to Digital Envoy Inc during 2021 was a key milestone in this journey. Not only did it allow us to focus on our core offerings, but it also significantly reduced our overheads and cash burn. As a result, we are well-funded and with a solid platform to deliver shareholder value going forward.

 

Throughout this process, we have remained committed to our key stakeholders, in particular our shareholders. We recognise that change brings uncertainty, and we have made every effort to navigate these challenges with transparency and fairness. Our team has shown remarkable resilience and adaptability during this period of transition, and we are grateful for their dedication to our shared vision.

 

Looking forward, we remain cautiously optimistic. The strategic review process has provided us with valuable insights into our strengths, weaknesses, and potential growth opportunities. Armed with this knowledge, we are actively exploring avenues for sustainable expansion and enhancement of our offerings.

 

Finally, I would like to express my heartfelt gratitude to our shareholders, clients, and partners for their unwavering support throughout this transformative period. Your confidence in our ability to navigate these challenges and capitalise on emerging opportunities has been instrumental in our progress.

 

In conclusion, while 2022 presented its fair share of hurdles, we are well-funded and strategically positioned for the future. With a solid financial foundation, streamlined operations, and a focus on delivering a new strategic path going forward, we are confident in our ability to create long-term value for our shareholders.

 

Thank you for your continued trust and support.

 

INDEPENDENT DIRECTORS FINANCIAL REVIEW FOR THE YEAR ENDED 31 DECEMBER 2022

Dear Shareholders,

 

As the Independent Director of Location Sciences Group PLC, I am pleased to present my report alongside the Chairman's statement for the 2022 report and accounts. As a member of the Board, my role is to provide an unbiased perspective and act in the best interests of the company and its shareholders.

 

Throughout 2022, I actively participated in the strategic review process and monitored the company's performance, governance, and risk management. I have assessed the decisions made and actions taken by the Board, ensuring that they align with the company's values and objectives.

 

Financial Performance

 

The financial performance of Location Sciences Group PLC in 2022 reflected the challenges faced by the company and the broader market environment. I have scrutinised the financial statements and worked closely with the team to understand the underlying causes and evaluate the appropriateness of the strategic initiatives undertaken. I have enclosed below a summary of the Group's financial performance and statement of financial position at the end of the year:

 

All figures in £GBP (unless otherwise stated)	Year to 31 December 2022	Six months to 30 June 2022	Year to 31 December 2021	Comparison to prior year
Revenue	110,856	53,073	167,940	(34.0%)
Administrative costs	723,149	489,552	801,432	(9.8%)
Loss before tax	850,578	492,353	1,199,068	(29.1%)
Loss per share	0.029p	0.020p	0.076p	(61.8%)
Net assets	4,330,452	4,805,999	5,178,571	(16.4%)
Net current assets	4,195,778	4,399,032	4,641,080	(9.6%)
Cash at bank	4,125,571	4,227,685	4,378,825	(5.8%)
Group borrowings	Nil	Nil	Nil	-

 

The Board made further overhead reductions during the year and the impact of these can be seen in the decreased administration costs in H2 2022 of £233,597 compared to H1 2022 of £489,552, representing a 52.3% reduction. The loss per share was negatively impacted in H2 2022 by a further right down of our intangible assets of £143,482 (2021: £283,210).

 

Strategic Review and Actions Taken

 

The Board conducted a thorough strategic review during the year to identify the most viable options for sustainable growth and shareholder value creation. This review included the disposal of the Insights business to Digital Envoy Inc, which significantly reduced overheads and cash burn, as well as refocusing the company on its core offerings. We closely scrutinised this disposal and believe it was a prudent decision that will help streamline operations and allocate resources more efficiently. We have also assessed the effectiveness of the board's decision-making process, ensuring that all potential risks and opportunities were duly considered.

 

Corporate Governance

 

We are committed to upholding the highest standards of corporate governance. Throughout the year, we monitored the company's compliance with applicable laws, regulations, and best practices. We reviewed the effectiveness of internal controls, risk management systems, and ethical practices. We are pleased to report that Location Sciences Group PLC has maintained a robust governance framework, with appropriate checks and balances in place to safeguard shareholder interests.

 

Stakeholder Relations

 

As the Independent Director, I place great importance on the company's relationships with its key stakeholders. I have closely monitored the engagement efforts undertaken by the team to foster a positive team culture, ensure fair treatment, and provide opportunities for professional growth. Furthermore, I have assessed the company's relationships with clients, suppliers, and other stakeholders, ensuring that open lines of communication are maintained and that their expectations are being met.

 

Looking Ahead

 

As the Independent Director, I remain committed to our fiduciary duties and to serving the best interests of Location Sciences Group PLC and its shareholders. I will continue to provide oversight, guidance, and independent perspectives to the Board as the company navigates the evolving landscape. I will monitor progress against strategic objectives, evaluate risk management practices, and advocate for responsible and sustainable business practices.

 

In conclusion, I express our appreciation for the trust placed in us by the shareholders of Location Sciences Group PLC. I believe that the company's strategic initiatives, including the disposal of the Insights business and the ongoing commitment to find a new strategic direction for the Group, will position it for long-term success. I remain vigilant in our oversight role and are dedicated to the company's continued growth and value creation.

 

STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2022

The Directors present their strategic report for the year ended 31 December 2022.

Fair review of the business

The fair review of the business is set out in the Chairman's and Independent Director's reviews, which describe in detail the financial results and future plans for Location Sciences.

The Board monitors progress on the overall Group strategy and the individual strategic elements by reference to KPIs. The primary measures are revenue, costs, EBITDA before exceptional items and working capital levels.

The Group is in a transition stage with the benefits of the refinancing, reorganisation of the Group and the Board's strategic review yet to deliver the value the Board expects to shareholders.

Principal risks and uncertainties

The principal and commercial risks to the Group are as follows:

Description		The Group's strategic review does not deliver the expected improved shareholder returns
Impact		The Group may not deliver shareholder value
Mitigation		The Board conducted a thorough strategic review during the year to identify the most viable options for sustainable growth and shareholder value creation.
Description		Location Sciences Group PLC continues to be in a cash consumption phase.
Impact		Going concern has been carefully considered and details are provided in the Corporate Governance Report below and in note 2 of the Group's financial statements.
Mitigation		The Group had in excess of £4 million in net cash resources as at 31 December 2022, which is more than sufficient for the Groups requirements for the foreseeable future.
Description		Changes in regulation negatively impact the Group's market.
Impact		The Group may find the demand for its products is reduced and / or the Group may be forced to change or stop selling one or more of its products.
Mitigation		The Board takes account of commentators and industrial bodies as to the direction of policy change.

The Board meets regularly to review specific and general risks that face the Group. The Board strives to position the Group in a way that any risks can be minimised and met, should the need arise.

The Group's performance will be dependent on the outcome of the strategic review and the implementation of the results of this review. As part of our strategic review, we have thoroughly analysed market trends, customer needs, and emerging opportunities to ensure the long-term success and sustainable growth of the company.

 

The Group is managing this risk by reducing the overheads of the Group and continuing to analyse new opportunities as they arise. The Board are committed to delivering shareholder value in the long-term.

 

Strategic risks

Following the strategic review, Location Sciences Group PLC has identified key initiatives, such as seeking acquisition targets and optimising operational efficiency. However, a strategic risk lies in the effective execution of these initiatives. Ensuring successful implementation, alignment across the organisation, and timely delivery of desired outcomes require careful planning, resource allocation, and effective management of change. Any delays, misalignment, or inadequate execution could impede the company's ability to achieve its strategic objectives and may result in lost opportunities, lower competitiveness, and suboptimal financial performance.

 

It is important for Location Sciences Group PLC to establish clear goals, allocate appropriate resources, and monitor the progress of these strategic initiatives. The company should implement robust project management practices, establish effective communication channels, and regularly evaluate and adjust the execution plan as needed. Additionally, strong leadership and stakeholder engagement are crucial to drive alignment and foster a culture of accountability throughout the organisation.

 

By proactively addressing this strategic risk and implementing effective execution strategies, Location Sciences Group PLC can enhance its chances of successfully realising the desired outcomes of the strategic initiatives and drive long-term value for shareholders.

 

This report, in conjunction with the Chairman's statement and Independent Directors report, form the Strategic Report for the purposes of s414A of the Companies Act 2006.

 

Section 172 statement

The Directors believe that they have effectively implemented their duties under section 172 of the Companies Act 2006 through adherence to the Quoted Companies Alliance Corporate Governance Code, as disclosed on pages 14 to 16 and as published on our website: www.locationsciencesgroup.ai/investor-relations/board-governance. The Chairman's Report and Chief Executive's Review details the Group's future plans to achieve its long-term strategy.

 

The Group is committed to maintaining an excellent reputation and strive for high standards, while maintaining an awareness of the environmental impact of the work that it does and strives to reduce its carbon footprint.

 

The Directors recognise the importance of the wider stakeholders in delivering their strategy and achieving sustainability within the business; in ensuring that all our stakeholders are considered as part of every decision process we believe we act fairly between all members of the company.

 

CORPORATE GOVERNANCE

The Board recognises the importance of good corporate governance in order to protect and build upon the substantial investments made by our diverse shareholder base. We have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the 'QCA Code'), which was developed by the QCA in consultation with a number of significant institutional small company investors, as an alternative corporate governance code applicable to AIM companies. The underlying principle of the QCA Code is that "the purpose of good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term". The Board anticipates that whilst the Company will continue to comply with the QCA Code, given the Group's size and plans for the future, it will also endeavour to have regard to the provisions of the UK Corporate Governance Code as best practice guidance to the extent appropriate for a company of its size and nature.

 

An explanation of how these principles have been applied is set out both below and in the Directors' remuneration, Audit Committee and internal control sections of this report.

 

Certain information required under the QCA code is included within the Strategic report and the Directors Remuneration Report.

Name	Date Appointed	Date Resigned	Role	Committees
Simon Wilkinson	25/05/2021		Chairman	Remuneration, Nomination,
				Audit
Nigel Burton	25/05/2021		Non-Executive Director	Remuneration, Nomination,
				Audit
Mark Slade	24/07/2017	22 June 2022	CEO	-
David Rae	12/02/2018	22 June 2022	CFO	-

 

The Board is responsible to the shareholders for the proper management of the Group through setting the overall strategy of the business and to review the people, performance, policies and budgets of the Group. The Board typically meets bi-monthly and also meets for any other extraordinary matters as they may arise. Detailed information on matters to be discussed during the meetings are circulated in advance of the meeting to ensure non-executive directors can contribute in an educated manner.

Independence of Chairman

The roles of the Chairman, Simon Wilkinson, and the Independent Director, Dr Nigel Burton, have a formal division. The Chairman is responsible for delivering the outcome of the strategic review and ensure the adequate and effective resources are in place to deliver shareholder value. The Independent Director is responsible for monitoring the Board and ensuring no individual or group takes control of the Board's decision making and that all key stakeholders are fully briefed on matters and their responsibilities.

Board Balance

A minimum of 50% of the Board will always consist of non-executive directors including the Chairman. All non-executive directors are independent of the management team and are not involved in any other business or relationship, both as an executive or non-executive, which may impair their independent nature and judgement.

Nomination Committee

The Group's nomination committee is responsible for reviewing and making proposals to the Board on the appointment of Directors and meets as necessary. The Group's nomination committee consists of Simon Wilkinson, who acts as Non-Executive Chairman of the committee, and Nigel Burton.

Performance Evaluation and Re-election

The Board has continued to evaluate its effectiveness and performance during the year, taking into account the Financial Reporting Council's Guidance on Board Effectiveness. It is anticipated that following the completion of the Board strategic review director appraisals will be performed to ensure that their performance is, and continues to be, effective, that where appropriate they maintain their independence and that they are demonstrating continued commitment to the role. The Directors will be evaluated internally based on their responsibilities to the Board. New Directors resign and stand for re-election at the Group's first AGM following their appointment. 50% of continuing Directors stand for re-election on an annual basis.

 

The Directors carry out continued professional development throughout the year where appropriate and each Director keeps up to date with market changes through the use of market articles and industry contacts.

Remuneration Committee

The Group's remuneration committee is responsible for the specific remuneration and incentive packages for each of the company's executive directors, senior executives and managers. The Group's Remuneration Committee consists of Nigel Burton and Simon Wilkinson, who acts as Non-Executive Chairman of the committee. Further details of the Committee's remit are contained in the Directors' Remuneration Report on pages 11 to 13.

Relations with Shareholders

The Group encourages two-way communication with both its institutional and private investors and responds promptly to all queries received. The Non-Executive Directors communicate regularly with the Group's institutional shareholders and ensure that their views are communicated fully to the Board. The Board recognises the Group's AGM as an important opportunity to meet with the Group's private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM.

Annual General Meeting

The Annual General Meeting of the Group provides shareholders with the opportunity to be updated on the Group's progress and to ask questions of the Board.

Financial Reporting and Internal Control

The Company has established policies covering the key areas of internal financial control and the appropriate procedures, controls, authority levels and reporting requirements which must be applied throughout the Group.

 

The key procedures that have been established in respect of internal financial control are:

 

• An annual budget set by the Board

• Monthly management accounts with comparisons to budget

• Monthly forecast updates with comparisons to budget

• Monthly cashflow forecasts with comparisons to budget

• Weekly meetings of the Executive Directors and Senior Management to review priorities and issues

• Restriction of user access to systems, including but not limited to Financial, HR and Technology.

 

The above controls have been established to support the growth of the business and to protect against future risks.

Corporate Culture

It is the Board's view that the Group's corporate culture is consistent with its objectives, strategy and business model. The Board is aware that the culture set by the Board will greatly impact all aspects of the Group and the way that employees behave. The Board invites employees to provide feedback on their peers and management.

Consolidated Accounts

The aforementioned Financial Reporting and Internal Controls apply to all subsidiaries. The accounts of all subsidiaries are combined with those of the Company to form consolidated accounts each month. The Chief Financial Officer is responsible for producing the consolidated accounts, including the elimination of intercompany transactions and balances.

Audit Committee

The Group's Audit Committee is responsible for ensuring the financial performance of the Group is properly monitored and reported on, the effectiveness of accounting systems and financial reporting procedures. The Group's Audit Committee consists of Nigel Burton and Simon Wilkinson, who acts as Non-Executive Chairman of the committee.

 

The Committee considers all proposals for non-audit services and ensures that these do not impact on the objectivity and independence of the auditor. The Audit Committee reviews, with the external auditor, the safeguards and procedures developed by the auditor to counter threats or perceived threats to their objectivity and independence. Non-audit services performed by the external auditor are assessed for threats to objectivity and independence on a case-by-case basis.

Board and Committee Attendance

Name	Main Board	Audit Committee	Remuneration Committee	Nomination Committee
Simon Wilkinson	4/4	1/1	1/1	1/1
Nigel Burton	4/4	1/1	1/1	1/1
Mark Slade	2/4	-	-	-
David Rae	2/4	-	-	-

Going concern

The directors have taken a view of the Group as a whole.

 

The Group ended 2022 with cash resources of £4,125,571, no debt and an annualised cash burn of less than £0.5 million. The Group continues to operate Verify which has a global client base with customers in Europe and South Africa and is seeking strategic alternatives to deliver shareholder value in the long term.

 

However, despite the actions of the Board, the Group continued to operate with a trading loss during the year and the same is expected throughout 2023. The new funds raised during 2021 will be utilised for the operation of Verify and for working capital purposes and future opportunities and enable the Group to also remain debt free. The Board will continue to monitor cash resources and progress the ongoing business review.

 

Based on the current status, after making enquiries and considering the existing cash resources of the business and the further cost reductions made during 2022, the Board has a reasonable expectation that the Group will be able to execute its plans in the medium term such that the Group will have adequate resources to continue in operational existence for the foreseeable future. This provides the Board with assurance on the Group's ability to continue as a going concern, and therefore adopt the going concern basis of accounting in preparing the annual financial statements.

 

DIRECTORS' REMUNERATION REPORT

As a Company admitted to trading on AIM, Location Sciences Group PLC is not required to present a directors' remuneration report, however, a number of voluntary disclosures have been made. The Company has complied with the disclosure requirements set out in the AIM Rules for Companies.

 

Remuneration Committee

The Remuneration Committee, consisting of the chairman Simon Wilkinson and Nigel Burton, determines the Group's policy for executive remuneration and the individual remuneration packages for executive directors. In setting the Group's remuneration policy, the committee considers a number of factors including:

 

• salaries and benefits available to executive directors of comparable companies; and

• the need to both attract and retain executives of appropriate calibre

 

Remuneration of executive directors

Consistent with this policy, benefit packages awarded to executive directors comprise a mix of basic salary and performance‐related remuneration that is designed as an incentive. The remuneration packages can comprise the following elements:

 

• base salary: the Remuneration Committee sets the base salaries to reflect responsibilities and the skills, knowledge and experience of the individual;

• bonus scheme: the executive directors are eligible to receive a bonus dependent on both individual and Group performance as determined by the Remuneration Committee;

• equity: share options; and

• various other add on benefits such as private medical insurance.

 

The executive directors are engaged under separate contracts which require a notice period of three or six months given at any time by the individual.

 

Remuneration of non-executive directors

The fees and equity awarded to non‐executive directors are determined by the Board. The non‐executive directors do not receive any other forms of benefit such as private medical insurance.

 

Year to 31 December 2022

Director	Salary and fees	Bonus	Pension	Benefits	Share based payments	Total
	£	£	£	£	£	£
M Slade (Executive)*	77,600	-	660	-	-	78,260
D Rae (Executive)*	64,667	-	660	-	-	65,327
S Wilkinson (Non-executive)	101,563	-	-	-	-	101,563
N Burton (Non-executive)	71,094	-	-	-	-	71,094
	314,924	-	1,320	-	-	316,244

 

Included within directors' remuneration for S Wilkinson and Nigel Burton is remuneration of £101,563 and £71,094 respectively that was settled by issue of shares.

 

* Resigned 22 June 2022.

 

Year to 31 December 2021

Director	Salary and fees	Bonus	Pension	Benefits	Share based payments	Total
	£	£	£	£	£	£
M Slade (Executive)	170,654	-	1,318	1,951	15,671	189,594
K Harrison* (Non-executive)	59,129	-	-	-	-	59,129
D Rae (Executive)	157,837	-	1,318	-	10,241	169,396
B Chilcott* (Non-executive)	36,000	-	-	-	-	36,000
S Wilkinson** (Non-executive)	165,000	-	-	-	-	165,000
N Burton** (Non-executive)	115,500	-	-	-	-	115,500
	704,120	-	2,636	1,951	25,912	734,619

 

Included within directors' remuneration for S Wilkinson and Nigel Burton is remuneration of £165,000 and £115,500 respectively that was settled by issue of shares.

 

* Resigned 25 May 2021.

** Appointed 25 May 2021.

 

Director	Grant Date	Exercise Price	At 31 December 2022 Number	At 31 December 2021 Number
M Slade (Executive)	29/11/2018	2.25p	-	15,555,556
D Rae (Executive)	29/11/2018	2.25p	-	7,333,333

 

Notes: The options were to vest in three equal tranches when certain share price targets have been reached, the share price targets are as follows:

 

• 4.8 pence per New Ordinary Share

• 7.3 pence per New Ordinary Share

• 9.7 pence per New Ordinary Share

 

The options in place at the end of 31 December 2021 were forfeit on 22 June 2022 when the option holders ceased to hold office.

 

Director Warrants

 

Non-transferable warrants to subscribe for, in aggregate, 120,000,000 Ordinary Shares were issued to the Executive Directors and the Non-Executive Directors, exercisable at 0.20p for five years from 25 May 2021, provided that the Ordinary Shares have traded at a Volume Weighted Average Price (VWAP) at or above 0.30p for 20 consecutive Business Days, or on a change of control of the Company.

 

Name                                     Number of Ordinary Shares subject to Director Warrants

 

Simon Wilkinson                 30,000,000

Dr Nigel Burton                   30,000,000

Mark Slade                          30,000,000

David Rae                           30,000,000

           

Broker Warrants

 

Transferable warrants to subscribe for, in aggregate, 41,250,000 Ordinary Shares were issued to the Executive Directors and the Non-Executive Directors, exercisable at 0.20p for five years from 25 May 2021.

 

Name                                     Number of Ordinary Shares subject to Broker Warrants

 

Dr Nigel Burton                    25,000,000

Mark Slade                           10,000,000

David Rae                             6,250,000

 

Promoter Warrants

 

Promoter warrants were issued to certain investors in the fundraising completed on 25 May 2021 in consideration of those persons assembling and co-ordinating the Concert Party's investment in the Company. As part of this issuance, non-transferable warrants to subscribe for, in aggregate, 500,000,000 Ordinary Shares were issued to Simon Wilkinson, exercisable at 0.20p for five years from 25 May 2021.

 

DIRECTORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 2022

The Directors are pleased to present the annual report and audited financial statements of Location Sciences Group PLC for the year ended 31 December 2022.

Dividends

The Directors do not recommend the payment of a dividend.

 

Board of Directors

 

Simon Wilkinson, Non-Executive Chairman

Simon joined Location Sciences as Non-Executive Chairman in May 2021. Simon is a highly experienced software executive and entrepreneur, having been involved with a number of public and private companies over his career. He was most recently CEO then Chairman of Mobica, a world-leading, award-winning software services company offering bespoke development, QA and consultancy. He was previously Chief Executive Officer of Myriad Group AG, which was listed in Zurich, and founder and Chief Executive Officer of Magic4 Ltd, a mobile messaging software market leader, backed by 3i, Philips Ventures and Motorola Ventures. 

 

Nigel Burton, Non-Executive Director

Nigel was appointed as a Non-Executive Director in May 2021. Nigel spent 14 years as an investment banker at leading City institutions including UBS Warburg and Deutsche Bank, including as the Managing Director responsible for the energy and utilities industries.  Following this he spent 15 years as Chief Financial Officer or Chief Executive Officer of a number of private and public companies. He is currently a Non-Executive Director of BlackRock Throgmorton Investment Trust plc, DeepVerge plc, eEnergy Group plc, Mobile Streams plc and Microsaic Systems plc.

 

Research and development

Due to the reorganisation of the business following the Board's strategic review, Location Sciences ceased investing into research and development. £Nil (2021: £341,441) of development expenditure has been capitalised as "Intangible Assets".

Financial Risk Management

The Group's financial instruments comprise cash and cash equivalents, trade receivables and payables and borrowings. The main risks arising from the Group's financial instruments are interest rate risk, credit risk, liquidity risk and foreign currency risk.

Interest rate and credit risk - the principal assets of the Group are its cash deposits. These are short-term liquid assets and as a result the exposure to interest rate income risk is not considered significant. The principal focus of the Directors has been to minimise any credit risk in relation to its cash deposits even at the expense of interest income received. Borrowings include financial instruments on fixed interest rate terms and a revolving credit facility at a variable rate. As a result, the exposure to interest rate expense risk is low and no active management of interest rate risk is undertaken by the Board.

Foreign currency risk - the main functional currency is sterling. Throughout 2022, the Company's transactions have primarily been denominated in sterling and the Group has had low exposure to foreign currency risk.

Liquidity risk - the Board's policy is to ensure that sufficient cash and cash equivalents are held on a short-term basis at all times in order to meet the Group's operational needs. The Group does actively raise funds through market placings and other loan facilities.

The Group has been operating at a trading loss due to its stage of development and seeks to ensure that its investments will deliver long term value to shareholders. Liquidity risk is actively managed through regular review of cash requirements of the business in conjunction with the strategic and operational plans for the Group.

 

Substantial shareholdings

As at 26 June 2023 the Directors had been notified of the following holdings representing 3% or more of the issued share capital of the Company:

	Number of ordinary shares	Percentage of issued share capital
Richard Hughes	200,000,000	7.55%
Mahmud Kamani	200,000,000	7.55%
Turner Pope Investments	132,750,000	5.01%
Darron Lee	125,000,000	4.72%
Simon Wilkinson	100,000,000	3.78%
Dr Nigel Burton	85,000,000	3.21%

Directors

The Directors, who held office during the year, were as follows:

 

S Wilkinson

N Burton

D Rae (resigned 22 June 2022)

M Slade (resigned 22 June 2022)

 

The Company maintains director and officers' liability insurance.

Statement of Directors' responsibilities

The Directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group and company for that period. In preparing these financial statements, the directors are required to:

•	select suitable accounting policies and apply them consistently;
•	make judgements and accounting estimates that are reasonable and prudent;
•	state whether applicable International Financial Reporting Standards (IFRSs) as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Directors' interests in shares

The directors held the following interests in Location Sciences Group PLC:

	At 31 December 2022			At 31 December 2021
	Ordinary Shares of 0.1p each	Options over Ordinary Shares of 0.1p each	Warrants over Ordinary Shares of 0.1p each	Ordinary Shares of 0.1p each	Options over Ordinary Shares of 0.1p each	Warrants over Ordinary Shares of 0.1p each
S Wilkinson	100,000,000	-	530,000,000	75,000,000	-	530,000,000
N Burton	85,000,000	-	55,000,000	67,500,000	-	55,000,000

 

The market price of the Company's shares at the end of the financial year was 0.13p.

Disclosure of information to auditor

Each of the persons who are directors at the time when this director's report is approved has confirmed that:

•	so far as that director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
•	that director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the auditor is aware of that information.

Annual General Meeting

Notice of the forthcoming Annual General Meeting of the Company together with resolutions relating to the Company's ordinary business will be given to the members separately.

Reappointment of auditors

The auditors, Hazlewoods LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LOCATION SCIENCES GROUP PLC

Opinion

We have audited the financial statements of Location Sciences Group PLC (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022, which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Statement of Financial Position, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated Statement of Cash Flows, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.

In our opinion the financial statements:

•	give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2022 and of the group's loss for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our approach to the audit

Our audit approach was based on a thorough understanding of the Group's business and is risk based. In arriving at our opinions set out in this report, we highlight the key audit matters that in our judgment, had the greatest effect on the financial statements.

 

Key audit matters

How our scope addressed this matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Recognition of revenue
Revenue consists of the value of services provided. Revenue recorded for services is recorded to the extent that the Group has performed its contractual obligations. We therefore identified revenue recognition as a risk that required particular audit attention.	Our audit work included but was not restricted to: - For revenue recognised in the year our audit work include, assessing whether the Group's accounting policy for revenue recognition was in accordance with IFRS 15 'Revenue'; - Sampling service sales in the year and comparing them to usage reports and stated performance dates; - Performing cut-off testing of sales around the year end; and - Analytical review of revenue recognised in the year including variance review.
Internally generated intangible assets
The Group has £134,674 of development costs in the year on the balance sheet. The Group capitalises development costs when the following criteria have been met: The product is technically viable, it is intended for sale, a market exists, expenditure can be measured reliably, and sufficient resources are available to allow completion of the project. When the Board is sufficiently confident that these criteria are met, the costs are capitalised. We therefore identified internally generated intangibles as a risk that required particular audit attention.	Our audit work included, but was not restricted to: - Assessing the nature of the costs capitalised to ensure they met the required accounting criteria for capitalisation; - Discussions with management to ensure that all criteria for capitalisation had been met and supporting evidence was obtained to corroborate this. - Considering whether there are any impairment indicators and, where these exist, reviewing impairment reviews prepared by management.
Going concern
Trading performance of the Group has previously indicated the existence of material uncertainty, which may cast significant doubt about the Company and the Group's ability to continue as a going concern.	Our audit work included, but was not limited to: - considering funds and resources available to the Group in the year; - review of forecasts prepared by management to support the going concern assumption; and - consideration of customer contracts.

Our application of materiality

We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any identified misstatements and in forming our opinion. For the purpose of determining whether the group financial statements are free from material misstatement, we define materiality as the magnitude of a misstatement or an omission from the financial statements or related disclosures that would make it probable that the judgement of a reasonable person, relying on the information would have been changed or influenced by the misstatement or omission. We also determine a level of performance materiality, which we used to determine the extent of testing needed, to reduce to an appropriately low level that the aggregate of uncorrected and undetected misstatements exceed materiality of the group financial statements as a whole.

 

We establish materiality for the financial statements as a whole to be £45,000, which is 1% of the value of the trading subsidiary's total assets.

 

Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the directors' assessment of the company's ability to continue to adopt the going concern basis of accounting included discussions with management to support assumptions included in forecasts and the Group ongoing strategy and assessing the level of resource available to the Group.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant section of this report.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

 

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•	the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
•	the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
•	the parent company financial statements are not in agreement with the accounting records and returns; or
•	certain disclosures of directors' remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

 

Responsibilities of directors

As explained more fully in the Directors' Report set out on page 16, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

Based on our understanding of the company and its activities, we identified that the principal risks of non-compliance with laws and regulations related to UK tax legislation and money laundering, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as UK GAAP and the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate or fictitious journal entries to manipulate the financial performance or financial position of the company.

 

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also planned and performed audit procedures including:

• Gaining an understanding of the legal and regulatory framework and considering the risk of any acts which may be contrary to applicable laws and regulations, including fraud.

• Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.

• Evaluation of the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Making inquiries with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud.

• Testing journal entries and other adjustments for appropriateness and evaluating the business rationale of any significant transactions outside the normal course of business.

• Evaluation of the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Conclusion on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations or through collusion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

A further description of our responsibilities is available on the Financial Reporting Council's website at:www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 

Use of this report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Ryan Hancock (Senior Statutory Auditor)

For and on behalf of Hazlewoods LLP, Statutory Auditor

 

Staverton Court

Staverton

Cheltenham

GL51 0UX

Date: 26 June 2023

 

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2022

Continuing Operations	Note	2022 £	2021 £
Revenue	4	110,856	167,940
Cost of sales		(29,358)	(77,243)
Gross profit		81,498	90,697
Administrative expenses		(723,149)	(801,432)
Other operating income	5	-	11,267
Operating loss before exceptional administrative expenses, amortisation and depreciation		(641,651)	(699,468)
Amortisation and depreciation		(259,335)	(216,392)
Exceptional administrative expenses	7	42,040	(283,210)
Operating loss	7	(858,946)	(1,199,070)
Finance income	8	8,368	2
Loss before tax		(850,578)	(1,199,068)
Income tax receipt	12	-	113,871
Loss for the year for the financial year from continuing operations		(850,578)	(1,085,197)
Discontinued operations
Profit (loss) for the year from discontinued operations	6	92,357	(298,161)
Loss for the financial year		(758,221)	(1,383,358)

 

Earnings per share
Loss per share - basic and diluted	13	(0.029p)	(0.076p)

The above results were derived from continuing operations.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022

		2022 £	2021 £
Loss for the year		(758,221)	(1,383,358)
Other comprehensive income
Foreign currency translation loss		-	(4,718)
Total comprehensive income for the year attributable to owners of the parent		(758,221)	(1,388,076)

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022

	Note	2022 £	2021 £
Assets
Non-current assets
Intangible assets	14	134,674	537,491
Property, plant and equipment	15	-	-
		134,674	537,491
Current assets
Trade and other receivables	17	228,072	331,559
Tax asset	12	-	113,871
Cash and cash equivalents		4,125,571	4,378,825
		4,353,643	4,824,255
Current liabilities
Trade and other payables	18	(157,864)	(183,175)
Net current assets		4,195,778	4,641,080
Total assets less current liabilities		4,330,453	5,178,571
Net assets		4,330,453	5,178,571
Equity
Share capital	21	16,340,507	16,298,007
Share premium		20,088,118	20,034,993
Merger relief reserve		11,605,556	11,605,556
Capital reserve		209,791	209,791
Reverse acquisition reserve		(9,225,108)	(9,225,108)
Equity reserve		1,135,319	1,135,319
Retained earnings		(35,823,730)	(34,879,987)
Equity attributable to owners of the company		4,330,453	5,178,571

 

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022

	Note	2022 £	2021 £
Assets
Non-current assets
Investments	16	3,034,374	3,219,896
Current assets
Trade and other receivables	17	58,797	132,919
Current liabilities
Trade and other payables	18	(76,000)	(76,000)
Net current assets		(17,203)	56,919
Total assets less current liabilities		3,017,171	3,276,815
Net assets		3,017,171	3,276,815
Equity
Share capital	21	16,340,507	16,298,007
Share premium		20,088,118	20,034,993
Merger relief reserve		11,605,556	11,605,556
Equity reserve		1,135,319	1,135,319
Retained earnings		(46,152,329)	(45,797,060)
Total equity		3,017,171	3,276,815

 

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements. The loss after tax for the parent Company for the year was £169,747 (2021: £3,796,912).

Approved by the Board on 26 June 2023 and signed on its behalf by:

 

 

Simon Wilkinson

Director