14 August 2023
Insig AI plc
("Insig AI" or the "Company")
Final results for the year ended 31 March 2023
and
Posting of the Annual Report and Accounts and Notice of Annual General Meeting
Insig AI plc (AIM:INSG), the data science and machine learning solutions company and its subsidiaries (the "Group") is pleased to announce its results for the year ended 31 March 2023.
The Group's Annual Report & Accounts, along with the Company's Notice of Annual General Meeting ("AGM") will be posted to shareholders on Tuesday 15 August and will be available shortly on the Group's website: www.insg.ai/investor-relations/. The AGM will be held at The Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE on 15 September 2023 at 12:00 p.m.
Highlights
· Revenue increase of 22% year on year to £2.1 million
· Significantly lower operating costs for Insig AI business implemented during the year
· Loss for the year after income tax of £18.5 million, which includes an impairment charge of £16.6 million
· Cash consumed by operating activities of £1.0 million against £2.2 million for the previous year
· Insig AI to provide data and software platforms to the FCA's 2023 TechSprint, known as the Global Financial Innovation Network's (GFIN) Greenwashing TechSprint
· Completion of equity fundraise post year end for £0.9 million
· Forecast that the Insig AI business will continue to achieve increases in revenue in the current and following financial year and for operational profitability in the current year and beyond
Richard Bernstein, Executive Chairman commented: "We have spent the last two years developing what we believe is a world class corporate disclosure database with over 130 million machine readable sentences. The work that we are now doing with the FCA and several other international regulators demonstrates the value of this core asset. In the coming months, through partnerships, distribution agreements and direct selling, we expect to monetise this offering to market participants for whom transparency of disclosures matters. Alongside deploying our generative AI data science capabilities, we are excited about both our market positioning and our prospects."
For further information, please visit www.insg.ai or contact:
| Insig AI plc Richard Bernstein, Executive Chairman Colm McVeigh, CEO
|
|
| Zeus (Nominated Adviser & Broker) David Foreman / James Hornigold / Danny Phillips
| +44 (0) 20 3829 5000 |
Chairman's statement
I am pleased to update you on developments at Insig AI plc and in the markets we serve. It is now two years since I came "on board." As a non-executive director, my role involved oversight, stewardship and introductions. Three months ago, I was delighted to become Executive Chairman. This has allowed me to increase my involvement in the operational aspects of the business, including directly interfacing with both clients and importantly, prospects.
In my statement last September, I was candid about the business: when I became Chairman, it was clear that the executive team at that time lacked experience in selling scalable software solutions. Since Colm McVeigh was appointed to the board, that has changed and his impact has been significant. The technical competence and machine learning capabilities within Insig AI have never been in doubt. However, a business is an enterprise, and its primary objective must be to convert its strengths into generating and growing sustainable revenues and profitability.
A challenge for any emerging technology business is to decide its area of focus. Since its formation in 2017, the core Insig AI business has served the asset management industry. This has been its client base and the Company has achieved considerable success in delivering valuable products and solutions. Two years ago, we supported AB CarVal Investors LP ("AB CarVal"), now part of Alliance Bernstein and delivered our ESG scoring tools which were incorporated within AB CarVal's highly successful Collateralised Loan Obligation ("CLO") fund.
The democratisation of investing is a welcome development. As well as owners of corporations having the right to charge their boards with the obligation for businesses to behave as responsible corporate citizens, so savers also have the right to demand that those with the responsibility of managing those savings, asset managers, allocate capital and invest in areas that are not harmful to the planet and people but also result in an improved or positive outcome.
Whilst such an approach is laudable, more recently, the "ESG" label has become tarnished and categorised by some as being part of the "woke" agenda. This is particularly the case in the United States, where a bifurcated political system has resulted in several states enacting legislation to restrict the use of ESG factors in making investment decisions. As a result, billions of dollars of State funds have been divested. In January 2023, 25 states filed a lawsuit in federal court seeking an injunction against the US Department of Labor that had introduced legislation that ESG factors should form part of fiduciary duties.
The ESG landscape requires regulation and as it evolves and matures, it also requires greater uniformity. The three letter acronym "ESG" has become something of a poster child for being either "pro" or "anti". This should not be about labels but put simply, whether investors and businesses act in a responsible manner.
Two weeks ago, Greta Thunberg, a widely acknowledged champion of highlighting the seriousness of climate change withdrew from attending the Edinburgh Book Festival, following reports that its sponsor, Baillie Gifford, has billions invested in firms that profit from fossil fuels. Baillie Gifford responded by stating that two per cent. of clients' money was invested in businesses with some element of fossil fuels, whereas five per cent. was invested in clean energy transition.
As regards the "E," what should an investor or asset manager be seeking to achieve? We do not subscribe to the notion that by bypassing an investment in say fossil fuels, that the world will automatically be a better place. Forcing a large cap oil company to divest its oil assets may well result in more damage to the planet if the new owner of these assets has no interest in being a responsible investor. Instead, investment should perhaps be focused on company level binding targets where owners of such assets are answerable and accountable in the public markets arena. Transparency and accountability are critical.
Whilst there has been an inevitable focus on the "E" and climate change, vital areas of the "S" and "G" have failed to garner as much focus. Recent events at Odey Asset Management and at Coutts & Co have brought into focus the impact on a business and on its staff of failing to attend to the "S" and the "G."
We remain of the view that regulatory disclosure will become mandatory. However, until that time, and in the US in particular, a "state of flux", seems to be an accurate characterisation of the ESG landscape. Inevitably, in the interim, such uncertainty is causing asset managers to defer fund launches and ESG asset allocation. With the added backdrop of a huge shift in asset allocation to government bonds, where the risk-free rate has returned to levels not seen for more than 20 years, it is unsurprising that purchasing and investment decisions are being deferred. The recessionary narrative has placed further pressures on spending budgets.
It is therefore our mission, not only to endure this transitory period but to stake our claim as being part of the ecosystem that raises standards of corporate disclosure. In this regard, I am pleased to report significant progress.
Insig AI, using its machine learning expertise, has the capability to source, analyse and categorise vast quantities of data to accelerate and enhance human decision making. Two years ago, the Company set out to achieve an ambitious target: to build a repository, essentially a database of corporate public disclosures. Then, our database comprised 200 companies. Last year, we reported that our repository of corporate disclosures had increased to 2,000 companies. Now, with a centralised library of transparent, tagged and machine-readable data of over 5,000 companies, we believe that we possess an unrivalled database and navigational tool for both corporations and market participants, encompassing over 130 million machine readable sentences.
As well as our people and our technology, we regard this repository as being a most valuable asset. Assets derive probable future economic benefit, and we believe that we will achieve substantial economic benefits from this two year, multi-million-pound investment. The most positive demonstration of the value of our database and data science capabilities has been evidenced by our partnership with the Financial Conduct Authority.
Data and technology collaboration with the Financial Conduct Authority ("FCA")
In April 2023, Insig AI was proud to announce that it would be providing the data and software platforms to the FCA's 2023 TechSprint, known as the Global Financial Innovation Network's (GFIN) Greenwashing TechSprint. The GFIN Greenwashing TechSprint has brought together 13 international regulators and 110 participants in each jurisdiction, including innovative tech firms and teams from large consultancies.
The goal of the project is to develop a tool or solution that can help regulators tackle or mitigate the risks of greenwashing in financial services across the globe. The project focuses on how technology, including AI and Machine Learning, can enable regulators and supervisors to verify that ESG-related product claims to retail consumers are accurate and complete and how technology can help monitor, collate, and identify examples of greenwashing from financial services firms' websites, social media platforms, and other documentation or data which can also be shared across jurisdictions.
Insig AI is providing its data and technology platform for onboarding of partners and participants of the GFIN Greenwashing TechSprint. The core data set comprises our database of pdf and machine-readable corporate financial and ESG documents with entity mapping and sentence-level classification against 15 ESG issues.
Participants have access to Insig AI's technology via the ESG Research Tool app, which combines machine learning, Natural Language Processing and Elastic search capability for efficient document interrogation and comparison across the database of reports. Insig AI has facilitated the collection, tagging and addition of new corporate documents into the database.
I am now delighted to report that we have received very positive feedback from multiple participants. We regard our involvement as integral to the GFIN Greenwashing TechSprint. Next month, in conjunction with the FCA, we expect to provide a more detailed update. Let us not underestimate the scale of this achievement and the quality of connections that it has brought. The World Bank is but one of more than a dozen international bodies that we are now able to interact with.
It is vital that those guilty of greenwashing, that is those who make false and/or misleading claims, are punished. The GFIN Greenwashing TechSprint focuses on companies, rather than on asset managers. However, rightly, asset managers must also be held accountable. We have had direct engagement with asset managers who are "talking the talk" of incorporating best practice on corporate disclosures but when we "drill down," it is evident that they are not doing so. We welcome the day when regulatory enforcement prohibits such behaviour.
We also note and concur with recent comments from ClimateEarth regarding the failure of the Big 6 Accounting firms to move forward with providing the necessary audit and disclosure risk assurances that are urgently required. We stand, ready, willing and able to work with the Big 6 Accounting firms to raise the bar of these essential corporate disclosures. Action will have to follow regulation but, for now, it is the regulators that are charged with this responsibility.
Financial performance
For the year ended 31 March 2023, we are reporting a 22 per cent increase in consolidated revenue to £2.1 million. The Group's legacy Sport in Schools business comprised £1.4 million, with the core Insig AI business delivering an 85 per cent. increase in revenue to £0.7 million.
During the year, Sport in Schools invested £0.1 million in a significant marketing campaign. This culminated with Gareth Southgate, manager of the England national football (soccer) team since 2016, providing a coaching session to pupils coached by Sport in Schools. After this investment, which was expensed in full, Sport in Schools delivered a modest operating profit.
Combined operating loss was £4.8 million. This was after charging depreciation and amortisation of £2.8 million. Net cash used in operating activities, was £1.0 million, as against £2.2 million in the previous year. This reflects the decision taken by the Board to significantly reduce operating costs, as software platform milestones had been delivered, we no longer required a large development team, and we were also able to streamline our business activities.
The Group carried out a review of the carrying value of its goodwill and other assets during the year. These have been written down by £16.6 million and accounted for as an exceptional item. This charge has no impact on either cash or prospects of the Group.
Cash at bank as at 31 March 2023 was £0.3 million. Following the year end, in April 2023, we announced a successful equity fundraise of £0.9 million, which I refer to below.
Funding
In May 2022, I provided the Company with an unsecured convertible loan facility of £1.0 million. The key terms were conversion at the higher of 35p per share and the prevailing share price at the time of conversion and a coupon of 5 per cent. per annum on funds drawn down. In June 2022, the Company announced that it had also agreed a £0.5 million convertible loan, on the same terms as my own facility, with David Kyte, a long term shareholder of the Company. These loan facilities were fully utilised and were due for repayment on 31 December 2022. In that month, both David Kyte and myself agreed to extend these loan facilities by 12 months.
For myself, the terms of the extension included increasing the interest rate to 8 per cent. per annum to reflect the significant increase in interest rates and the deterioration in the debt capital markets. The conversion price was amended to 20p which represented a 17.6 per cent. premium to the prevailing share price and 1,666,667 warrants were granted expiring on 31 December 2025 and exercisable at a price of 30p, which represented a 76.5 per cent. premium to the prevailing share price.
For David Kyte's facility, the terms of extension included increasing the interest rate to 8 per cent. per annum to reflect the significant increase in interest rates and the deterioration in the debt capital markets. The conversion price was amended to 18p, which represented a 5.9 per cent premium to the prevailing share price and 1,388,889 warrants were granted expiring on 31 December 2025 and exercisable at a price of 25p, which represented a 47.1 per cent premium to the current share price.
In September 2022, I provided a further convertible loan facility of up to £0.75 million. This facility has been fully utilised. The key terms were a conversion price of 35p per share and a coupon of 5 per cent. per annum on funds drawn down. This loan was secured against the share capital held by the Company in Westside Sports Limited, which has interests in Ultimate Player Limited, Pantheon Leisure plc, Sport in Schools Limited and the Elms Group Limited. The loan was due to be repaid on 30 June 2023. As previously announced, the Company and myself agreed to extend the repayment date by six months.
Successful equity funding
In April 2023, the Company announced that it had completed an equity subscription raising £0.9 million at 17p per share, being the closing price on 20 April 2023. I subscribed for £0.15 million. Funds are being utilised to invest in sales and marketing as well as for working capital purposes.
The subscribed for shares were issued from shares held in treasury, being shares gifted to the Company in December 2022 by Insight Capital founders and directors of the Company, Steve Cracknell and Warren Pearson, Chief Product Officer and Chief Technology Officer respectively. As a result, effectively, existing shareholders suffered no equity dilution.
AB CarVal partnership
In February 2022, the Company announced a landmark agreement with AB CarVal to develop and launch a new line of high yield ("HY") and investment grade ("IG") ESG scoring tools to be used by AB CarVal to optimise HY and/or IG portfolios based on ESG considerations. As previously stated, our share of fees is based on AB CarVal's assets under management ("AUM") raised in connection with these HY and/or IG focused investment pools and we continue to anticipate that as AB CarVal secures mandates, our fees will increase commensurably and continue for several years.
In July 2022, AB CarVal was acquired by Alliance Bernstein, which we hope will provide further opportunities. In April 2023, we reported that over the last year, we have worked closely with AB CarVal on refining the ESG scoring tools and that we believe that these tools are now ready for commercialisation. We continue to expect a slow and gradual ramp up of sustainable revenues from this partnership. Whilst the recent uncertain ESG landscape in the US described above will inevitably make the ESG fundraising environment slower and more challenging, we remain of the view that AB CarVal has a market leading product, which over time, will garner support with growing traction.
Generative AI and new product breakthrough delivering alpha
Of late, many column inches have been devoted to the pros and cons of generative AI. What seems beyond dispute is that the output from generative AI is a function of its input, or its source data. At Insig AI, we are now able to successfully use generative AI because of the integrity, objectivity, and transparency of our source data of 130 million machine-readable sentences.
We have also recently been able to utilise this capability to construct a fixed income model portfolio, which, based on momentum and value criteria, is able to deliver 160 basis points of additional alpha. We now intend to partner with an asset manager to test this portfolio optimisation tool on an existing portfolio.
Board composition
We were greatly saddened by the sudden and untimely death in April of John Murray. His wise counsel is sorely missed. Whilst John is truly irreplaceable, we are currently seeking to strengthen the board.
Prospects
It remains early in the Group's current financial year. We have been awarded a financial database assignment from a new client, as well as an annual licencing agreement for our ESG data from another new client asset manager. In the first quarter, we also secured additional business from an existing client. We remain frustrated by the very slow pace of decision making at prospects - even though, the business case in our opinion, is so strong.
We continue to forecast further sales growth for the Insig AI business. The board remains optimistic that it will achieve operating profitability in FY-24. Also, we are benefiting from decisions taken earlier in the year that materially lowered our operating costs.
We have previously commented on the current bear market for asset managers and that many have characterised this as being the harshest investment climate for a generation. Against such a backdrop, we remain realistic as to the pace of sales growth in the very short term. That is why the decisive action we took last autumn to adapt to this tough environment has proven to be the right strategy.
We are using our machine learning and data science optimisation capabilities to drive better performance outcomes, to reduce risk and to improve decision making and the standard of corporate disclosure.
We are delighted with recent progress from our data and collaboration agreement with the FCA. The feedback received from participants is that our repository, our Natural Language Processing classifiers, and their ability to use keywords to surface patterns of reporting are both unique and valuable. We regard this as being a core asset, ideally suited to partnership opportunities, where we will be able to significantly broaden our user base and translate this into increasing revenues and profits.
Richard Bernstein
Chairman
13 August 2023
Consolidated statement of financial position
|
|
| Group |
| Company | ||||
|
| Note | 31 March 2023 £ | 31 March 2022 £ |
| 31 March 2023 £ | 31 March 2022 £ |
| |
| Non-Current Assets |
|
| | | | |
| |
| Property, plant and equipment | 12 | 37,648 | 65,664 | | - | - |
| |
| Right of Use Assets | 13 | 28,266 | 38,545 | | - | - |
| |
| Intangible assets | 14 | 20,309,278 | 38,217,155 | | - | - |
| |
| Investment in subsidiaries | 15 | - | - | | 20,383,136 | 39,179,029 |
| |
|
| | 20,375,192 | 38,321,364 |
| 20,383,136 | 39,179,029 |
| |
| Current Assets | |
| |
|
| |
| |
| Trade and other receivables | 16 | 719,840 | 289,819 |
| 151,699 | 89,414 |
| |
| Cash and cash equivalents | 17 | 280,584 | 473,390 | | 3,749 | 61,314 |
| |
| | | 1,000,424 | 763,209 |
| 155,448 | 150,728 |
| |
| Total Assets | | 21,375,616 | 39,084,573 |
| 20,538,584 | 39,329,757 |
| |
| Non-Current Liabilities | |
| | |
| |
| |
| Lease liabilities | 19 | 16,868 | 28,593 | | - | - |
| |
| Deferred tax liabilities | 20 | 2,586,096 | 4,160,088 | | - | - |
| |
|
| | 2,602,964 | 4,188,681 | | - | - |
| |
| Current Liabilities | |
| | |
| |
| |
| Trade and other payables | 18 | 932,927 | 810,331 | | 382,636 | 308,544 |
| |
| Lease liabilities | 19 | 10,386 | 9,048 | | - | - |
| |
| Convertible loan notes | 19 | 2,261,769 | - | | 2,261,769 | - |
| |
|
| | 3,205,082 | 819,379 | | 2,644,405 | 308,544 |
| |
| Total Liabilities | | 5,808,046 | 5,008,060 |
| 2,644,405 | 308,544 |
| |
|
| |
| | |
| |
| |
| Net Assets | | 15,567,570 | 34,076,513 |
| 17,894,179 | 39,021,213 |
| |
| Equity attributable to owners of the Parent | |
| | |
| |
| |
| Share capital | 22 | 3,109,804 | 3,109,804 | | 3,109,804 | 3,109,804 |
| |
| Share premium | 22 | 39,077,403 | 39,077,403 | | 39,077,403 | 39,077,403 |
| |
| Other reserves | 24 | 377,381 | 325,583 | | 377,381 | 325,583 |
| |
| Share based payments reserve | 23 | 18,845 | 17,240 | | 18,845 | 17,240 |
| |
| Retained losses | | (26,964,846) | (8,400,850) | | (24,689,254) | (3,508,817) |
| |
| Equity attributable to shareholders of the parent parent company | | 15,618,587 | 34,129,180 |
| 17,894,179 | 39,021,213 |
| |
| Non-controlling interests | | (51,017) | (52,667) | | - | - |
| |
| Total Equity | | 15,567,570 | 34,076,513 |
| 17,894,179 | 39,021,213 |
| |
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company Income Statement and Statement of Comprehensive Income. The loss for the Company for the year ended 31 March 2023 was £21,180,437 (31 March 2022: loss of £267,798).
The Financial Statements were approved and authorised for issue by the Board of Directors on 13 August 2023 and were signed on its behalf by:
Colm McVeigh
Chief Executive Officer
Consolidated Income statement
|
|
| ||
| Continued operations | Note |
Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Revenue | 5 | 2,092,161 | 1,707,790 |
| Cost of sales | 5 | (732,966) | (719,068) |
| Gross profit |
| 1,359,195 | 988,722 |
| Administrative expenses | 7 | (6,124,769) | (5,256,104) |
| Other gains/(losses) | 8 | (23,368) | 7,838 |
| Other income | 9 | 444 | 119,025 |
| Impairments | 14 | (16,558,296) | - |
| Operating loss | | (21,346,794) | (4,140,519) |
| Finance income | 10 | 101 | 3,878 |
| Finance costs | 10 | (81,518) | (14,010) |
| Loss before exceptional item |
| (21,428,211) | (4,150,651) |
| Exceptional items | 11 | - | 905,851 |
| Loss before income tax |
| (21,428,211) | (3,244,800) |
| Tax credit/(charge) | 27 | 2,865,865 | (941,919) |
| Loss for the year after income tax |
| (18,562,346) | (4,186,719) |
| Loss for the year attributable to owners of the Parent |
| (18,563,996) | (4,199,720) |
| Profit/(Loss) for the year attributable to Non-controlling interests |
| 1,650 | 13,001 |
| Basic and Diluted Loss Per Share attributable to owners of the Parent during the period (expressed in pence per share) | 28 | (17.89)p | (4.40)p |
|
|
|
Year ended 31 March 2023 £ |
Year ended 31 March 2022 £ |
| ||
| Loss for the year |
| (18,562,346) | (4,186,719) | |||
| Other Comprehensive Income: |
|
| | |||
| Items that may be subsequently reclassified to profit or loss |
| | | |||
| Other comprehensive loss for the year, net of tax |
| - | - | |||
| Total comprehensive loss |
| (18,562,346) | (4,186,719) | |||
| Total comprehensive loss attributable to owners of the Parent |
| (18,563,996) | (4,199,720) | |||
| Total comprehensive profit/(loss) attributable to Non-controlling interests |
| 1,650 | 13,001 | |||
Consolidated statement of changes in equity
|
|
|
|
|
|
|
|
| ||||||
|
| Note | Share capital £ | Share premium £ | Share based payments reserve £ | Other reserves £ | Retained earnings /(losses) £ | Total £ | Non Controlling Interest £ | Total £ |
| |||
| Balance as at 1 April 2021 |
| 2,479,664 | 3,039,531 | - | 427,727 | (4,201,130) | 1,745,792 | (65,668) | 1,680,124 | ||||
| Loss for the period | | - | - | - | - | (4,199,720) | (4,199,720) | 13,001 | (4,186,719) | ||||
| Other comprehensive loss for the period |
|
|
|
|
|
|
|
|
| ||||
| Items that may be subsequently reclassified to profit or loss |
| - | - |
-
| - | - | - | - | - | ||||
| Total comprehensive loss for the period |
| - | - | - | - | (4,199,720) | (4,199,720) | 13,001 | (4,186,719) | ||||
| Issue of new shares | | 630,140 | 36,201,388 | - | - | - | 36,831,528 | - | 36,831,528 | ||||
| Equity component of CLN issued in period | | - | - | - | (124,343) | - | (124,343) | - | (124,343) | ||||
| Share issue costs | | - | (163,516) | - | 22,199 | - | (141,317) | - | (141,317) | ||||
| Share based payments | | - | - | 17,240 | - | - | 17,240 | - | 17,240 | ||||
| Total transactions with owners, recognised directly in equity |
|
630,140 |
36,037,872 |
17,240 |
(102,144) |
- |
36,583,108 |
- |
36,583,108 | ||||
| Balance as at 31 March 2022 |
|
3,109,804 |
39,077,403 |
17,240 |
325,583 |
(8,400,850) |
34,129,180 |
(52,667) |
34,076,513 | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
| Balance as at 1 April 2022 |
|
3,109,804 |
39,077,403 |
17,240 |
325,583 |
(8,400,850) |
34,129,180 |
(52,667) |
34,076,513 | ||||
| | | | |
| | | | |
| ||||
| Profit/(Loss) for the year | | - | - | - | - | (18,563,99) | (18,563,996) | 1,650 | (18,562,346) | ||||
| Other comprehensive loss for the year |
|
|
|
|
|
|
|
|
| ||||
| Items that may be subsequently reclassified to profit or loss | | - | - | - | - | - | - | - | - | ||||
| Total comprehensive loss for the year | | - | - |
- | - | (18,563,99) | (18,563,996) | 1,650 | (18,562,346) | ||||
| Share based payments | | - | - | 1,605 | - | - | 1,605 | - | 1,605 | ||||
| Equity component of CLN issued in period | | - | - | - | 51,798 | - | 51,798 | - | 51,798 | ||||
| Total transactions with owners, recognised directly in equity |
|
- |
- |
1,605 |
51,798 |
- |
53,403 |
- |
53,403 | ||||
| Balance as at 31 March 2023 |
|
3,109,804 |
39,077,403 |
18,845 |
377,381 |
(26,964,846) |
15,618,587 |
(51,017) |
15,567,570 | ||||
Consolidated statements of cash flows
|
|
| Group | | Company | ||
|
| Note | 12 month period ended 31 March 2023 £ | 12 month period ended 31 March 2022 £ | | 12 month period ended 31 March 2023 £ | 12 month period ended 31 March 2022 £ |
| Cash flows from operating activities |
|
| |
|
| |
| (Loss)/profit before income tax | | (18,562,346) | (4,186,719) | | (21,180,437) | 267,798 |
| Adjustments for: | | | | | | |
| Depreciation and amortisation | | 2,839,889 | 2,239,017 | | - | - |
| Share based payments | 23 | 1,605 | 17,240 | | 1,605 | 17,240 |
| Impairments | | 16,558,296 | | | 20,408,199 | |
| Net finance (income)/costs | | 81,518 | 13,546 | | 63,566 | (58,104) |
| Provision for deferred tax liabilities | | (1,573,992) | 941,918 | | - | - |
| Provision for R&D tax credits | | (552,000) | - | | - | - |
| R&D provision for prior year | | (749,873) | - | | | |
| Proceeds from R&D tax credits | | 749,873 | 683,143 | | - | - |
| Fair value uplift on unlisted investment | | - | (1,759,221) | | - | (1,759,222) |
| Loss on disposal of lease liability | | - | (7,725) | | - | - |
| Changes in working capital: | | | | | | |
| (Increase)/Decrease in trade and other receivables | | 118,704 | 36,658 | | (62,285) | 52,849 |
| Increase/(Decrease) in trade and other payables | | 121,131 | (170,024) | | 74,092 | (56,110) |
| Net cash used in operating activities | | (967,195) | (2,192,167) |
| (695,260) | (1,535,549) |
| Cash flows from investing activities | |
| | |
| |
| Sale/(Purchase) of property, plant and equipment | 12 | (8,788) | (34,053) | | - | - |
| Acquisition of subsidiaries net of cash acquired | | - | (1,528,518) | | - | (1,742,478) |
| Purchase of intangible assets | 14 | (1,456,436) | (2,304,860) | | - | - |
| Loans granted to subsidiaries | | - | - | | (1,612,305) | (3,148,487) |
| Net cash used in investing activities | | (1,465,224) | (3,867,431) |
| (1,612,305) | (4,890,965) |
| Cash flows from financing activities | |
| | |
| |
| Proceeds from issue of share capital | | - | 6,145,490 | | - | 6,145,490 |
| Transaction costs of share issue | | - | (141,516) | | - | (141,317) |
| Proceeds from Borrowings | | 2,250,000 | - | | 2,250,000 | - |
| Repayment of borrowings | | - | (290,000) | | - | - |
| Repayment of leasing liabilities | | (10,387) | (115,939) | | - | - |
| Net cash generated from financing activities | | 2,239,613 | 5,598,035 |
| 2,250,000 | 6,004,173 |
| Net decrease/(increase) in cash and cash equivalents | | (192,806) | (461,563) | | (57,565) | (422,341) |
| Cash and cash equivalents at beginning of year | | 473,390 | 934,953 | | 61,314 | 483,655 |
| Cash and cash equivalents at end of year | 17 | 280,584 | 473,390 |
| 3,749 | 61,314 |
Major Non-Cash Transactions:
On 21 December 2022, Steven Cracknell and Warren Pearson, Chief Product Officer and Chief Technology Officer gifted at nil value, their shares to the Company to be held in treasury and to be used at the discretion of the Company. Steven Cracknell gifted 4,500,000 ordinary shares of 1p each and Warren Pearson has gifted 2,500,000.
Notes to the financial statements
1. General information
Insig AI plc is a public company limited by shares, domiciled and incorporated in England and Wales and its activities are as described in the strategic report on pages 7-12.
These financial statements are prepared in pounds sterling being the currency of the primary economic environment in which the Group operates.
2. Summary of significant accounting policies
The principal Accounting Policies applied in the preparation of these Consolidated Financial Statements are set out below. These Policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1. Basis of preparation of Financial Statements
The Group and Company Financial Statements have been prepared in accordance with UK-adopted international accounting standards. The Group and Company Financial Statements have also been prepared under the historical cost convention.
The Financial Statements are presented in Pound Sterling rounded to the nearest pound.
The preparation of Financial Statements in conformity with UK adopted International Accounting Standards (IAS) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group and Company Financial Statements are disclosed in Note 4.
2.2. New and amended standards
(i) New and amended standards adopted by the Group and Company
The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 31 March 2023 but did not result in any material changes to the financial statements of the Group or Company.
Of the other IFRS and IFRIC amendments, none are expected to have a material effect on future Group or Company Financial Statements.
(ii) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
| Standard |
| Impact on initial application |
| Effective date |
| IFRS 17 (Amendments) | | Insurance contracts | | 1 January 2023 |
| IAS 1 (Amendments) and IFRS Practice Statement 2 | | Disclosure of Accounting Policies | | 1 January 2023 |
| IAS 8 (Amendments) | | Definition of Accounting Estimate | | 1 January 2023 |
| IAS 12 Income Taxes (Amendments) | | Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction | | 1 January 2023 |
| IAS 1 (Amendments) | | Classification of liabilities as current or non-current | | 1 January 2024 |
| IFRS 16 (Amendments) | | Lease Liability in a Sale and Leaseback | | 1 January 2024 |
None are expected to have a material effect on the Group or Company Financial Statements.
2.3. Basis of Consolidation
The Consolidated Financial Statements consolidate the financial statements of the Company and its subsidiaries made up to 31 March 2023. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
· The contractual arrangement with the other vote holders of the investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within the parent company financial statements. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation.
2.4. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represent amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. Under IFRS 15 there is a five-step approach to revenue recognition which is adopted across all revenue streams. The process is:
· Step 1: Identify the contract(s) with a customer;
· Step 2: Identify the performance obligations in the contract;
· Step 3: Determine the transaction price;
· Step 4: Allocate the transaction price to the performance obligations in the contract; and
· Step 5: Fees are recognised once the work is completed and provided to the client.
The Group has two types of revenue streams being machine learning and data services and sports activities.
Machine learning and Data services revenue comprises of:
1. ESG Research Tool
Fees are recognised as the agreed work is conducted.
2. Machine Readable Data
Fees are recognised as the agreed work is conducted.
3. Bespoke Data Science Solutions
Charged on a project basis and includes work related to data migration, design fees, communication fees and technological services. The fees are recognised as the agreed work in conducted.
For the services detailed above, revenue is recognised and invoiced in accordance with milestones agreed within each contract with the customer, which can vary on a case-by-case basis. In all scenarios, the revenue is recognised in accordance with the provision of the agreed services provided or, where the quantum and timing of the services can be difficult to predict, rateable over the period of the agreement. Depending on the client, invoices can be monthly, quarterly or ad-hoc. Invoices can be adjusted in situations where the agreed scope of work is exceeded or additional work is applied.
Sports activities revenue is recognised once performance obligations have been satisfied and work is completed with payment due in advance of the performance obligations. Under the Group's standard contract terms, customers may be offered refunds for cancellation of sports and leisure activities. It is considered highly probable that a significant reversal in the revenue recognised will not occur given the consistent low level of refunds in prior years.
2.5. Going concern
The preparation of financial statements requires an assessment on the validity of the going concern assumption. The Directors have reviewed projections for a period of at least 12 months from the date of approval of the financial statements as well as potential opportunities. Any potential short falls in funding have been identified and the steps to which Directors are able to mitigate such scenarios and/or defer or curtail discretionary expenditures should these be required have been considered. The directors have noted in their going concern assessment that the convertible loan notes provided to the Company are due for repayment on 31 December 2024 and the Company has forecast the receipt of a research and development refund in the coming months.
In approving the financial statements, the Board have recognised that there is a material uncertainty. The financial statements do not include any adjustments that may arise in the event of the Group not being a going concern. However, having made enquiries and considered the uncertainties outlined above, the Directors have a reasonable expectation that the Group will continue to be able to raise finance as required over this period to enable it to continue in operation and existence for the foreseeable future. Accordingly, the Board believes it is appropriate to adopt the going concern basis in the preparation of the financial statements.
2.6. Foreign currencies
(a) Functional and presentation currency
Items included in the Financial Statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The functional currency of the UK parent
entity and UK subsidiaries is Pounds Sterling, The Financial Statements are presented in Pounds Sterling which the Company's functional and Group's presentational currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
2.7. Intangible assets
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of subsidiary entities at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the statement of comprehensive income and is not subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to each of the Group's cash generating units expected to benefit from synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, associate or jointly controlled entity, the amount of goodwill is included in the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS's has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.
Development costs are expensed in arriving at the operating profit or loss for the year unless the Directors are satisfied as to the technical, commercial and financial viability of individual project. In this situation, the expenditure is recognised as an asset and is reviewed for impairment on an annual basis. Amortisation is provided on all development costs to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates:
Technology assets - 7 years straight line
Customer relationships - 13 years straight line
Databases - 7 years straight line
Any impairment is recognised immediately in the income statement in administrative expenses.
2.8. Investments in subsidiaries
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.
2.9. Property, plant and equipment
Property, Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates:
Office Equipment - 25% and 10% straight line
Plant and Equipment - 25% and 10% straight line
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. If an impairment review is conducted following an indicator of impairment, assets which are not able to be assessed for impairment individually are assessed in combination with other assets within a cash generating unit.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other (losses)/gains' in the Income Statement.
2.10. Impairment of non-financial assets
Assets that have an indefinite useful life, for example, intangible assets not ready to use, and goodwill, are not subject to amortisation and are tested annually for impairment. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
2.11. Financial Instruments
Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset and the net amount reported in the consolidated statement of financial position and income statement when there is a currently enforceable legal right to offset the recognized amounts and the Group intends to settle on a net basis or realise the asset and liability simultaneously.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company's business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets
All Group's recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Financial assets that meet the following conditions are measured subsequently at amortised cost using the effective interest rate method:
• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding.
The company classifies the following financial assets at fair value through profit or loss (FVPL):
• debt instruments that do not qualify for measurement at either amortised cost (see above) or FVOCI;
• equity investments that are held for trading; and
• equity investments for which the entity has not elected to recognised fair value gains and losses through OCI.
The Group does not hold any financial assets that meet conditions for subsequent recognition at fair value through other comprehensive income ("FVTOCI").
Impairment of financial assets
The Group recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities
The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics. All purchases of financial liabilities are recorded on trade date, being the date on which the Group becomes party to the contractual requirements of the financial liability. Unless otherwise indicated the carrying amounts of the Group's financial liabilities approximate to their fair values.
The Group's financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at fair value through profit or loss.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method. The Group's financial liabilities measured at amortised cost comprise convertible loan notes, trade and other payables, and accruals.
The effective interest method is a method of calculating the amortised cost of a financial asset/liability and of allocating interest income/expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts/payments through the expected life of the financial asset/liability or, where appropriate, a shorter period.
Convertible loan notes
On issue of a convertible loan, the fair value of the liability component is determined by discounting the contractual future cash flows using a market rate for a non-convertible instrument with similar terms. This value is carried as a liability on the amortised cost basis unless is designated as a Fair Value Through Profit and Loss ("FVTPL") at inception.
Financial instruments designated as FVTPL are classified in this category irrevocably at inception and are derecognised when extinguished. They are initially measured at fair value and transaction costs directly attributable to their acquisition are recognised immediately in profit or loss. Subsequent changes in fair values are recognised in the income statement with profit or loss.
Equity instruments are instruments that evidence a residual interest in the assets of an entity after deducting all of its liabilities. Therefore, when the initial carrying amount of a compound financial instrument is allocated to its equity and liability components, the equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. The value of any derivative features (such as a call option) embedded in the compound financial instrument other than the equity component (such as an equity conversion option) is included in the liability component.
Derecognition of financial liabilities
A financial liability (in whole or in part) is recognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the income statement.
Fair value measurement hierarchy
The Group classifies its financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement. The fair value hierarchy has the following levels:
• quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (level 2); and
• inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
The level in the fair value hierarchy within the financial asset or financial liability is determined on the basis of the lowest level input that is significant to the fair value measurement.
2.12. Leases
The Group leases certain property, plant and equipment.
The lease liability is initially measured at the present value of the lease payments that are not paid. Lease payments generally include fixed payments less any lease incentives receivable. The lease liability is discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. The Group estimates the incremental borrowing rate based on the lease term, collateral assumptions, and the economic environment in which the lease is denominated. The lease liability is subsequently measured at amortized cost using the effective interest method. The lease liability is remeasured when the expected lease payments change as a result of new assessments of contractual options and residual value guarantees.
The right-of-use asset is recognised at the present value of the liability at the commencement date of the lease less any incentives received from the lessor. Added to the right-of-use asset are initial direct costs, payments made before the commencement date, and estimated restoration costs. The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in lease liabilities, split between current and non-current depending on when the liabilities are due. The interest element of the finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Assets obtained under finance leases are depreciated over their useful lives. The lease liabilities are shown in Note 19.
Exemptions are applied for short life leases and low value assets, with payment made under operating leases charged to the Consolidated Statement of Comprehensive Income on a straight-line basis of the period of the lease.
2.13. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.14. Equity
Equity comprises the following:
· "Share capital" represents the nominal value of the Ordinary shares;
· "Share Premium" represents consideration less nominal value of issued shares and costs directly attributable to the issue of new shares;
· "Treasury shares" are the portion of shares that a company keeps in its own treasury. These can be gifted or purchased.
· "Other reserves" represents the merger reserve, revaluation reserve and share option reserve where;
o "Merger reserve" represents the difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange;
o "Revaluation reserve" represents a non-distributable reserve arising on the acquisition of Insig Partners Limited;
o "Share option reserve" represents share options awarded by the group;
· "Retained earnings" represents retained losses.
2.15. Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available.
2.16. Share based payments
The Group operates a number of equity-settled, share-based schemes, under which the Group receives services from employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third party suppliers' services received in exchange for the grant of the options is recognised as an expense in the Income Statement or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Income Statement and its value is determined by reference to the fair value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and
· including the impact of any non-vesting conditions (for example, the requirement for employees to save).
The fair value of the share options and warrants are determined using the Black Scholes valuation model.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.
When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.
2.17. Taxation
Corporation tax is the main tax that a limited company must pay based on their profits, in addition to any gains from the sale of assets. For the year ended 31 March 2023, corporation tax is calculated as 19% of a company's profit for the year. No current tax is yet payable in view of the losses to date.
Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets and liabilities are not discounted.
3. Financial risk management
3.1. Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. None of these risks are hedged.
Risk management is carried out by the management team under policies approved by the Board of Directors.
Market risk
The Group is exposed to market risk, primarily relating to interest rate and foreign exchange. The Group has not sensitised the figures for fluctuations in interest rates and foreign exchange as the Directors are of the opinion that these fluctuations would not have a significant impact on the Financial Statements at the present time. The Directors will continue to assess the effect of movements in market risks on the Group's financial operations and initiate suitable risk management measures where necessary.
Credit risk
Credit risk arises from cash and cash equivalents as well as loans to subsidiaries and outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
Impairment provisions for loans to subsidiaries are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. At year end it was assessed credit risk was low due to future profits forecast therefore no provision was required.
For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. At year end all receivables were less than 60 day outstanding and deemed highly likely to be received therefore no provision was required.
Liquidity risk
In keeping with similar sized groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.
With exception to deferred taxation, financial liabilities are all due within one year.
3.2. Capital risk management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, to enable the Group to continue its activities, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts.
The Group defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future activities and may issue new shares in order to raise further funds from time to time.
4. Critical accounting estimates and judgements
The preparation of the Financial Statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the period.
Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Items subject to such estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, include but are not limited to:
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill is the deemed cost on first time application of IFRS.
Details of the carrying value of goodwill at the period end and the impairment review assessment are given in Note 14.
Impairment of intangible assets
The Company follows the guidance of IAS 36 to determine when impairment indicators exist for its intangible assets. When impairment indicators exist, the Company is required to make a formal estimate of the recoverable amount of its intangible assets. This determination requires significant judgement. In making this judgement, management evaluates external and internal factors, such as significant adverse changes in the technological market, economic or legal environment in which the Company operates as well as the results of its ongoing development programs. Management also considers the carrying amount of the Company's net assets in relation to its market capitalisation as a key indicator.
Capitalised development costs
Development costs incurred in building the Group's key platform for future expansion have been capitalised in accordance with the requirements of IAS38. The majority of these costs consist of salary expenses to which an estimated proportion of development time has been applied. Salary expenses are capitalised because the work done is expected to lead to future economic benefits for the Group.
Deferred tax asset
At the present time the Directors' do not consider that there is sufficient certainty regarding the utilisation of tax losses available in the Group. As a result, no deferred tax asset has been recognised.
Investment in Subsidiaries
The Company considers the recoverability of the investment in subsidiaries to be a key area of judgment, and this is held at its carrying amount which is expected to be recovered from the subsidiary. The directors believe that the investment in subsidiaries balance at year end is recoverable based on the directors' expectation around the potential that the subsidiaries have to generate sufficient economic benefits in the foreseeable future.
The investment in subsidiaries includes loans as detailed in note 15. The loans are considered recoverable by management, and the investments made have been impaired in line with their level of recoverability.
Going Concern
As discussed more fully in the in the Strategic Report on page 10, these financial statements have been prepared on the going concern basis. This approach is based on management's judgement that cashflow requirements for the continued development can be achieved through operating activities and additional fundraising if required.
5. Segment information
Business segments are identified according to the different trading activities in the Group.
| 31 March 2023 |
| Machine learning and Data services £ | Sport in Schools £ | Total £ |
| Revenue | | 693,734 | 1,398,427 | 2,092,161 |
| Cost of sales | | (51) | (732,915) | (732,966) |
| Administrative expenses | | (5,484,356) | (640,413) | (6,124,769) |
| Other gains/(losses) | | (15,796) | (7,572) | (23,368) |
| Other income | | 1,291,873 | 444 | 1,292,317 |
| Finance income | | 101 | - | 101 |
| Finance costs | | (81,518) | - | (81,518) |
| Impairments | | (16,558,296) | - | (16,558,296) |
| Profit/(Loss) before tax per reportable segment |
| (20,154,309) | 17,971 | (20,136,338) |
| Additions to intangible asset | | 1,456,436 | - | 1,456,436 |
| Reportable segment assets |
| 20,809,036 | 566,580 | 21,375,616 |
| Reportable segment liabilities |
| 5,544,528 | 263,518 | 5,808,046 |
During the year, the Group's trading segments were machine learning and data services representing revenue of £693,734 (2022: £373,680) and its sports and leisure activities, comprising sports tuition at schools representing its revenue of £1,398,427 (31 March 2022: £1,334,110). All revenue was generated in the UK.
| 31 March 2022 |
| Machine learning and Data services £ | Sport in Schools £ | Total £ |
| Revenue | | 373,680 | 1,334,110 | 1,707,790 |
| Cost of sales | | (14,335) | (704,733) | (719,068) |
| Administrative expenses | | (4,697,299) | (558,805) | (5,256,104) |
| Other gains/(losses) | | 7,838 | - | 7,838 |
| Other income | | 9,953 | 109,072 | 119,025 |
| Finance income | | 3,878 | - | 3,878 |
| Finance costs | | (11,236) | (2,774) | (14,010) |
| Exceptional items | | 905,851 | - | 905,851 |
| Profit/(Loss) before tax per reportable segment |
| (3,421,670) | 176,870 | (3,244,800) |
| Additions to intangible asset | | 38,217,000 | - | 38,217,000 |
| Reportable segment assets |
| 38,633,000 | 450,000 | 39,083,000 |
| Reportable segment liabilities |
| 4,780,000 | 226,000 | 5,006,000 |
| |
| | |
|
6. Revenue
| 31 March 2023 |
| Machine learning and Data services £ | Sport in Schools £ | Total £ |
| Revenue | | 693,734 | 1,398,427 | 2,092,161 |
| 31 March 2022 |
| Machine learning and Data services £ | Sport in Schools £ | Total £ |
| Revenue | | 373,680 | 1,334,110 | 1,707,790 |
Lodbrok Capital LLP were the only customer that accounted for over 10% of the Group's revenue for the year, contributing £334,657.
7. Administrative expenses
|
|
|
| |
|
| Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
|
| | | |
|
| Employee salaries and costs | 1,374,989 | 1,149,262 | |
| Director remuneration | 351,828 | 430,144 | |
| Office and expenses | 152,481 | 77,703 | |
| Travel & subsistence | 47,587 | 29,498 | |
| Professional & consultancy fees | 635,774 | 927,649 | |
| IT & Software | 81,902 | 71,595 | |
| Subscriptions | 291,281 | 175,147 | |
| Insurance | 106,719 | 84,819 | |
| Depreciation and amortisation | 2,839,889 | 2,239,017 | |
| Share option expense | 1,605 | 17,240 | |
| Exchange related costs | 67,452 | - | |
| Other expenses | 173,262 | 54,030 | |
| Total administrative expenses | 6,124,769 | 5,256,104 | |
Services provided by the Company's auditor and its associates
During the year, the Group (including overseas subsidiaries) obtained the following services from the Company's auditors and its associates:
| | Group | |
|
| Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Auditors' remuneration | 70,500 | 90,998 |
8. Other gain/(losses)
|
| Group | |
|
| Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Other Losses | 23,368 | - |
| Loss on disposal of Right of Use asset | - | 7,838 |
| Other gain/(losses) | 23,368 | 7,838 |
9. Other operating income
|
| Group | |
|
| Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Local Government grants | - | 119,025 |
| Sale of equipment | 444 | - |
|
| 444 | 119,025 |
10. Finance income/(costs)
|
| Group | |
|
| Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Interest received from cash and cash equivalents | 101 | 3,878 |
| Finance Income | 101 | 3,878 |
| Loan interest | (81,518) | (14,010) |
| Finance Costs | (81,518) | (14,010) |
11. Exceptional Items
|
| Group | |
|
| Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Fair value uplift upon acquisition | - | 1,759,221 |
| Readmission and acquisition costs | - | (853,370) |
|
| - | 905,851 |
12. Property, plant and equipment
| Group |
| |||
| | Plant and equipment £ | Total £ | ||
| Cost | | | ||
| As at 1 April 2021 | 105,567 | 105,567 | ||
| Additions | 34,310 | 34,310 | ||
| Acquired upon acquisition | 66,452 | 66,452 | ||
| As at 31 March 2022 | 206,329 | 206,329 | ||
| As at 1 April 2022 | 206,329 | 206,329 | ||
| Additions | 10,616 | 10,616 | ||
| Disposals | (54,332) | (54,332) | ||
| As at 31 March 2023 | 162,613 | 162,613 | ||
| Depreciation |
|
| ||
| As at 1 April 2021 | 102,605 | 102,605 | ||
| Charge for the year | 17,322 | 17,322 | ||
| Acquired upon acquisition | 20,738 | 20,738 | ||
| As at 31 March 2022 | 140,665 | 140,665 | ||
| As at 1 April 2022 | 140,665 | 140,665 | ||
| Charge for the year | 23,593 | 23,593 | ||
| Disposal | (39,293) | (39,293) | ||
| As at 31 March 2023 | 124,965 | 124,965 | ||
| Net book value as at 31 March 2022 | 65,664 | 65,664 | ||
| Net book value as at 31 March 2023 | 37,648 | 37,648 | ||
All tangible assets shown above are assets in use by the Group's subsidiary undertakings.
13. Right of use Assets
| Group |
|
| ||||
| | Office assets £ | Other £ | Total £ | |||
| Cost | | | | |||
| As at 1 April 2021 | - | 154,180 | 154,180 | |||
| Additions | 294,635 | - | 294,635 | |||
| Acquired upon acquisition | 407,731 | - | 407,731 | |||
| Disposal | (702,366) | - | (702,366) | |||
| As at 31 March 2022 | - | 154,180 | 154,180 | |||
| As at 1 April 2022 | - | 154,180 | 154,180 | |||
| Additions | - | - | - | |||
| Disposal | - | - | - | |||
| As at 31 March 2023 | - | 154,180 | 154,180 | |||
| Depreciation |
|
|
| |||
| As at 1 April 2021 | - | 102,787 | 102,787 | |||
| Charge for the year | 117,202 | 12,848 | 130,050 | |||
| Acquired upon acquisition | 101,934 | - | 101,934 | |||
| Disposal | (219,136) | - | (219,136) | |||
| As at 31 March 2022 | - | 115,635 | 115,635 | |||
| As at 1 April 2022 | - | 115,635 | 115,635 | |||
| Charge for the year | - | 10,279 | 10,279 | |||
| Disposal | - | - | - | |||
| As at 31 March 2023 | - | 125,914 | 125,914 | |||
| Net book value as at 31 March 2022 | - | 38,545 | 38,545 | |||
| Net book value as at 31 March 2023 | - | 28,266 | 28,266 | |||
Right of Use Assets represent leasehold premises from which the Group operates in relation to its sports and leisure activities.
All right of use assets shown above are assets in use by the Group's subsidiary undertakings.
14. Intangible assets
Intangible assets comprise goodwill and development costs.
|
|
|
|
|
|
|
|
| Assets - Cost and Net Book Value | Goodwill £ | Development Costs £ | Technology assets £ | Customer relationships £ | Databases £ | Total £ |
| Cost |
|
|
|
|
|
|
| As at 1 April 2021 | 60,000 | 1,085,000 | - | - | - | 1,145,000 |
| Additions | - | | 2,304,727 | - | - | 2,304,727 |
| Acquired from business combination | 21,561,803 | - | 14,081,000 | 1,207,000 | 1,094,000 | 37,943,803 |
| As at 1 April 2022 | 21,621,803 | 1,085,000 | 16,385,727 | 1,207,000 | 1,094,000 | 41,393,530 |
| Additions | - | 1,456,436 | - | - | - | 1,456,436 |
| As at 31 March 2023 | 21,621,803 | 2,541,436 | 16,385,727 | 1,207,000 | 1,094,000 | 42,849,966 |
| Amortisation |
|
|
|
|
|
|
| As at 1 April 2021 | - | (1,085,000) | - | - | - | (1,085,000) |
| Amortisation | - | - | (1,964,556) | (74,724) | (52,095) | (2,091,375) |
| As at 1 April 2022 | - | (1,085,000) | (1,964,556) | (74,724) | (52,095) | (3,176,375) |
| Amortisation | - | (537,328) | (2,018,000) | (94,404) | (156,285) | (2,806,017) |
| Impairment | (11,655,908) | (919,108) | (2,742,498) | (355,162) | (885,620) | (16,558,296) |
| As at 31 March 2023 | (11,655,908) | (2,541,436) | (6,725,054) | (524,290) | (1,094,000) | (22,540,688) |
| Net book value 2022 | 21,621,803 | - | 14,421,171 | 1,132,276 | 1,041,905 | 38,217,155 |
| Net book value 2023 | 9,965,895 | - | 9,660,673 | 682,710 | - | 20,309,278 |
· Goodwill of £60,000 included above relates to the acquisition of Pantheon Leisure Plc which is included at its deemed cost on first time application of IFRS.
· Goodwill of £19,041,000 included as at 31 March 2022 above to the acquisition of Insig Partners Limited.
· Goodwill of £2,520,000 included as at 31 March 2022 relates to the acquisition of Insig Data (formerly FDB Systems Limited).
Development costs are predominantly capitalised staff costs associated with enhancements to the technology being developed by Insig Partners Limited. The Group's technology, customer relationships and database technology are acquired from the acquisitions undertaken during the period.
Goodwill is recognised when a business combination does not generate cash flows independently of other assets or groups of assets. As a result, the recoverable amount, being the value in use, is determined at a cash-generating unit (CGU) level. These CGUs represent the smallest identifiable group of assets that generate cash flows. The CGUs are deemed to be the assets within the operating units. Each CGU to which goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes.
The total intangible value in use for each CGU, incorporating goodwill and the intangible asset value, is determined using discounted cash flow projections derived from the total historical revenue profile of each identifiable CGU. The assumptions which are applied to each CGU including the useful economic life are set out in Note 2.7.
The original CGUs for the group were ESG Research Application, Portfolio Insights, Dash-Plus ML Framework, Crystal Ball, Insig Docs and Entity Master. These were combined and renamed to simplify marketing to customers. ESG Research Application is now named ESG Disclosures Research Tool; which is used to compare companies against ESG progress with the use of the Group's ESG framework.
The other CGUs are now part of a component catalogue which is licensed and deployed as part of Bespoke FinTech Data Science projects. These provide mid-sized investment managers the ability to utilise machine learning models.
The CGUs used by the group are consistent with the purchase price allocation exercise completed in the year ended 31 March 2022 which are as follows:
· Insig ESG (ESG Disclosures Research Tool.)
· Insig Portfolio (Bespoke FinTech Data Science)
· Insig Excelton (Bespoke FinTech Data Science)
· Insig Data (ESG Disclosures Research Tool)
· Insig Docs (Bespoke FinTech Data Science)
The key assumptions for the value in use calculations are those regarding growth rates particularly in respect of the growth in revenue and discount rates. The discount rate is reviewed annually to take into account the current market assessment of the time value of money and the risks specific to the cash generating units and rates used by comparable companies. The discount rate used to calculate the value in use is 24.9%. The long term growth rate used for the terminal value calculation was 2%.
An impairment review of the Group's development costs, technology, customer relationships and database technology is carried out on an annual basis. The recoverable amounts of the cash-generating units are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding forecast revenues, discount rates and operating costs. Management have considered the following elements:
(i) Based on current assessments of the Insig Partners activities made by the Directors, they consider that whilst revenues are forecast to grow in 2024 and exponentially grow from 2025-2027, these forecasts are reduced from previous forecasts prepared.
(ii) The reduction of activities in Insig Data have led to the Directors assessing the need for an impairment.
(iii) Operational costs are monitored and controlled
Following their assessment, the Directors concluded an impairment charge of £16,558,296 was necessary for the year ended 31 March 2023 due to the reduced future sales forecast and sale performance in the current and prior years.
15. Investments in subsidiary undertakings
|
| Company |
| |||
| Shares in Group Undertakings | Investment in subsidiaries | Loans to Group Undertakings |
| ||
| Cost |
| |
| ||
| 31 March 2022 | 35,145,004 | 4,034,025 |
| ||
| Additions | - | 1,612,305 |
| ||
| Impairment | (19,550,467) | (857,731) |
| ||
| 31 March 2023 | 15,594,537 | 4,788,599 |
| ||
|
| Company | ||||
| Shares in Group Undertakings and Group Loans | NBV 31 March 2023 £ | NBV 31 March 2022 £ | |||
| Cost |
| | |||
| Insig Partners | 15,594,537 | 31,145,004 | |||
| Insig Data | - | 4,000,000 | |||
| Loans to Group undertakings | 4,788,599 | 4,034,025 | |||
| Total | 20,383,136 | 39,179,029 | |||
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.
During the year, the £4,000,000 investment in Insig Data was fully impaired after Management concluded that it was appropriate to reduce the scale of Insig Data's business. It no longer has any employees, in addition to having a minimal cost base. After assessing the recoverability of the investments, the Directors also agreed that the intangible assets of Insig Data, being Customer Relationships and Database should be impaired. Further information on this is provided in note 14.
Although Insig Data's trading activity reduced significantly during the year, it hasn't ceased its trade.
During the year, £15,550,466 of the investment held in Insig Partners was impaired after reviewal from Management. This impairment was determined after comparing the total investment value of £31,145,004 with the value in use total. There was also an impairment of the intangible assets held within Insig Partners. This was applied as a result of a revised forecast dated from March 2023 to March 2030. The revised sales expected for the Company's products and cost base led to a reduced enterprise value of Insig Partners' intangible assets. Further information on this is provided in note 14.
During the year, the loans granted to Insig Data by Insig AI plc, totalling £363,610; and the loans granted to Westside Sports, totalling £89,947, were fully impaired. The loans grated to Pantheon Leisure were partially impaired by £404,174. These impairments were agreed based on the recoverability of the loans, after taking the net assets of the mentioned subsidiaries into account.
The Company has provided a guarantee in respect of the outstanding liabilities of the subsidiary companies listed below in accordance with Section 479A - 479C of the Companies Act 2006 as these subsidiary companies of the Group are exempt from the requirements of the Companies Act 2006 relating to the audit of the accounts by virtue of Section 479A of this Act.
Subsidiaries
The following companies were subsidiaries at the balance sheet date and the results and year end position of these companies have been included in these consolidated financial statements.
| Name of subsidiary | Registered office address | Country of incorporation and place of business | Proportion of ordinary shares held (%) | Nature of business |
| Insig Partners Limited | 6 Heddon Street, London, W1B 4BT | United Kingdom | 100% | Artificial Intelligence |
| Westside Sports Limited | 6 Heddon Street, London, W1B 4BT | United Kingdom | 100% | Holding company |
| Insight Capital Consulting Limited*** | 6 Heddon Street, London, W1B 4BT | United Kingdom | 100% | Artificial Intelligence |
| Insig Data Limited | 6 Heddon Street, London, W1B 4BT | United Kingdom | 100% | Artificial Intelligence |
| Ultimate Player Limited | 6 Heddon Street, London, W1B 4BT | United Kingdom | 100% | Dormant |
| Pantheon Leisure Plc * | 6 Heddon Street, London, W1B 4BT | United Kingdom | 85.87% | Activities of head office |
| Sport In Schools Limited** | 6 Heddon Street, London, W1B 4BT | United Kingdom | 85.87% | Sports coaching in schools |
| The Elms Group Limited ** | 6 Heddon Street, London, W1B 4BT | United Kingdom | 85.87% | Dormant
|
* Shares held indirectly through Westside Sports Limited
** Shares held indirectly through Pantheon Leisure Plc
*** Shares held indirectly by Insig Partners Limited
16. Trade and other receivables
|
| Group |
| Company | ||
| Current | 31 March 2023 £ | 31 March 2022 £ |
| 31 March 2023 £ | 31 March 2022 £ |
| Trade receivables | 125,030 | 239,550 | | - | - |
| Amounts due from subsidiary undertakings | - | - | | 106,864 | 30,151 |
| Prepayments | 38,498 | 8,374 | | 26,749 | - |
| VAT receivable | - | 25,109 | | 18,086 | 59,263 |
| Research and development receivable | 542,000 | - | | - | - |
| Other receivables | 14,312 | 16,786 | | - | - |
| Total | 719,840 | 289,819 |
| 151,699 | 89,414 |
The ageing of trade receivables is as follows:
|
|
| As at 31 March 2023 £ | As at 31 March 2022 £ |
| Up to 3 months | | 125,030 | 239,550 |
| Total | | 125,030 | 239,550 |
17. Cash and cash equivalents
|
| Group | | Company | ||
|
| 31 March 2023 £ | 31 March 2022 £ |
| 31 March 2023 £ | 31 March 2022 £ |
| Cash at bank and in hand | 280,584 | 473,390 | | 3,749 | 61,314 |
18. Trade and other payables
|
| Group | | Company | |||
|
| 31 March 2023 £ | 31 March 2022 £ |
| 31 March 2023 £ | 31 March 2022 £ |
|
| Trade payables | 266,978 | 271,103 | | 149,346 | 196,341 |
|
| Accruals | 371,056 | 183,311 | | 233,290 | 109,000 |
|
| Deferred income | 50,000 | 100,407 | | - | - |
|
| Other creditors | 4,852 | 69,568 | | - | - |
|
| Taxes and social security | 240,041 | 185,942 | | - | 3,203 |
|
|
| 932,927 | 810,331 |
| 382,636 | 308,544 |
|
The ageing of trade and other payables is as follows:
|
|
| As at 31 March 2023 £ | As at 31 March 2022 £ |
| Up to 3 months | | 170,849 | 412,000 |
| 3 to 6 months | | 296,448 | 114,000 |
| 6 to 12 months | | - | - |
| Total | | 467,297 | 526,000 |
19. Leases and borrowings
|
| Group |
Company | ||
|
| 31 March 2023 | 31 March 2022 | 31 March 2023 | 31 March 2022 |
|
| £ | £ | £ | £ |
| Not later than one year: | | | | |
| Convertible loan note | 2,261,769 | - | 2,261,769 | - |
| Right of use liability | 10,386 | 8,675 | - | - |
| | | | | |
| Later than one year: | | | | |
| Right of use liability | 16,868 | 28,966 | - | - |
| Total | 2,289,023 | 37,641 | 2,261,769 | - |
Convertible loan notes
|
|
|
|
| 31 March 2023 |
|
| £ |
| Convertible loan note | |
| Proceeds of issue of convertible loan notes - May 2022 | 1,000,000 |
| Proceeds of issue of convertible loan notes - June 2022 | 750,000 |
| Proceeds of issue of convertible loan notes - September 2022 | 500,000 |
| | |
| Interest | |
| Total interest payable to date (5%) | 63,567 |
| | |
| Equity | |
| Derivative Split | (51,798) |
| Total | 2,261,769 |
On the 4 May 2022, the Company entered into a formal agreement for a £1.0m convertible loan note to be provided by Richard Bernstein, Chairman of the Company. A total of £1,000,000 has been drawn down by the Company. The loan facility when issued was repayable on or before 31 December 2022, and interest accrued from the date monies were drawn down at a rate of 5%. The convertible loan note can be converted at the noteholder's discretion.
On 17 June 2022, the Company entered into a convertible loan facility agreement with David Kyte, a long-term shareholder in the Company for £500,000. A total of £500,000 has been drawn down by the Company. The loan facility when issued was repayable on or before 31 December 2022, and interest accrued from the date monies were drawn down at a rate of 5%. The convertible loan note can be converted at the noteholder's discretion.
On 22 December 2022, the Company agreed revised terms for both the convertible loan note (CLN) agreements with Richard Bernstein and David Kyte for £1m and £0.5m respectively.
The following revisions were made:
- Interest owed on the first CLN will be rolled up into the loan expiring 31 December 2023, with an interest of 8% per annum.
- A conversion price of 20 pence for Richard Bernstein, and 18 pence for David Kyte.
- The issuance of 1,666,667 warrants expiring on 31 December 2025 exercisable at a price of 30 pence for Richard Bernstein.
- The issuance of 1,388,889 warrants expiring on 31 December 2025 exercisable at a price of 25 pence for David Kyte.
On the 12 September 2022, the Company entered into a formal agreement for a £750,000 convertible loan note to be provided by Richard Bernstein, Non-Executive Chairman of the Company. A total of £750,000 has been drawn down by the Company.
The loan facility is repayable on or before 30 June 2023, and interest will be accrued from the date monies are drawn down
at a rate of 5%. The loan facility has a conversion price which is set at the higher of 35 pence per ordinary share or the prevailing share price at the date of conversion. The convertible loan note can be converted at the noteholder's discretion.
20. Deferred tax
An analysis of the deferred tax liability is set out below.
|
|
|
|
| |
|
|
|
|
| Cost £ |
| Deferred tax liability |
| |
|
|
| As at 31 March 2021 |
| |
| - |
| Deferred tax acquired on acquisition |
| |
| 3,218,747 |
| Deferred tax liability for intangibles |
| |
| 941,341 |
| As at 31 March 2022 |
|
|
| 4,160,088 |
| Deferred tax liability for intangibles |
|
|
| (1,573,992) |
| As at 31 March 2023 |
|
|
| 2,586,096 |
21. Financial Instruments by Category
Group
|
| 31 March 2023 | 31 March 2022 | |||
|
| Amortised cost | Total | Amortised cost | Total | |
| Assets per Statement of Financial Position | £ | £ | £ | £ | |
| Trade and other receivables | 681,341 | 681,341 | 256,336 | 256,336 | |
| Cash and cash equivalents | 280,584 | 280,584 | 473,390 | 473,390 | |
|
| 961,925 | 961,925 | 729,726 | 729,726 | |
|
|
|
| | | |
|
| 31 March 2023 | 31 March 2022 | |||
|
| Amortised cost | Total | Amortised cost | Total | |
| Liabilities per Statement of Financial Position | £ | £ | £ | £ | |
| Trade and other payables | 2,964,025 | 2,964,025 | 526,612 | 526,612 | |
| Right of use lease liabilities | 27,254 | 27,254 | 37,641 | 37,641 | |
| | 2,991,279 | 2,991,279 | 564,253 | 564,253 | |
|
Company
|
| 31 March 2023 | 31 March 2022 | ||
|
| Amortised cost | Total | Amortised cost | Total |
| Assets per Statement of Financial Position | £ | £ | £ | £ |
| Trade and other receivables | 106,864 | 106,864 | 30,151 | 30,151 |
| Due from subsidiary undertakings | 4,788,599 | 4,788,599 | 4,034,025 | 4,034,025 |
| Cash and cash equivalents | 3,749 | 3,749 | 61,314 | 61,314 |
| | 4,899,212 | 4,899,212 | 4,125,490 | 4,125,490 |
|
| 31 March 2023 | 31 March 2022 |
| ||
|
| Amortised cost | Total | Amortised cost | Total | |
| Liabilities per Statement of Financial Position | £ | £ | £ | £ |
|
| Trade and other payables | 382,636 | 382,636 | 305,341 | 305,341 |
|
| | 382,636 | 382,636 | 305,341 | 305,341 |
|
The Company's financial instruments comprise cash and cash equivalents, receivables and payables which arise in the normal course of business. As a result, the main risks arising from the Company's financial instruments are credit and liquidity risks. Please refer to Note 3.1.
22. Share capital and premium
|
Group and Company |
Number of shares |
Share capital | |||
| | 31 March 2023 | 31 March 2022 | 31 March 2023 | 31 March 2022 | |
| Ordinary shares | 105,675,645 | 105,675,645 | 1,056,757 | 1,056,757 | |
| Deferred shares | 22,811,638 | 22,811,638 | 2,053,047 | 2,053,047 | |
| Total | 128,487,283 | 128,487,283 | 3,109,804 | 3,109,804 | |
|
Issued at 0.01 pence per share | Number of Ordinary shares | Share capital £ | Share premium £ | Total £ |
| As at 31 March 2022 | 105,675,645 | 1,056,000 | 39,077,000 | 40,133,000 |
| As at 31 March 2023 | 105,675,645 | 1,056,000 | 39,077,000 | 40,133,000 |
| Deferred Shares (nominal value of 0.09 pence per share) | Number of Deferred shares | Share capital £ |
| As at 31 March 2022 | 22,811,638 | 2,053,047 |
| As at 31 March 2023 | 22,811,638 | 2,053,047 |
The Company has an authorised share capital limit in place, which will be considered by shareholders at the next annual general meeting.
23. Share based payments
The Company has established a share option scheme for Directors, employees and consultants to the Group. Share options and warrants outstanding and exercisable at the end of the period have the following expiry dates and exercise prices:
|
|
|
| | | Options & Warrants | |
| Grant Date | Vesting Date | Expiry Date | Exercise price in £ per share | | 31 March 2023 | 31 March 2022 |
| Options | | | | | | |
| 1 August 2019 | 31 January 2020 | 31 July 2023 | 0.20 | | 666,666 | 666,666 |
| 1 August 2019 | 31 July 2021 | 31 July 2023 | 0.20 | | 333,333 | 333,333 |
| 1 August 2019 | 31 July 2020 | 31 January 2024 | 0.40 | | 333,333 | 333,333 |
| 1 August 2019 | 31 July 2021 | 31 January 2024 | 0.40 | | 666,666 | 666,666 |
| 1 August 2019 | 31 January 2022 | 31 January 2025 | 0.60 | | 666,666 | 666,666 |
| 1 August 2019 | 31 January 2022 | 31 July 2025 | 0.60 | | 666,666 | 666,666 |
| 1 August 2019 | 31 July 2022 | 31 July 2025 | 0.60 | | 666,670 | 666,670 |
| 8 March 2022 | 4 October 2024 | 7 March 2032 | 0.48 | | 2,000,000 | 2,000,000 |
| 8 March 2022 | 4 August 2024 | 7 March 2032 | 0.48 | | 900,000 | 900,000 |
| 8 March 2022 | 4 January 2025 | 7 March 2032 | 0.48 | | 150,000 | 150,000 |
| 8 March 2022 | 4 March 2025 | 7 March 2032 | 0.48 | | 300,000 | 300,000 |
| Warrants | | | | | | |
| 5 October 2021 | 5 October 2021 | 10 May 2027 | 0.84 | | 396,582 | 396,582 |
| 22 December 2022 | 22 December 2022 | 31 December 2025 | 0.30 | | 1,666,667 | - |
| 22 December 2022 | 22 December 2022 | 31 December 2025 | 0.25 | | 1,388,889 | - |
| Lapsed | | | | | | |
| 13 April 2022 | 4 January 2025 | 7 March 2032 | 0.48 | | (100,000) | - |
| 10 June 2022 | 4 August 2024 | 7 March 2032 | 0.48 | | (75,000) | - |
| 15 January 2023 | 4 January 2025 | 7 March 2032 | 0.48 | | (50,000) | - |
| 15 January 2023 | 4 March 2025 | 7 March 2032 | 0.48 | | (50,000) | - |
| 27 January 2023 | 4 August 2024 | 7 March 2032 | 0.48 | | (250,000) | - |
| 4 February 2023 | 4 March 2025 | 7 March 2032 | 0.48 | | (250,000) | - |
|
|
|
|
|
| 10,027,138 | 7,746,582 |
The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash.
During the year, a total of 775,000 options lapsed as a result of employees leaving the group.
Warrants
|
| 2023 |
| 2022 |
| Outstanding at beginning of period | 396,582 |
| - |
| Exercised | - | | - |
| Vested | 3,055,556 | | 396,582 |
| Outstanding as at period end | 3,452,138 |
| 396,582 |
| Exercisable at period end | 3,452,138 |
| 396,582 |
The movements in the weighted average exercise price of the warrants were as follows:
|
| 2023 |
| 2022 |
| Outstanding at beginning of period | 0.84 |
| - |
| Granted | 0.28 | | 0.84 |
| Outstanding as at period end | 1.12 | | 0.84 |
| Exercisable at period end | 0.46 | | 0.84 |
In accordance with IFRS2, the fair value of the warrants issued and recognised as a charge in the accounts for the 12 month period is £1,605 (12 months ended 31 March 2022 - £Nil). In arriving at this amount, the expected volatility is based on historical volatility, the expected life is the average expected period to exercise, and the risk-free rate of return is the yield on a zero-coupon UK government bond for a term consistent with the assumed option life.
The fair value of the equity instruments granted was determined using the Black Scholes Model. The inputs into the model for warrants outstanding at the year-end were as follows
| | 2022 Warrants |
| Granted on: | 22 December 2022 |
| Life (years) | 3 years |
| Share price (pence per share) | 15p |
| Exercise price | 25p |
| Shares under option | 3,055,556 |
| Vesting period (years) | 3 years |
| Small company discount factor | 20% |
| Total fair value (pence per option) | 0.33 |
Options
In January 2011, the Company adopted an unapproved share option scheme and on 1 August 2019, the Company granted options over 4,000,000 ordinary shares in the Company as part of a Director's compensation agreement. In March 2022, the Company granted options over 3,350,000 ordinary shares to a Director and certain employees. Details of the options are set out below:
|
| 2023 |
| 2022 |
| Outstanding at beginning of period | 7,350,000 |
| 4,000,000 |
| Lapsed during period | (775,000) | | - |
| Exercised | - | | - |
| Granted | - | | 3,350,000 |
| Outstanding as at period end | 6,575,000 | | 7,350,000 |
| Exercisable at period end | 4,000,000 | | 3,333,000 |
|
| 2023 |
| 2022 |
| Outstanding at beginning of period | 46.0 |
| 45.0 |
| Lapsed | 48.0 | | 45.0 |
| Exercised | - | | - |
| Granted | - | | 48.0 |
| Outstanding as at period end | 44.0 | | 46.0 |
| Exercisable at period end | 44.0 | | 46.0 |
The movements in the weighted average exercise price of the options were as follows:
The fair value of the equity instruments granted was determined using the Black Scholes Model. The only conditions attached to the options is continuing employment. The inputs into the model for options outstanding at the year-end were as follows:
| | 2019 Options | 2019 Options | 2019 Options | 2022 Options |
| Granted on: | 1 August 2019 | 1 August 2019 | 1 August 2019 | 8 March 2022 |
| Life (years) | 3 years | 3 years | 3 years | 10 years |
| Share price (pence per share) | 17p | 17p | 17p | 27.5p |
| Exercise price | 20p | 40p | 60p | 48p |
| Shares under option | 1,000,000 | 1,000,000 | 2,000,000 | 3,350,000 |
| Risk free rate | 0.57% | 0.57% | 0.57% | 0.57% |
| Expected volatility | 43.1% | 43.1% | 43.1% | 43.1% |
| Vesting period (years) | 1 to 3 years | 1 to 4 Years | 2 to 5 Years | 8 to 9 years |
| Small company discount factor | 35% | 35% | 35% | 35% |
| Total fair value (pence per option) | 2.5 | 2.5 | 0.7 | 0.02 |
The expected volatility is based on historical volatility, the expected life is the average expected period to exercise, and the risk-free rate of return is the yield on a zero-coupon UK government bond for a term consistent with the assumed option life.
In accordance with IFRS 2, the fair value of the share options issued and recognised as a charge in the accounts for the 12 month period is £nil (31 March 2022 - £17,000).
The weighted average contractual life of options outstanding on 31 March 2023 was 4.3 years (31 March 2022: 2.4 years).
24. Other reserves
|
|
|
| |
|
|
Equity reserve for convertible loan notes | Merger reserve £ | Total £ |
| At 31 March 2022 | - | 325,583 | 325,583 |
|
At 31 March 2023 |
51,798 | 325,583 | 377,381 |
25. Employee benefit expense
|
| Group |
| Company | ||
| Staff costs (excluding Directors) | Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Salaries and wages | 2,081,959 | 2,227,000 | | - | - |
| Social security costs | 305,479 | 270,789 | | - | - |
| Pension contributions | 128,743 | 108,830 | | - | - |
| Other employment costs | 13,668 | 5,933 | | - | - |
|
| 2,529,849 | 2,612,552 | | - | - |
The average monthly number of employees for the Group during the year was 112 (31 March 2022: 119) and the average monthly number of employees for the Company was nil (31 March 2022: nil).
Of the above Group staff costs, £1,167,769 (31 March 2022: £1,463,000) has been capitalised in accordance with IAS 38 as development costs and are shown as an intangible addition in the year
There were no employees in the Company apart from Directors whose remuneration is disclosed in Note 26.
26. Directors' remuneration
|
|
| 31 March 2023 | | ||
|
| Salary | Pension | Total |
| |
|
| £ | £ | £ |
| |
| Executive Directors |
|
|
|
| |
| Richard Bernstein | 35,000 | - | 35,000 |
| |
| Steven Cracknell | 146,667 | 10,000 | 156,667 |
| |
| Warren Pearson | 146,667 | 10,000 | 156,667 |
| |
| Colm McVeigh | 233,333 | 9,333 | 242,666 |
| |
| Non-executive Directors | | | |
| |
| John Murray | 35,000 | - | 35,000 |
| |
| Richard Cooper | 43,826 | - | 43,826 |
| |
|
| 640,493 | 29,333 | 669,826 |
| |
Directors who were appointed during the year:
· Richard Cooper - appointed 11 April 2022
Directors who retired after the year end:
· John Murray - deceased 24 April 2023
Of the above Group directors' remuneration, £288,665 (year ended 31 March 2022: £375,210 has been capitalised in accordance with IAS 38 as development related costs and are shown as an intangible addition in the year.
|
|
| 31 March 2022 |
|
|
| Remuneration | Share based payments | Total |
|
| £ | £ | £ |
| Executive Directors |
|
|
|
| Richard Bernstein | 22,167 | - | 22,167 |
| Steven Cracknell | 216,843 | - | 216,843 |
| Warren Pearson | 228,924 | - | 228,924 |
| Colm McVeigh | 124,679 | - | 124,679 |
| Matthew Farnum-Schneider | 140,258 | 17,000 | 157,258 |
| Non-executive Directors | | | |
| John Murray | 31,237 | - | 31,237 |
| Peter Rutter | 22,487 | - | 22,487 |
| David Coldbeck | 10,551 | - | 10,551 |
| John Zucker | 10,551 | - | 10,551 |
| David Hillel | 15,827 | - | 15,827 |
|
| 823,524 | 17,000 | 840,524 |
The fair value of the share options issued to Matthew Farnum-Schneider and recognised as a charge in the accounts for the 12 month period is £17,000.
The remuneration of Directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.
27. Income tax expense
|
| Group | |
|
| Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Deferred Tax |
| |
| Fixed assets and short-term temporary difference | (1,573,992) | (538,501) |
| Intangibles on business combinations | - | (402,840) |
| Losses and other deductions | - | - |
| Total deferred tax | (1,573,992) | (941,341) |
| Current Tax |
| |
| UK corporation tax on profit for the year | (542,000) | - |
| Adjustments in respect of prior periods | (749,873) | - |
| Total current tax | (1,291,873) | - |
| Total income tax expense | (2,865,865) | (941,341) |
|
| Group | |
|
| Year ended 31 March 2023 £ | Year ended 31 March 2022 £ |
| Loss before tax | (21,428,211) | (3,243,000) |
| Tax at the applicable rate of 19% (2022: 19%) | (4,071,360) | (616,000) |
| Effects of: |
| |
| Expenditure not deductible for tax purposes | 2,940,457 | 1,456,000 |
| Additional deduction for R&D expenditure | (401,421) | - |
| Surrender of tax losses for R&D tax credit refund | 168,207 | - |
| R&D expenditure credits | 8,461 | - |
| Group relief surrendered/(claimed) | (20,948) | - |
| Adjustments in respect of prior periods regarding R&D | (749,873) | - |
| Effect of tax rate change on deferred tax opening balance | (209,040) | - |
| Effect of tax rate change on deferred tax acquired in business combinations | - | 226,000 |
| Unrecognised deferred tax asset in relation to carried forward losses | (530,348) | (2,008,000) |
| Tax charge | (2,865,865) | (942,000) |
The Group has unutilised tax losses of approximately £13,828,392 (31 March 2022 £11,707,000) available to carry forward against future taxable profits. No deferred tax asset has been recognised on accumulated tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset.
28. Loss per share
Group
The calculation of the total basic loss per share of (17.89) pence (31 March 2022: (4.40) pence) is based on the loss attributable to equity holders of the parent company of £18,563,996 (31 March 2022: £4,199,720) and on the weighted average number of ordinary shares of 103,757,837 (31 March 2022: 95,267,869) in issue during the year.
In accordance with IAS 33, basic and diluted loss per share are identical for the Group as the effect of the exercise of share options would be to decrease the loss per share. Details of share options that could potentially dilute earnings per share in future periods are set out in Note 23.
29. Contingent liabilities
In the prior year, there was an ongoing legal dispute between the Company and a former employee for breach of contract. A settlement was agreed in relation to this dispute on 17th March 2023 and the matter is now closed.
30. Related party transactions
Loans to Group undertakings
Amounts receivable as a result of loans granted to subsidiary undertakings are as follows:
| | Company | |
| | 31 March 2023 | 31 March 2022 |
| | £ | £ |
| Insig Partners | 4,655,904 | 3,333,269 |
| Insig Data (formerly FDB Systems Limited) | - | 71,850 |
| Insight Capital Consulting Limited | 31 | - |
| Pantheon Leisure | 132,664 | 538,959 |
| Westside Sports Limited | - | 89,947 |
| | 4,788,599 | 4,034,025 |
Insig Partners Limited
Loans totalling £1,322,635 were provided to Insig Partners Limited from Insig AI Plc during the year to cover operating costs (31 March 2022: £3,113,269).
Insig Data Limited (formerly FDB Systems Limited)
Loans totalling £291,761 were provided to Insig Data from Insig AI Plc during the year to cover operating costs (31 March 2022: £71,850).
At the end of the year, the loan balance was fully impaired.
Insight Capital Consulting Limited
Loans totalling £31 were provided to Insight Capital Consulting from Insig Partners Limited during the year to cover operating costs (31 March 2022: £15,718).
Westside Sports Limited
At the end of the year, the loan balance was fully impaired
Pantheon Leisure Plc
Loans totalling £2,121 were provided to Pantheon Leisure from Insig AI Plc during the year to cover operating costs (31 March 2022: £26,645).
At the end of the year, the loan balance was partially impaired by £404,174.
These amounts are unsecured and repayable on demand.
All intra Group transactions are eliminated on consolidation.
Other transactions
The Group defines its key management personnel as the Directors of the Company as disclosed in the Directors' Report.
Luclem Estates, a limited company of which Richard Cooper is a director, was paid a fee of £32,112 for the year ended 31 March 2023 (31 March 2022: £nil) for the provision of corporate management and consulting services to the Company. There was a balance of £7,362 owing at year end (31 March 2022: £Nil).
On the 4 May 2022, the Company entered into a formal agreement for a £1.0m convertible loan note to be provided by Richard Bernstein. The loan facility when issued was repayable on or before 31 December 2022, and interest accrued from the date monies were drawn down at a rate of 5%.
On the 12 September 2022, the Company entered into a formal agreement for a £750,000 convertible loan note to be provided by Richard Bernstein. A total of £750,000 has been drawn down by the Company. The loan facility is repayable on or before 30 June 2023, and interest will be accrued from the date monies are drawn down at a rate of 5%.
On 21 December 2022, Steven Cracknell and Warren Pearson, Chief Product Officer and Chief Technology Officer gifted at nil value, their shares to the Company to be held in treasury and to be used at the discretion of the Company. Steven Cracknell gifted 4,500,000 ordinary shares of 1p each and Warren Pearson has gifted 2,500,000.
On 22 December 2022, the Company agreed revised terms for the convertible loan note, being Interest owed on the first CLN to be rolled up into the loan expiring 31 December 2023, with an interest of 8% per annum.
In addition the Company also granted Richard Bernstein 1,666,667 warrants as part of the revision to the terms.
31. Ultimate controlling party
The Directors believe there is no ultimate controlling party.
32. Events after the reporting date
On 24 April 2023 the Company announced that it had successfully raised £0.9 million by way of equity subscription for 5,294,118 ordinary shares of 1 pence each in the Company at 17 pence per Ordinary Share. The shares will be issued from Treasury, from shares gifted to the Company in December 2022 by founders Steve Cracknell and Warren Pearson, Chief Product Officer and Chief Technology Officer. Specifically, 1,764,705 Subscription Shares were issued on 27 April 2023 with the balance of 3,529,413 Subscription Shares being issued on 23 June 2023.
On 4 July 2023, the Company announced that it had agreed revised terms for the convertible loan note (CLN) agreement with Richard Bernstein as announced on 12 September 2022 for £0.75 million. The Company and Loan Note Holder agreed to extend the term of the CLN by six months to 30 December 2023.
END
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