REG - Cordel Group PLC - Annual Report and Notice of AGM
30/10/2023 07:15
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RNS Number : 6153R Cordel Group PLC 30 October 2023
30 October 2023
Cordel Group PLC
("Cordel" or the "Company" or the "Group")
Results for the year ended 30 June 2023
Publication of Annual Report and Accounts and Notice of Annual General Meeting
Cordel Group PLC (AIM: CRDL), the Artificial Intelligence platform for
transport corridor analytics, today announces its audited results for the
twelve months ended 30 June 2023 ("FY23").
Financial Highlights
GBP 000's Twelve months to 30 June 2023 Twelve months to 30 June 2022 % Change % Change constant currency
Total Revenue 3,046 2,273 34% 35%
Cost of sales (791) (775) 2% -2%
Total expenses (3,129) (3,300) -5% -6%
Grant Income 372 597 -37% -33%
Other income 36 - - -
Loss before Income tax (466) (1,205) -61% -69%
*Constant currency reflects the results had the underlying transactional
currencies been constant in both periods reported. 52% of revenue for the
twelve months to June 2022 was in Australian dollars.
Operational and Financial Highlights for the Period
· Amtrak (USA) key 6 year contract win to supply fully automated
software suite for survey and clearance management, valued at $6.7 million.
· Angel Trains (UK) 5 year contract win to install fully-automated
hardware onto passenger trains; delivery milestones achieved.
· One Rail Australia ballast profile analysis 12-month contract win,
delivering Cordel's LIDAR-based solutions.
· Joined Microsoft ISV Success program, working with Microsoft's Rail
Industry Sector team.
· Partnership launched with Ricardo to identify and pursue
opportunities in railway inspection and asset management
· Total revenue up 34% in reported currency and up 35% in constant
currency
· Total expenses decreased by 5% (6% in constant currency), with
rationalisation of business units to focus on core LiDAR + AI solution
· Australian R&D grant reduced due to changes in product mix
· Oversubscribed equity placing in March 2023 raising £1.7 million
(gross)
· Cash balance and trade receivables as at 30 June 2023 was £2,692,672
Post Period End Highlights
· In July 2023, ARTC Australia contract extension to August 2024
awarded
John Davis, CEO of Cordel, commented:
"This year has been seminal for Cordel. We have built on our momentum from
FY22 and have been able to significantly increase engagement with our target
markets in FY23. We achieved a 34% revenue growth result and critically, we
now hold a strong base of recurring revenue contracts plus a substantial deal
pipeline resulting from continued progress with existing and new customers.
There has been a great deal to be proud of during FY23: the Amtrak contract is
a vital foundation stone for the growth of Cordel in the future - our first
really meaningful achievement in the US market. Our relationships with Network
Rail and Angel in the UK and ARTC in Australia remain very strong and both
offer us considerable opportunities moving forward. In addition, we have
strengthened our leadership team, our sales capability and our tech and
product functions. We are extremely well positioned to accelerate our growth
in FY24 and beyond."
Annual Report
The Annual Report and Accounts are being posted to shareholders today and will
be made available on the Group's website www.cordel.ai (http://www.cordel.ai)
Key extracts from the report and accounts are presented below.
The Company also announces that the annual general meeting of the Company is
to be held at the offices of Cordel Group plc, Salisbury House, London Wall,
EC2M 5SQ, United Kingdom at 9.00 am on Thursday 30 November 2023. A notice
of Annual General Meeting has been posted to shareholders today.
Enquiries:
Cordel Group PLC c/o Zeus
Ian Buddery, Chairman
John Davis, Chief Executive Officer
Zeus Capital Limited Broker +44 (0)20 3829 5000
Simon Johnson / Alexandra Campbell-Harris
Strand Hanson Limited Nominated Adviser
Richard Johnson / James Bellman +44 (0)20 7409 3494
About Cordel
Cordel produces specialist hardware and software for capturing, analysing and
reporting on large datasets within the transport sector, employing
sophisticated artificial intelligence algorithms.
Further information on the Company is available at: www.cordel.ai
(http://www.cordel.ai)
STRATEGIC REPORT
The directors present their strategic report on the consolidated entity
(referred to hereafter as the 'Group') consisting of Cordel Group plc
(referred to hereafter as 'Cordel', 'the Company' or ' the parent entity') and
the entities it controlled at the end of, or during, the year ended 30 June
2023.
The strategic report includes the following sections:
1. Company Overview
2. Chairman's statement
3. Review of operations by the Chief Executive Officer
4. Principal risks and uncertainties
5. People
Cautionary statement regarding forward-looking statements
This document contains certain forward-looking statements. These
forward-looking statements include references to matters that are not
historical facts or are statements regarding the Company's intentions, beliefs
or current expectations concerning, among other things, the Group's results of
operations, financial condition, liquidity, prospects, growth, strategies, and
the industries in which the Group operates. Forward-looking statements are
based on the information available to the directors at the time of preparation
of this document and will not be updated subsequent to the issue of this
document. The directors can give no assurance that these expectations will
prove to be correct. Due to inherent uncertainties, including both economic
and business risk factors underlying such forward-looking information, actual
results may differ materially from those expressed or implied by these
forward-looking statements.
Principal activities
Cordel is a United Kingdom ('UK') incorporated software company with
operations in Australia (main country of operation), USA and the UK. Cordel
produces specialist software and hardware for capturing, analysing and
reporting on large datasets within the transport sector, employing
sophisticated artificial intelligence algorithms.
1. COMPANY OVERVIEW
Cordel's specialist hardware and cloud-based platforms, used primarily in the rail and road infrastructure industries, capture data and turn it into actionable insights to help manage vital assets, improving safety, efficiency and sustainability for our customers.
The Cordel Group operates subsidiaries in the UK, Australia and the USA,
delivering products and services for rail and road asset management. Cordel
designs and manufactures LiDAR (Light Detection And Ranging) sensors optimised
and ruggedised for train and other vehicle data capture applications.
The Group is a leader in infrastructure monitoring through automation and
machine learning. The flagship Cordel solution is focused on the rail industry
predicting and identifying maintenance needs including issues with vegetation,
overhead lines and track ballast. The solution utilises LiDAR sensors and
high-resolution video cameras, attached to trains and track maintenance
vehicles, to automate the collection of infrastructure data at survey-grade
accuracy. It then employs Artificial Intelligence to analyse the huge
datasets, confirming correct geometry, providing insights and recommending
actions in near real time.
Cordel is seeking to establish a strong business in rail before expanding into
road and energy infrastructure. The Group has key 'anchor' customers for
Cordel in Amtrak in the USA, Network Rail in the UK and the Australian Rail
Track Corporation (ARTC) .
The Market
The markets for Cordel solutions are large in size and global in extent and
include the UK, USA, Europe, Middle East and Australia.
Cordel
Managing infrastructure assets is a major component of the overall railway
management system market, which is projected to grow strongly. Global Market
Insights Inc estimates that the market surpassed US$35 billion in 2019 and is
anticipated to grow at over 8% CAGR between 2020 and 2026, to reach US$55
billion. Within this, the growth of support and maintenance spend will be
higher across the same period, at up to 16% CAGR. (GMI Report, November 2020
(https://www.gminsights.com/industry-analysis/railway-management-system-market)
). Technavio is also reporting strong growth in the railway management
system market, at 9% CAGR between 2019 and 2023. (Technavio Report, February
2019
(https://www.technavio.com/report/global-railway-management-system-market-industry-analysis?tnplus)
). More broadly, The machine learning market reached a value of about US
$1.41 billion in 2020 and is expected to reach US $8.81 billion by 2025, (360
Research Reports
(https://www.360researchreports.com/-global-machine-learning-market-17801825)
29 March, 2021).
The Cordel offering is a new entrant into this growth environment and aims to
take market share away from older, less effective approaches to asset
infrastructure monitoring, as well as take advantage of new budgets being
allocated, as innovation-oriented spend grows within the ongoing market
expansion.
Cordel is strongly positioned within its markets with a highly differentiated
offering. It provides a wider range of analytic outputs than alternative
services and can monitor and analyse infrastructure faster, more often and at
lower cost, due in no small part to the high levels of automation inherent in
its design.
2. CHAIRMAN'S STATEMENT
We are delighted with our achievements in the 2023 Fiscal Year, including our
major breakthrough into the US market and continuing strength in the UK. We
are now positioned and resourced for accelerated growth. Importantly, we have
a rich technology development roadmap actively in progress, as we begin to
reap the benefits of our leadership in the application of Artificial
Intelligence to railway infrastructure management.
We were successful in raising £1.7million in March, to fund our USA expansion
strategy through 2024. At the date of this report, our plan is ahead of
schedule with key hires in the UK (including a Strategic Growth Director, a
Project Delivery Lead and Marketing personnel), in the US (a Senior Sales /
Delivery Engineer) and in Australia (in Software Engineering, including lead
AI engineers).
The UK and Australian markets continue to embrace our solutions and we now
look forward to faster
progress in the USA. We are reassured by customer feedback that attests to
our technology
advantage, low deployment cost and rapid processing times.
We continue to carefully manage expenditures, operating at or above cashflow
breakeven before expansion strategy costs. Investment continued in product
development, much of which is focused on increasing automation and new
solutions to further improve our competitive position. We regularly review our
structure and cost base to ensure that our core mission of data capture and
machine learning analysis is foremost.
As always, the Board is grateful for the dedication and hard work of our
people in the UK, United States and Australia. We have a great team who are
committed to customers and the company.
Our purpose is to build a strong and resilient business, growing shareholder
value through the consistent achievement of business plan targets and the
expansion of our recurring revenue customer base. We have confidence in the
long-term outlook and we thank our shareholders for their continuing support.
_____________________________
Ian Buddery
Chairman
24 October 2023
3. REVIEW OF OPERATIONS BY THE CHIEF EXECUTIVE OFFICER
I was honored to step into the CEO role in March 2023. Having been a
Non-Executive Director of the Group since May 2018, I have seen first-hand the
significant market opportunity that exists for Cordel in rail. We have been
delighted by what we have been able to achieve in the FY ending June 2023 and
look forward with genuine excitement and optimism to what we can deliver in
the next 12-24 months.
This year has been a critical foundation for Cordel. We have built on our
momentum from FY22 and have been able to significantly increase engagement
with our target markets in FY23. In the rail industry, we do find that
customer decision time frames are long and sometimes unpredictable which has
impacted revenue in the period. Having said that, we achieved a 34% revenue
growth result and critically, we now hold a strong deal pipeline resulting
from the backlog created by some revenue slipping beyond our year end.
Overview of results
GBP 000's Twelve months to 30 June 2023 Twelve months to 30 June 2022 % Change % Change constant currency
Total Revenue 3,046 2,273 34% 35%
Cost of sales (791) (775) 2% -2%
Total expenses (3,129) (3,300) -5% -6%
Grant Income 372 597 -37% -33%
Other income 36 - - -
Loss before Income tax (466) (1,205) -61% -69%
Gross margin improved from 66% to 74% as we've increased the volume of rail
miles captured and analysed. Expenses remained broadly flat despite the growth
in revenue.
Strategy
Our plan for the financial year FY23 was focused on achieving growth with
existing and new customers in our key markets of the UK, United States and
Australia, allied with investing time and effort to expand our partner
channel. We have developed our relationships with Network Rail and Angel in
the UK, agreed a contract extension with ARTC in Australia and critically, won
a multi-year, multimillion dollar contract with Amtrak in the US. We have also
deepened our partnership with D/Gauge (now owned by TUV Rheinland).
In FY24 our focus continues to be on winning more customer contracts in our
core markets of the UK, United States and Australia. Having secured a
successful capital raise in March 2023, we are now in a position to grow our
sales and business development capabilities whilst also investing heavily in
our engineering and product development and delivery teams. We see the single
biggest opportunity for growth coming from the United States and our
recruitment is focused on maximising that. Furthermore, more track miles under
management and more products provided to each customer results in organic
growth, in turn leading to margin improvement. And higher numbers of scanners
running continuously on a greater number of trains will result in a greater
proportion of future revenues being of a recurring nature.
Our products and services already employ Artificial Intelligence. We see a
significant opportunity to develop our capabilities and propositions to
customers in the AI space and since the end of FY23, we have recruited two new
AI engineers who will help to drive this work. In addition, ongoing Cordel
product development will expand processing and capability across data capture,
data processing and insights generated. The nature of the machine learning
approach means our offering is in a state of perpetual self-improvement, a
virtuous circle in which the datasets added from each new customer and
application refine our solution's knowledge base and recommended actions.
Ongoing operations
As of 30 June 2023, the Group had cash of £1,283,463 and receivables of
£1,985,957.
The Group is laser focused on delivering on our recently agreed vision to
'Create safer, more efficient and sustainable railways around the world' We
operate from offices in Newcastle, Australia while staff in the UK and USA
have been working from home offices. After the FY23 year closed, we took a
small office in Moorgate, London to enable the growing UK team to have a
permanent base. We will continue to recruit new employees as part of
expanding the business and management will ruthlessly focus on maintaining a
strong and committed team whilst ensuring efficient and careful use of
available resources.
We work very hard as a team to meet the challenges created by operating in
multiple time zones. At the very heart of this is our focus on exceptional
communications - which are facilitated by a range of technology solutions. As
well as honing our vision, we have also recently revitalised our core values
which are unity, humility, integrity, curiosity, excellence and ambition. To
support the company and its aims, we have further enhanced our robust systems
and processes for financial management, customer support and product
development management, in preparation for scaling the Company.
Outlook
We are confident of continuing or exceeding our current growth trend in FY24,
acquiring new customers for Cordel and providing new services to our existing
customer base. We look forward to delivering further growth in value for our
shareholders.
_____________________________
John Davis
Chief Executive Officer
24 October 2023
4. PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group's growth
strategies are subject to a number of risks which could adversely affect the
Group's future development. The following is not an exhaustive list or
explanation of all risks and uncertainties associated with the Group but those
considered by management to be the principal risks:
Risks relating to the Group and the industry in which it operates:
Dependence on major clients
The Group's future growth relies on new sales to rail and road network owners
in multiple countries. These owners typically have complex procurement
arrangements which include product trials and competitive tenders. This risk
is mitigated by increasing sales and business development teams in order to
broaden the pool of opportunities and entering into partnership agreements
with Engineering Consulting firms, such as Holland LLP in the USA.
Business strategy
Although the Group has a clearly defined strategy, there can be no guarantee
that its objectives will be achieved or that the Group will achieve the level
of success that the Company's directors expect. Therefore, the Group may
decide to change aspects of its strategy as needed. The Group's ability to
implement its business strategy successfully may be adversely impacted by
factors that the Group cannot currently foresee, such as unanticipated market
forces, costs and expenses or technological factors. Should it be unsuccessful
in implementing its strategy or should it take longer than expected to
implement, the future financial results of the Group could be negatively
impacted. This risk is mitigated by the continual review of the business
performance to its plan and that changes are made to ensure the Group has
sufficient liquidity to pursue its current plan.
Technological changes
Generally, product markets are exposed to rapid technological change, changes
in use, changes to customer requirements and preferences; and services
employing new technologies and the emergence of new industry standards and
practices. The Group operates in a market with such changes which have the
potential to render the Group's existing technology and products competitively
impaired.
To successfully remain competitive, the Group will ensure continued product
improvement and the development of new markets and capabilities to maintain a
pace congruent with changing technology. This added strain may stretch the
Group's capital resources which may adversely impact the revenues and
profitability of the Group. The Group's success is dependent on the ability to
effectively respond and adapt to technological changes and changes to customer
preferences. There can be no assurance that the Group will be able to
effectively anticipate future technological changes or changes in customer
preferences. Furthermore, there is also no assurance that the Group will have
sufficient financial resources to effectively respond in a timely manner if
such a change is anticipated.
Competition
There is no guarantee against new entrants or current competitors providing
superior technologies, products or services to the market. There is no
certainty that new entrants or current competitors will not provide equivalent
products for a lower price. The Group may be forced to make changes to one or
more of its products or to its pricing strategy to effectively respond to
changes in customer preferences in order to remain competitive. This may
impact negatively on the Group's financial performance. The Group will
continue to review its competitive position and adjust its business plan to
maintain relevance to its customers' requirements.
Inability to contract with customers on the most favourable terms to the Group
The Group contracts with a wide variety of companies and partners, many of
which are in strong negotiating positions and have greater financial resources
than the Group. The Group may in the future have limited scope for negotiation
of the price or contract terms with some of its major clients.
The Group's software may not perform as expected and the Group could be at
risk of defects which adversely affect its customers
There is no guarantee that the Group's software will perform as intended.
Costs spent on developing the software may therefore not be recouped and this
may result in reduced profitability for the Group. As the software is complex,
it may contain defects or vulnerabilities which may not be detected until
after deployment to major customers. To mitigate this risk the Group has
implemented applicable internal code review and testing processes. The
software is then subject to customer acceptance testing and an ongoing high
level of technical support.
Data security and data privacy
The Group is subject to data and privacy regulations, particularly General
Data Protection Regulation ('GDPR') and its equivalents in the US and other
markets in which we intend to operate. Failure to comply with legal or
regulatory requirements relating to data security or data privacy in the
course of the Group business activities, results in reputational damage, fines
or other adverse consequences, including criminal penalties and consequential
litigation, adverse impact on the Group's financial results or unfavourable
effects on the Group's ability to do business. To mitigate this risk the Group
has implemented policies and processes to ensure data is held securely and
privacy is maintained. The Group also holds ISO27001: Information Security
Management Systems certification.
Dependence on key executives and personnel
The Group is dependent on a small number of key executives. In addition, the
future performance of the Group will, to some extent, be dependent on its
ability to retain the services and personal connections or contacts of key
executives and to attract, recruit, motivate and retain other suitably
skilled, qualified and industry experienced personnel to form a high calibre
management team. Such key executives are expected to play an important role in
the development and growth of the Group in particular, by maintaining good
business relationships with regulatory and governmental departments and
essential partners, contractors and suppliers. The failure to appoint or
retain such people could adversely affect the Group.
Ability to recruit and retain skilled personnel
The Group believes that it has the appropriate incentive structures to attract
and retain the calibre of employees necessary to ensure the efficient
management and development of the Group. However, any difficulties encountered
in hiring appropriate employees and the failure to do so, or a change in
market conditions that renders current incentive structures ineffective, may
have a detrimental effect upon the trading performance of the Group. The
ability to attract new employees with the appropriate expertise and skills
cannot be guaranteed.
Financial controls and internal reporting procedures
The Group's future growth and prospects will depend on its ability to manage
growth and to continue to maintain, expand and improve operational, financial
and management information systems on a timely basis, whilst at the same time
maintaining effective cost controls. Any damage to, failure of or inability to
maintain, expand and upgrade effective operational, financial and management
information systems and internal controls in line with the Group's growth,
could have a material adverse effect on the Group's business, financial
condition and results of operations. The Group mitigates this through the
implementation of internal controls as well as the review of monthly financial
performance by the Board.
Economic uncertainty
Any economic downturn either globally or locally in any area in which the
Group operates may have an adverse effect on demand for the Group's products.
A more prolonged downturn may lead to an overall decline in sales. Economic
uncertainty might have an adverse impact on the Group's operations and
business results. To mitigate this risk the Group will monitor both the
Group's performance and general market conditions on a monthly basis. The
Group will also maintain adequate liquidity to sustain short term fluctuations
in market conditions.
5. PEOPLE
Equal opportunity
The Group is committed to an active equal opportunities policy. It is the
Group's policy to promote an environment free from discrimination, harassment
and victimisation, where everyone receives equal treatment regardless of
gender, colour, ethnic or national origin, disability, age, marital status,
sexual orientation or religion. Employment practices are applied which are
fair, equitable and consistent with the skills and abilities of the employees
and the needs of the Group.
Disabled employees
Applications for employment by disabled persons are always fully considered,
bearing in mind the aptitudes of the applicant concerned. In the event of
members of staff becoming disabled, every effort is made to ensure that their
employment with the Group continues and that appropriate re-training is
arranged. It is the policy of the Group that the training, career development
and promotion of disabled persons should, as far as possible, be identical
with that of other employees.
This report is made in accordance with a resolution of directors.
On behalf of the directors
_____________________________
Ian Buddery
Chairman
24 October 2023
CORPORATE GOVERNANCE
The Directors acknowledge the importance of high standards of corporate
governance and intend, given the Group's size and the constitution of the
Board, to comply with the principles set out in the QCA Corporate Governance
Code published by the Quoted Companies Alliance in April 2019 (the 'QCA Code')
and, where it does not comply with any of its recommendations, to explain the
reasons therefor.
In the Board's opinion, the Group currently complies with the ten principles
of the QCA Code which, together, are designed to deliver growth, maintain a
dynamic management framework and build trust. As the Group expands, the Board
will review its corporate governance framework and will consider adoption of
additional principles and practices including from the UK Corporate Governance
Code 2018 published by the Financial Reporting Council (the 'UK Corporate
Governance Code').
Read more in our Corporate Governance Statement of Compliance with the QCA
Corporate Governance Code at the following website link:
https://cordel.ai/wp-content/uploads/2023/02/Cordel-Statement-of-QCA-compliance-2023.pdf
On behalf of the Directors
_____________________________
Ian Buddery
Chairman
24 October 2023
DIRECTORS' REPORT
The Directors present their report, together with the financial statements, on
the consolidated entity (referred to hereafter as the 'Group') consisting of
Cordel Group plc (referred to hereafter as the 'Company' or 'parent entity')
and the entities it controlled during the year ended 30 June 2023.
Directors
The following persons were Directors of Cordel Group plc up to the date of
this report, unless otherwise stated:
Ian Buddery Non-Executive Chairman
John Davis Executive Director and CEO
(appointed CEO 1 March 2023)
Jonathan Macleod Independent Non-Executive Director
Nicholas McInnes Independent Non-Executive Director
Aaron Hoye Executive Director and Chief
Technology Officer
Thouraya Walker Executive Director, Company Secretary
and Chief Financial Officer (appointed 3 May 2023)
Nicholas Smith Executive Director) resigned 1 March
2023)
Robert Lojszczyk Executive Director, Company Secretary and
Chief Financial Officer (resigned 31 July 2023)
Ian Buddery, aged 66 - Non-Executive Chairman
Ian has extensive public company experience and a long background in the
telecommunications and financial services industries in both international and
local markets. Ian has founded multiple companies; obtained venture capital
and angel funding, performed two IPOs, six acquisitions and two significant
trade sales. Ian was the founder, CEO and Executive Chair of eServGlobal,
founded in 1991 and listed on the Australian Securities Exchange ('ASX') in
2000 and the AIM in 2004. (LSE: ESG).
Ian was appointed a Director of Cordel Group plc Ltd on 6 December 2017.
John Davis, aged 53 - Executive Director and Chief Executive Officer
John has been working with banks and SMBs for more than 20 years. Based in
London, John was the Marketing and Product Director for Barclays Business from
2005-2010 before setting out on an entrepreneurial career as the co-owner and
Managing Director of Business Centric Services Group Limited, an award
winning, high growth business, helping banks and telecommunication companies
to enhance their digital engagement with and propositions for small and medium
sized businesses. He also
acted as Chair and co-owner of two other London based FinTech start-ups. John
completed the sales of all three of these companies during 2016 and 2018.
John was appointed a Director of Cordel Group plc on 4 May 2018 and CEO on 1
March 2023.
Jonathan Macleod, aged 66 - Independent Non-Executive Director
Jonathan is a practicing Chartered Accountant and Financial Adviser with over
30 years of experience in the Financial Services and Software industries in
both NZ and Australia. He has held senior executive positions within the
National Bank of NZ and Rabobank Australia/NZ. Jonathan was the Chief
Financial Officer of ASX listed company eServGlobal from 2008 to 2010.
Jonathan was appointed a Director of Cordel Group plc on 4 May 2018.
Nicholas McInnes, aged 68 - Independent Non-Executive Director
Nick McInnes has been a United Kingdom diplomat through much of his career,
focusing on international trade and investment in such key positions as the
British Consul General, Sydney and Director General
Trade & Investment for Australia and New Zealand; and Director Trade &
Investment USA and Deputy Consul General New York.
Nicholas was appointed a Director of Cordel Group plc on 13 March 2020.
Aaron Hoye, aged 41 - Executive Director, Chief Technology Officer
Aaron co-founded Cordel in 2012 and has extensive technology experience of
both hardware and software across a range of settings, covering remote sensor
technologies, including LiDAR and photogrammetry, data fusion & data
processing, machine learning and UI design. He has a degree in Computer
Science and Mathematics from the University of Newcastle, New South Wales.
Aaron was appointed a Director of Cordel Group plc on 14 April 2022.
Thouraya Walker, aged 44 - Executive Director, Chief Financial Officer and
Company Secretary
Thouraya's background includes roles at Mazars LLP, Standard Chartered Bank
and Oliver Wyman Limited. She is a Fellow of the Association of Chartered
Certified Accountants and holds a degree in Mathematics from the University
of York.
Thouraya was appointed as Chief Financial Officer on 1 April 2023 and a
Director on 3 May 2023.
Nicholas Smith, aged 37 - Executive Director and Chief Executive Officer
(resigned 1 March 2023)
Results focused with an outstanding record of founding, growing and scaling
technical businesses, Nick has a demonstrated ability to lead and manage
geographically dispersed teams while maintaining the culture of the
organisation.
Nicholas stepped down as a director and Chief Executive Officer on 1 March
2023. He was immediately appointed to the role of Vice President Europe
& Middle East.
Robert Lojszczyk, aged 65 - Executive Director, Chief Financial Officer and
Company Secretary (resigned 31 July 2023)
Robert is a widely experienced senior finance executive with a blue chip
organisational and commercial background.
Robert retired and as a result resigned as a Director on 31 July 2023.
Principal activities
Information on the Group's principal activities are disclosed in the strategic
report.
Results and dividends
The loss for the Group after providing for income tax and non-controlling
interest amounted to £598,150 (30 June 2022: £1,200,693).
No dividend has been paid during the financial year and the directors do not
recommend a final dividend in respect of the year ended 30 June 2023 (30 June
2022: £Nil).
Further commentary on the financial results are disclosed in the financial
review by the Chief Financial Officer within the strategic report.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and financial position are given in the
strategic review and this directors' report. In addition, the notes to the
financial statements include details on the Group's borrowing facilities and
its objectives, policies and processes for managing its capital; its financial
risk management objectives; and its exposures to credit risk and liquidity
risk.
The Group has considerable financial resources together with a member base
split across different geographic areas. The Group's forecasts and
projections, taking into account reasonably possible changes in trading
performance and the newly acquired business, show that the Group should be
able to operate for the foreseeable future with the current working capital.
As a consequence, the directors believe that the Group is well placed to
manage its business risks successfully.
The directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in preparing the
financial statements.
Likely future developments
Information on likely future developments of the Group are disclosed in the
strategic report.
Financial instruments
Information on the Group's financial instruments are disclosed in the
strategic report and note 25 to the financial statements.
Charitable and political donations
No charitable or political donations were made during the financial year.
Disabled employees
Due to the size of the Group, no formal policy for the employment of disabled
persons has been established. However, the Group gives full consideration to
employment applications from disabled persons where the candidate's particular
aptitudes and abilities are consistent with adequately meeting the
requirements of the job.
Indemnity of directors
The Company has indemnified the directors of the Company for costs incurred,
in their capacity as a director, for which they may be held personally liable,
except where there is a lack of good faith.
Substantial shareholdings
The substantial shareholders in the Company as at 30 June 2023 were as
follows:
Nicholas Smith 12.83%
Aaron Hoye 12.83%
Disclosure of information to the auditors
So far as each person who was a director at the date of approving this report
is aware, there is no relevant audit information, being information needed by
the auditor in connection with preparing its report, of which the auditor is
unaware. Having made enquiries of fellow directors and the Group's auditor,
each director has taken all the steps that they are obliged to take as a
director in order to make themselves aware of any relevant audit information
and to establish that the auditor is aware of that information.
Auditor
Oury Clark was appointed in an earlier financial year and pursuant to section
487 of the Companies Act 2006 will be deemed to be re-appointed and therefore
continue in office.
On behalf of the directors
_________________
Ian Buddery
Chairman
24 October 2023
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the strategic report, directors'
report and the financial statements in accordance with applicable law and
regulation.
UK Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have elected to prepare the Group
financial statements in accordance with International Financial Reporting
Standards ('IFRS') as adopted by the United Kingdom and financial statements
of the Company in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law) including
FRS 101 'Reduced Disclosure Framework'. Under company law the directors must
not approve the financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and Company and the
profit or loss of the Group for that year.
In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable IFRS as adopted by the United Kingdom
and applicable United Kingdom Accounting Standards have been followed for the
Group and the Company respectively, subject to any material departures
disclosed and explained in the financial statements; and
· prepare the financial statements on a going concern basis unless
it is inappropriate to presume that the Group and Company will continue in
business.
The directors confirm they have complied with all the above requirements in
preparing the financial statements.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and Company's transactions and
disclose with reasonable accuracy at any time, the financial position of the
Group and Company and enable them to ensure that the financial statements
comply with the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
_________________
Ian Buddery
Chairman
24 October 2023
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CORDEL GROUP PLC
Opinion
We have audited the group financial statements of Cordel Group PLC (the
'group') for the year ended 30 June 2023 which comprise the Consolidated
Statement of Profit or Loss and Other Comprehensive Income, the Consolidated
Statement of Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flows and Notes to the Statement of
Cash Flows and Notes to the Consolidated Financial Statements, including a
summary of significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the United Kingdom and as
applied in accordance with the provisions of the Companies Act 2006.
In our opinion, the group financial statements:
- give a true and fair view of the state of the group's affairs as at 30 June
2023 and of its loss for the year then ended;
- have been properly prepared in accordance with IFRSs as adopted by the
United Kingdom;
- have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditors' responsibilities for the
audit of the financial statements section of our report. We are independent of
the group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed public entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to
which the ISAs (UK) require us to report to you where:
- the directors' use of the going concern basis of accounting in the
preparation of the financial statements is not appropriate; or
- the directors have not disclosed in the financial statements any identified
material uncertainties that may cast significant doubt about the group's
ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months and one day from the date when the financial
statements are authorised for issue.
Overview of our audit approach
Key audit matters
1. Goodwill valuation
2. Revenue recognition
3. Inventory valuation
4. Management override
Audit scope
1. We performed an audit of the parent company and the consolidated
entity.
2. We did not audit the components located in Australia, though our
consolidated audit included direction of those component audits, a review of
the procedures and work undertaken on these by the local authorised auditors
together with an assessment of those auditors.
3. We did not audit the component located in America. This component did
not need a local audit. We undertook audit work in relation to elements that
were material to the group, utilising local expertise where needed.
4. We did not audit the 100% UK subsidiary, as this was not required to be
audited. However, we did undertake audit work on the elements that were
material to the group financial statements.
Materiality
1. Overall group materiality was £61,000. This represents 2% of the
group's turnover for the year.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements, as a whole, and in our opinion thereon, and we do
not provide a separate opinion on these matters.
Goodwill valuation
Risk
1. The group recorded losses in the year and the subsidiaries also
continued to generate losses.
2. There is a risk that the Goodwill stated in the group financial
statements is overstated if the subsidiaries no longer provide this level of
value.
Our response to the risk
1. We reviewed management's assessment and challenged the assumptions
provided through discussions.
2. We reviewed plans going forwards and worked to understand the status of
the subsidiaries in light of operational changes within the group.
3. We assessed whether the original value arising on acquisition is still
held.
4. We concluded that the Goodwill arising on initial acquisition is still
appropriate and that no impairment was required.
Revenue recognition
Risk
1. The group has a number of large value contracts.
2. There is a risk that revenue is recognised too early or too late.
Our response to the risk
1. We, or our component auditors as appropriate, obtained a sample of
contracts for customers in the year and reviewed invoicing schedules alongside
evidence of stage of completion at the year end.
2. We reviewed the pipeline for new revenue as part of our going concern
review without noting any contracts omitted from revenue in the year.
3. We concluded that revenue has been appropriately recognised in the period.
Inventory valuation
Risk
1. The group holds inventory at the year end in relation to hardware sales.
2. There is a risk that this inventory value is not recoverable.
Our response to the risk
1. We obtained an inventory listing detailing all inventory items at the year
end.
2. We reviewed after date sales evidence in respect of a sample of items to
confirm the inventory value was less than the future selling price.
3. We discussed with management possible provisions and reasonableness of
these in respect of slow moving or obsolete items at the year end.
4. We concluded that the inventory value was not materially overstated.
Management override Risk
1. In accordance with the ISAs (UK), management override is considered to be a
significant risk.
2. There is a risk that management make inappropriate entries into the
financial ledgers in order to gain a benefit for either themselves or the
company.
Our response to the risk
1. We, or our component auditors as appropriate, obtained nominal ledger
detail for the transactions of the group in the year.
2. We, or our component auditors as appropriate, reviewed these for
reasonableness and evidence of any management override, including but not
limited to, a review of journals made on weekends, journals with unusual
narrative and round-sum journals.
3. We, or our component auditors as appropriate, did not note any management
override in the period.
Key observations communicated to the audit committee
1. Based on our audit procedures and discussions with management we agreed
that an impairment of the intercompany receivables balance from Corridor
Holdings Pty Limited in the individual financial statements of Cordel Group
PLC was appropriate. This has no impact upon the figures reported at a group
level.
2. Based on our audit procedures and discussions with management we
determined that the inventory value is not materially misstated, but that
inventory should be reviewed more frequently, and provisions made as
appropriate, for possible slow moving or obsolete inventory items.
An overview of the scope of our audit
Our assessment of audit risk, our evaluation of materiality and our allocation
of performance materiality determine our audit scope for each entity within
the group. Taken together, this enables us to form an opinion on the
consolidated financial statements. We take into account size, risk profile,
the organisation of the group and effectiveness of group-wide controls,
changes in the business environment and other factors such as recent internal
audit results when assessing the level of work to be performed at each entity.
In assessing the risk of material misstatement to the group financial
statements, and to ensure we had adequate quantitative coverage of significant
accounts in the financial statements, we selected all components covering
entities within Australia, United States of America and the United Kingdom,
which represent the principal business units within the Group.
Of all the components selected, we performed an audit of the complete
financial information of the UK parent entity. We reviewed the work undertaken
by component auditors of the Australian entities. We also performed audit
testing on the material elements of the United States of America entity,
utilising experts where needed and the UK subsidiary entity.
The reporting components where we performed audit procedures or reviewed
component auditor procedures undertaken accounted for 100% of the Group's loss
before tax, 100% of the Group's revenue and 100% of the Group's total assets.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in
evaluating the effect of identified misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of
the users of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £61,000 (2022: £60,000) which
is 2% of the turnover for the year (2022: 5% of the loss for the year). We
believe that turnover is now the most appropriate basis for materiality as the
group has matured, revenue has grown and the nature of contracts being entered
into has improved. During the course of the audit, we reassessed initial
materiality as required and updated this to the turnover basis as we
determined from the contract reviews for going concern that the business
maturity now rendered revenue the most appropriate measure of materiality.
Performance materiality
The application of materiality at the individual account or balance level. It
is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk assessments, together with our assessment of the
Group's overall control environment, our judgement was that performance
materiality was 75% (2022: 75%) of our final materiality, being £45,750
(2022: £45,000). We have set performance materiality at this level as we
consider this to be commensurate with the overall control environment and the
assessed audit risk.
Reporting threshold
The amount below which identified misstatements are considered as being
clearly trivial.
It was decided that we would report all audit differences in excess of £1,000
(2022: £2,500), which is set as less than 5% of materiality, as well as
differences below that threshold that, in our view, warranted reporting on
qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The directors are responsible for the other information. The other information
comprises the information set out in pages 4 to 16, but does not include the
financial statements and our Report of the Auditors thereon.
Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is inconsistent with the financial statements, or our knowledge
obtained in the audit or otherwise appears to be misstated. If we identify
such
inconsistencies or apparent misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Group Strategic Report and the Report of the
Directors for the financial year for which the group financial statements are
prepared is consistent with the group financial statements; and
- the Group Strategic Report and the Report of the Directors has been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and its
environment obtained in the course of the audit, we have not identified any
matters in the Strategic Report or the Report of the Directors that are
inconsistent with our overall view of the financial statements.
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
- certain disclosures of directors' remuneration specified by law are not
made; or
- we have not received all the information and explanations we require for our
audit.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set
out on page 16, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine necessary to
enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the group
financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue a Report of the Auditors that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Identifying and assessing potential irregularities, including fraud
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and regulations,
our procedures included the following:
1. Considering the nature of the industry, sector, control environment and
current business activities, including possible performance targets and
subsequent remuneration;
2. Enquiring of management concerning policies and procedures relating to:
- complying with laws and regulations and whether there were any instances
of non-compliance; and
- mitigating, detecting and responding to fraud risk and whether there has
been any actual or possible instances of fraud;
3. Discussing with the engagement team and internal specialists where
necessary, regarding how and where fraud may occur in the financial statements
along with the possible indicators of fraud. We identified the following areas
most likely to be susceptible to fraud:
- management override;
- revenue recognition.
4. Discussing with the engagement team and internal specialists where
necessary, the legal and regulatory framework in which the group operates and
in particular those which would have an impact on the financial statements.
The key laws and regulations considered were the Companies Act 2006, tax
legislation, employment law and AIM Rules for Companies.
Audit response to the risks identified
As noted above, we identified management override and revenue recognition as
the matters that would most likely be susceptible to fraud. Our procedures to
respond to these risks included the following:
- Performing analytical procedures to identify any unusual or unexpected
relationships that may indicate risks of material misstatement due to fraud;
- Detailed review of journal entries in the period;
- Review of contracts and stage of completion to confirm revenue not
recognised too early.
Further, we also identified compliance with the Companies Act 2006, tax
legislation, employment law and AIM Rules for Companies as key areas where
there may be possible non-compliance. Our procedures to respond to these risks
included the following:
- Review the financial statement disclosures and testing to supporting
documentation to assess compliance with the Companies Act 2006;
- Reviewing expenses codes for any items not allowable for the tax
computations;
- Being cognisant of any potential indicators of employment disputes;
- Review of correspondence between the entity and the AIM.
The above matters and identified laws and regulations and potential fraud
risks were communicated to all engagement team members and internal
specialists where necessary, in order to enable the team to have the ability
to identify such risks. The whole team remained alert to any indications of
fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above and the
risk of not detecting a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error, as fraud may involve
deliberate concealment.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
Report of the Auditors.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in a Report of the Auditors and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Rachel Lockwood (Senior Statutory Auditor)
for and on behalf of Oury Clark Chartered Accountants
Statutory Auditors
Herschel House
58 Herschel Street
Slough
Berkshire
SL1 1PG
Date: 22 October, 2023
Notes:
1. The maintenance and integrity of the Cordel Group PLC website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CORDEL GROUP PLC
Opinion
We have audited the financial statements of Cordel Group PLC (the 'parent
company') for the year ended 30 June 2023 which comprise the parent company
Statement of Financial Position, the parent company Statement of Changes in
Equity and Notes to the parent Company Financial Statements, including a
summary of significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and United
Kingdom Accounting Standards, including FRS101 "Reduced Disclosure Framework"
(United Kingdom Generally Accepted Accounting Practice).
In our opinion, the parent company financial statements:
- give a true and fair view of the state of the parent company's affairs as at
30 June 2023;
- have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
- have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditors' responsibilities for the
audit of the parent company financial statements section of our report. We are
independent of the parent company in accordance with the ethical requirements
that are relevant to our audit of the parent company financial statements in
the UK, including the FRC's Ethical Standard as applied to listed public
entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to
which the ISAs (UK) require us to report to you where:
- the directors' use of the going concern basis of accounting in the
preparation of the parent company financial statements is not appropriate; or
- the directors have not disclosed in the parent company financial statements
any identified material uncertainties that may cast significant doubt about
the parent company's ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months and one day from the date
when the parent company financial statements are authorised for issue.
Overview of our audit approach
Key audit matters
1. Investment valuation
2. Recoverability of intercompany balances
3. Management override
Audit scope
1. We performed an audit of the parent company.
Materiality
1. Parent company materiality was £61,000. This represents 2% of the
group's turnover for the year. Ordinarily we would have assessed the
individual entity based on 5% net assets but restricted this to group
materiality.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements, as a whole, and in our opinion thereon, and we do
not provide a separate opinion on these matters.
Investment valuation
Risk
1. The group recorded losses in the year and the subsidiaries also
continued to generate losses.
2. There is a risk that the investment in subsidiaries stated in the
parent company financial statements is overstated if the subsidiaries no
longer provide this level of value.
Our response to the risk
1. We reviewed management's assessment and challenged the assumptions
provided through discussions.
2. We reviewed plans going forwards and worked to understand the status of
the subsidiaries in light of operational changes within the group.
3. We assessed whether the original value paid when acquiring from a third
party on acquisition is still an expected minimum market value.
4. We concluded that the Investment value is still appropriate and that no
impairment was required.
Recoverability of intercompany balances
Risk
1. There is a risk that intercompany balances due from subsidiaries are not
recoverable.
Our response to the risk
1. We reviewed any intercompany debtor balances and considered the entities
ability to repay.
2. In one instance we concluded the balance did not appear to be recoverable.
We discussed with management who made an adjustment to provide for this debt.
Management override
Risk
1. In accordance with the ISAs (UK), management override is considered to be a
significant risk.
2. There is a risk that management make inappropriate entries into the
financial ledgers in order to gain a benefit for either themselves or the
company.
Our response to the risk
1. We obtained nominal ledger detail for the transactions of the company in
the year.
2. We reviewed these for reasonableness and evidence of any management
override, including but not limited to, a review of journals made on weekends,
journals with unusual narrative and round-sum journals.
3. We did not note any management override in the period.
Key observations communicated to the audit committee
1. Based on our audit procedures and discussions with management we agreed
that an impairment of the intercompany receivables balance from Corridor
Holdings Pty Limited was appropriate.
An overview of the scope of our audit
Our assessment of audit risk, our evaluation of materiality and our allocation
of performance materiality determine our audit scope. We take into account
size, risk profile, the organisation of the entity and effectiveness of
controls, changes in the business environment and other factors such as recent
internal audit results when assessing the level of work to be performed.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in
evaluating the effect of identified misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of
the users of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the company to be £61,000 (2022: £60,000)
which is 2% of the group turnover for the year (2022: 5% of the loss for the
year). We restricted the individual entity materiality to group materiality.
We believe that turnover is now the most appropriate basis for group
materiality as the group has matured, revenue has grown and the nature of
contracts being entered into has improved. During the course of the audit, we
reassessed initial group materiality as required and updated this to the
turnover basis as we determined from the contract reviews for going concern
that the business maturity now rendered revenue the most appropriate measure
of materiality. Consequently, we updated the parent company materiality
accordingly as the revised level was below what it would have been at 5% of
net assets which we would have applied otherwise.
Performance materiality
The application of materiality at the individual account or balance level. It
is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk assessments, together with our assessment of the
company's overall control environment, our judgement was that performance
materiality was 75% (2022: 75%) of our final materiality, being £45,750
(2022: £45,000). We have set performance materiality at this level as we
consider this to be commensurate with the overall control environment and the
assessed audit risk.
Reporting threshold
The amount below which identified misstatements are considered as being
clearly trivial.
It was decided that we would report all audit differences in excess of £1,000
(2022: £2,500), which is set as less than 5% of materiality, as well as
differences below that threshold that, in our view, warranted reporting on
qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The directors are responsible for the other information. The other information
comprises the information set out in the Report of the Directors but does not
include the parent company financial statements and our Report of the Auditors
thereon.
Our opinion on the parent company financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the parent company financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is inconsistent with the parent company
financial statements, or our knowledge obtained in the audit or otherwise
appears to be misstated. If we identify such inconsistencies or apparent
misstatements, we are required to determine whether there is a material
misstatement in the parent company financial statements or a misstatement of
the other information. If, based on the work we have performed, we conclude
that there is a misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Report of the Directors for the financial year
for which the parent company financial statements are prepared is consistent
with the parent company financial statements; and
- the Report of the Directors has been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the parent company and its
environment obtained in the course of the audit, we have not identified any
matters in the Report of the Directors that are inconsistent with our overall
view of the parent company financial statements.
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
- the parent company financial statements are not in agreement with the
accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not
made; or
- we have not received all the information and explanations we require for our
audit; or
- the directors were not entitled to take advantage of the small companies'
exemption from the requirement to prepare a Strategic Report or in preparing
the Report of the Directors.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set
out on page 16, the directors are responsible for the preparation of the
parent company financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors determine
necessary to enable the preparation of parent company financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the parent company financial statements, the directors are
responsible for assessing the parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the parent company or to cease operations, or have no realistic
alternative but to do so.
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the parent
company financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue a Report of the Auditors that
includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these parent company financial
statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Identifying and assessing potential irregularities, including fraud
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and regulations,
our procedures included the following:
1. Considering the nature of the industry, sector, control environment and
current business activities, including possible performance targets and
subsequent remuneration;
2. Enquiring of management concerning policies and procedures relating to:
- complying with laws and regulations and whether there were any instances
of non-compliance; and
- mitigating, detecting and responding to fraud risk and whether there has
been any actual or possible instances of fraud;
3. Discussing with the engagement team and internal specialists where
necessary, regarding how and where fraud may occur in the parent company
financial statements along with the possible indicators of fraud. We
identified the following areas most likely to be susceptible to fraud:
- management override.
4. Discussing with the engagement team and internal specialists where
necessary, the legal and regulatory framework in which the parent company
operates and in particular those which would have an impact on the parent
company financial statements. The key laws and regulations considered were the
Companies Act 2006, tax legislation, employment law and AIM Rules for
Companies.
Audit response to the risks identified
As noted above, we identified management override as the matter that would
most likely be susceptible to fraud. Our procedures to respond to this risk
included the following:
- Performing analytical procedures to identify any unusual or unexpected
relationships that may indicate risks of material misstatement due to fraud;
- Detailed review of journal entries in the period.
Further, we also identified compliance with the Companies Act 2006, tax
legislation, employment law and AIM Rules for Companies as key areas where
there may be possible non-compliance. Our procedures to respond to these risks
included the following:
- Review the financial statement disclosures and testing to supporting
documentation to assess compliance with the Companies Act 2006;
- Reviewing expenses codes for any items not allowable for the tax
computations;
- Being cognisant of any potential indicators of employment disputes;
- Review of correspondence between the entity and the AIM.
The above matters and identified laws and regulations and potential fraud
risks were communicated to all engagement team members and internal
specialists where necessary, in order to enable the team to have the ability
to identify such risks. The whole team remained alert to any indications of
fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above and the
risk of not detecting a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error, as fraud may involve
deliberate concealment.
A further description of our responsibilities for the audit of the parent
company financial statements is located on the Financial Reporting Council's
website at www.frc.org.uk/auditorsresponsibilities. This description forms
part of our Report of the Auditors.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in a Report of the Auditors and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Rachel Lockwood (Senior Statutory Auditor)
for and on behalf of Oury Clark Chartered Accountants
Statutory Auditors
Herschel House
58 Herschel Street
Slough
Berkshire
SL1 1PG
Date: 22 October, 2023
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR
THE YEAR ENDED 30 JUNE 2023
Note
2023 2022
£ £
Revenue from contracts with customers 3 3,046,496 2,272,683
Other income 4 408,756 596,765
Interest revenue calculated using the effective interest method 46 12
Expenses
Hosting fees and other direct costs (791,668) (775,290)
Employee benefits expense 5 (2,367,385) (2,191,308)
Occupancy expense (34,411) (29,338)
Depreciation and amortisation expense (117,302) (166,797)
Other expenses (593,297) (897,103)
Finance costs (16,819) (14,398)
Loss before income tax expense (465,584) (1,204,774)
Income tax expense 8 (132,566) 4,081
Loss after income tax expense for the year (598,150) (1,200,693)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Share option reserve 54,601 59,048
Foreign currency translation (17,257) (77,879)
Other comprehensive income for the year, net of tax 37,344 (18,831)
Total comprehensive income for the year (560,806) (1,219,524)
Loss for the year is attributable to:
Non-controlling interest - -
Owners of Cordel Group plc (598,150) (1,200,693)
(598,150) (1,200,693)
Total comprehensive income for the year is attributable to:
Non-controlling interest - -
Owners of Cordel Group plc (560,806) (1,219,524)
(560,806) (1,219,524)
Pence Pence
Basic earnings per share 10 (0.30) (0.70)
Diluted earnings per share 10 (0.30) (0.70)
The above consolidated statement of profit or loss and other comprehensive
income should be read in conjunction with the accompanying notes
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2023
Note 2023 2022
£ £
Non-current assets
Goodwill 11 1,223,403 1,223,403
Right of use asset 12 28,858 98,843
Property, plant and equipment 13 73,872 132,478
Deferred tax asset 84,069 234,842
Total non-current assets 1,410,202 1,689,566
Current assets
Inventories 15 143,781 246,940
Trade and other receivables 16 1,985,957 1,309,395
Cash and cash equivalents 1,283,463 339,665
Total current assets 3,413,201 1,896,000
Non-current liabilities
Lease Liabilities 22 - 62,392
Deferred tax 2,031 5,151
Total non-current liabilities 2,031 67,543
Current liabilities
Trade and other payables 17 662,160 580,240
Employee benefits 194,146 157,584
Unearned Income 133,290 -
Lease Liabilities 22 32,700 44,927
Total current liabilities 1,022,296 782,751
Net current assets 2,390,905 1,113,249
Total assets less current liabilities 3,801,107 2,802,815
Net assets 3,799,076 2,735,272
Equity
Share capital 18 1,994,886 1,704,272
Share premium account 18 10,856,854 9,525,617
Other reserves 19 2,437,108 2,399,764
Accumulated losses (11,489,772) (10,894,381)
Total equity 3,799,076 2,735,272
The above consolidated balance sheet should be read in conjunction with
accompanying notes
The financial statements of Cordel Group plc (company number 11098701 (England
and Wales)) were approved by the Board of Directors and authorised for issue
on 24 October 2023.
They were signed on its behalf by:
___________________________
___________________________
Ian
Buddery
John Davis
Chairman
Director
24 October 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Share Share premium Other Accumulated Total equity
capital account reserves losses
£ £ £ £ £
Balance at 1 July 2021 1,687,661 9,520,634 2,418,596 (9,784,991) 3,841,900
Loss after income tax expense for the year - - - (1,200,693) (1,200,693)
Other comprehensive income for the year, net of tax - - (18,832) 4,330 (14,502)
Prior year adjustment 86,973 86,973
Total comprehensive income for the year - - (18,832) (1,109,390) (1,128,222)
Share issue 16,611 4,983 - - 21,594
1,704,272 9,525,617 2,399,764 (10,894,381) 2,735,272
Balance at 30 June 2022
v The share premium account is used to recognise the difference between the
issued share capital at nominal value and the capital received, net of
transaction costs.
Share Share premium Other Accumulated Total equity
capital account reserves losses
£ £ £ £ £
Balance at 1 July 2022 1,704,272 9,525,617 2,399,764 (10,894,381) 2,735,272
Loss after income tax expense for the year - - - (598,150) (598,150)
Other comprehensive income for the year, net of tax - - 37,344 2,759 40,103
Total comprehensive income for the year - - 37,344 (595,391) (558,047)
Share issue 290,614 1,331,237 - - 1,621,851
Balance at 30 June 2023 1,994,886 10,856,854 2,437,108 (11,489,772) 3,799,076
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Note 2023 2022
£ £
Cash flows from operating activities
Loss before income tax expense for the year (465,584) (1,204,774)
Adjustments for:
Depreciation and amortisation 117,302 166,797
Loss/(Gain) on disposal of equipment (36,423) 11,880
Foreign exchange differences 15,136 (5,436)
Share option reserve 57,360 65,378
Interest received (46) (12)
Interest and other finance costs 16,819 14,398
(295,436) (951,769)
Change in operating assets and liabilities:
Decrease/(increase) in inventories 103,159 (56,787)
Decrease/(increase) in trade and other receivables (676,561) (277,663)
(Decrease)/increase in trade and other payables 81,920 240,056
(Decrease)/increase in other liabilities 169,852 20,346
(617,066) (1,025,817)
Interest received 46 12
Interest and other finance costs paid (12,133) (3,464)
Net cash used in operating activities (629,153) (1,029,269)
Cash flows from investing activities
Proceeds from disposal of fixed asset 69,422 12,491
Payments for plant and equipment (60,809) (160,240)
Net cash used in investing activities 8,613 (147,748)
Cash flows from financing activities
Proceeds from issue of shares 1,725,066 21,595
Cash payments for leases (37,650) (50,732)
Interest on lease payments (4,685) (10,934)
Transaction costs on issue of shares (103,214) -
Net cash from financing activities 1,579,517 (40,071)
Net (decrease)/increase in cash and cash equivalents 958,977 (1,217,088)
Cash and cash equivalents at the beginning of the financial year 339,665 1,538,150
Effects of exchange rate changes on cash and cash equivalents (15,179) 18,603
Cash and cash equivalents at the end of the financial year 1,283,463 339,665
The above consolidated statement of cash flows should be read in conjunction
with the accompanying notes
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. GENERAL INFORMATION
Cordel Group plc is a public company, registered in England and Wales and
listed on the Alternative Investment Market ('AIM'). The company's registered
number and registered office can be found on the General Information page.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of Cordel Group plc have been prepared in accordance
with UK adopted International Accounting Standards and with requirements of
the Companies Act 2006 as applicable to companies reporting under those
standards. The financial statements have been prepared under the historical
cost convention, with the exception of financial instruments as set out below,
and are presented in pound sterling, which is also the company's functional
currency.
The following principal accounting policies have been applied consistently in
dealing with items which are considered material in relation to the financial
statements. These policies have been consistently applied to all the years
presented, unless otherwise stated.
The preparation of the consolidated financial statements requires the use of
certain critical accounting estimates. It also requires management to exercise
its judgement in the process of applying the Group's and Company's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Going concern
The financial statements have been prepared assuming the Group will continue
as a going concern. Under the going concern assumption, an entity is
ordinarily viewed as continuing in business for the foreseeable future.
The directors have considered the Group's existing working capital, contracted
revenue and pipeline of opportunities and are of the opinion that the Group
has adequate resources to undertake its planned programme of activities for
the 12 months and one day from the date of approval of these financial
statements.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities
of all subsidiaries of Cordel Group plc as at the balance sheet dates
presented and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions
between entities in the Group are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
The acquisition of common control subsidiaries is accounted for at book value.
The acquisition of other subsidiaries is accounted for using the acquisition
method of accounting. A change in ownership interest, without the loss of
control, is accounted for as an equity transaction, where the difference
between the
consideration transferred and the book value of the share of the
non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets
including goodwill, liabilities and non-controlling interest in the subsidiary
together with any cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received and the fair
value of any investment retained together with any gain or loss in profit or
loss.
Operating segments
Operating segments are presented using the 'management approach', where the
information presented is on the same basis as the internal reports provided to
the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The consolidated financial statements are presented in Pound Sterling, which
is Cordel Group plc's functional currency.
Foreign currency transactions
Foreign currency transactions are translated into Pound Sterling using the
exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from
the translation at financial year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in profit or
loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Pound
Sterling using the exchange rates at the reporting date. The revenues and
expenses of foreign operations are translated into Pound Sterling
using the average exchange rates, which approximate the rates at the dates of
the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency
reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign
operation or net investment is disposed of.
Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which
the Group is expected to be entitled in exchange for transferring goods or
services to a customer. For each contract with a customer, the Group:
identifies the contract with a customer; identifies the performance
obligations in the contract; determines the transaction price which takes into
account estimates of variable consideration and the time value of money;
allocates the transaction price to the separate performance obligations on the
basis of the relative stand-alone selling price of each distinct good or
service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner that depicts
the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects
concessions provided to the customer such as discounts, rebates and refunds,
any potential bonuses receivable from the customer and any other contingent
events. Such estimates are determined using either the 'expected value' or
'most likely amount' method. The measurement of variable consideration is
subject to a constraining principle whereby revenue will only be recognised to
the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur.
The measurement constraint continues until the uncertainty associated with the
variable consideration is subsequently resolved. Amounts received that are
subject to the constraining principle are recognised as a refund liability.
Revenue is not recognised in line with when the revenue is received. Revenue
is received prior to the delivery of a good or service.
Grants from government
Grants from government are recognised at their fair value where there is a
reasonable assurance that the grant will be received, and the Group will
comply, with all attached conditions. Government grants which
represent compensation for expenses or losses already incurred are included in
other income in the profit or loss statement in the year in which the expenses
or losses were incurred.
Interest income
Interest income is recognised as interest accrues using the effective interest
method. This is a method of calculating the amortised cost of a financial
asset and allocating the interest income over the relevant period using the
effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other income
Other income is recognised when it is received or when the right to receive
payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that
period's taxable income based on the applicable income tax rate for each
jurisdiction, adjusted by the changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and the adjustment
recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences
at the tax rates expected to be applied when the assets are recovered or
liabilities are settled, based on those tax rates that are enacted or
substantively enacted, except for:
· When the deferred income tax asset or liability arises from the
initial recognition of goodwill or an asset or liability in a transaction that
is not a business combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
· When the taxable temporary difference is associated with
interests in subsidiaries, associates or joint ventures, and the timing of the
reversal can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets is
reviewed at each reporting date. Deferred tax assets recognised are reduced to
the extent that it is no longer probable that future taxable profits will be
available for the carrying amount to be recovered. Previously unrecognised
deferred
tax assets are recognised to the extent that it is probable that there are
future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally
enforceable right to offset current tax assets against current tax liabilities
and deferred tax assets against deferred tax liabilities; and they
relate to the same taxable authority on either the same taxable entity or
different taxable entities which
intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the balance sheet based on current and
non-current classification.
An asset is classified as current when: it is either expected to be realised
or intended to be sold or consumed in the Group's normal operating cycle; it
is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash
equivalent unless restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting period. All other assets
are classified as non-current.
A liability is classified as current when: it is either expected to be settled
in the Group's normal operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within 12 months after the reporting
period; or there is no unconditional right to defer the settlement of the
liability for at least 12 months after the reporting period. All other
liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of
changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest method, less any
provision for impairment. Trade receivables are generally due for settlement
within 30 days.
The Group has applied the simplified approach to measuring expected credit
losses, which uses a lifetime expected loss allowance. To measure the expected
credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for
expected credit losses.
Contract assets
Contract assets are recognised when the Group has transferred goods or
services to the customer but where the Group is yet to establish an
unconditional right to consideration. Contract assets are treated as financial
assets for impairment purposes.
Plant and equipment
Equipment is stated at historical cost less accumulated depreciation and
impairment. Historical cost includes expenditure that is directly attributable
to the acquisition of the items.
Depreciation is calculated on a straight-line/diminishing value basis to write
off the depreciable amount of each item of equipment over their expected
useful lives as follows:
Office
equipment
2 years straight line
Furniture and
fixtures
2 years straight line
Leasehold
improvements
4 years straight line
Flight
equipment
2 years straight line
Motor
vehicles
8 years diminishing value
The residual values, useful lives and depreciation methods are reviewed, and
adjusted if appropriate, at each reporting date.
Equipment under leases are depreciated over the unexpired period of the lease
or the estimated useful life of the assets, whichever is shorter.
An item of equipment is derecognised upon disposal or when there is no future
economic benefit to the Group. Gains and losses between the carrying amount
and the disposal proceeds are taken to profit or loss.
Inventories
Inventories are measured at the lower of cost and net realisable value. The
cost of manufactured products includes direct part costs. Net realisable value
is estimated selling price in the ordinary course of business, less estimated
costs of completion and the estimated costs necessary to make the sale.
Intangible assets
Intangible assets acquired as part of a business combination, are initially
measured at their fair value at the date of the acquisition. Intangible assets
acquired separately are initially recognised at cost. Finite life intangible
assets are subsequently measured at cost less amortisation and any impairment.
The gains or losses recognised in profit or loss arising from the
derecognition of intangible assets are measured as the difference between net
disposal proceeds and the carrying amount of the intangible asset. The
amortisation method and useful lives of finite life intangible assets are
reviewed annually. Changes in the expected pattern of consumption or useful
life are accounted for prospectively by changing the amortisation method or
period.
An annual impairment review is conducted to assess whether the goodwill
recognised in respect of acquisition accounting is in need of impairment. The
Directors have reviewed and endorsed a Strategic Business and Financial Plan
prepared by the Management Team for the next 2-3 years. Based on those
assumptions and forecasts, the Directors believe that at this stage the
Goodwill from the Corridor Holdings acquisition (previously Airsight Holdings)
has an indefinite life.
Software
Significant costs associated with purchased software are deferred and
amortised on a reducing balance basis over the period of their expected
benefit, being their finite useful life of two years.
Research and development
Research costs are expensed in the period in which they are incurred.
Development costs are capitalised when it is probable that the project will be
a success considering its commercial and technical feasibility; the Group is
able to use or sell the asset; the Group has sufficient resources; and intent
to complete the development and its costs can be measured reliably.
Capitalised development costs are amortised on a straight-line basis over
the period of their expected benefit. Amortisation commences when the asset is
available for use, i.e. when it is in the location and condition necessary for
it to be capable of operating in the manner intended by management.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised at the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of
disposal and value-in-use. The value-in-use is the present value of the
estimated future cash flows relating to the asset using a pre-tax discount
rate specific to the asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped together to form a
cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the
Group prior to the end of the financial year and which are unpaid. Due to
their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of
recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or
services to a customer and are recognised when a customer pays consideration,
or when the Group recognises a receivable to reflect its unconditional right
to consideration (whichever is earlier) before the Group has transferred the
goods or services to the customer.
Employee benefits
Pension costs and other post-retirement benefits
The company operates a defined contribution pension scheme. Contributions
payable to the company's pension scheme are charged to profit or loss in the
period to which they relate.
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual
leave and long service leave expected to be settled wholly within 12 months of
the reporting date are measured at the amounts expected to be paid when the
liabilities are settled.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that
are provided to employees in exchange for the rendering of services.
The cost of equity-settled transactions is measured at fair value on grant
date. Fair value is independently determined using either the Binomial or
Black-Scholes option pricing model that takes into account the exercise price,
the term of the option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together
with non-vesting conditions that do not determine whether the Group receives
the services that entitle the employees to receive payment. No account is
taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a
corresponding increase in equity over the vesting period. The cumulative
charge to profit or loss is calculated based on the grant date fair value of
the award, the best estimate of the number of awards that are likely to be
exercised after allowing for forfeiture rates, and the expired portion of the
vesting period. The amount recognised in profit or loss for the period is the
cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in determining fair value.
Therefore, any awards subject to market conditions are considered to vest
irrespective of whether or not that market condition has been met, provided
all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised
as if the modification has not been made. An additional expense is recognised,
over the remaining vesting period, for any modification that increases the
total fair value of the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the Group or employee,
the failure to satisfy the condition is treated as a cancellation. If the
condition is not within the control of the Group or employee and is not
satisfied during the vesting period, any remaining expense for the award is
recognised over the remaining vesting period, unless the award is forfeited.
If an equity-settled award is cancelled, it is treated as if it has vested on
the date of cancellation, and any remaining expense is recognised immediately.
If a new replacement award is substituted for the cancelled award, the
cancelled and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair
value for recognition or disclosure purposes, the fair value is based on the
price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date; and assumes that the transaction will take place either: in
the principal market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming they act in their economic
best interests. For non-financial assets, the fair value measurement is based
on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair
value, are used, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three
levels, using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. Classifications are reviewed at each
reporting date and transfers between levels are determined based on a
reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may
be used when internal expertise is either not available or when the valuation
is deemed to be significant. External valuers are selected based on market
knowledge and reputation. Where there is a significant change in fair value of
an asset or liability from one period to another, an analysis is undertaken,
which includes a verification of the major inputs applied in the latest
valuation and a comparison, where applicable, with external sources of data.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown
in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year.
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
the owners of Cordel Group plc, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary
shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account the after income tax effect of
interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued
for no consideration in relation to dilutive potential ordinary shares.
Value-Added Tax ('VAT')/Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated
VAT/GST, unless the VAT/GST incurred is not recoverable from the tax
authority. In this case it is recognised as part of the cost of the
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of VAT/GST
receivable or payable. The net amount of VAT/GST recoverable from, or payable
to, the tax authority is included in other receivables or other payables in
the balance sheet.
Cash flows are presented on a gross basis. The VAT/GST components of cash
flows arising from investing or financing activities which are recoverable
from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of VAT/GST
recoverable from, or payable to, the tax authority.
Leases
The Group assesses at contract inception whether a contract is, or contains, a
lease, that is if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all
leases, except for short-term leases and leases of low-value assets. The Group
recognises lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
Right-of-use assets
The Group recognises right-of-use assets at the commitment date of the lease
(i.e. the date the underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation and impairment losses,
and adjusted for any measurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the shorter
of the lease term and estimated useful life of the assets, as follows:
Property
10 years
If ownership of the leased asset transfers to the Group at the end of the
lease term or the cost reflects the exercise of a purchased option,
depreciation is calculated using the estimated useful life of the asset.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating the lease, if the lease terms reflects the Group
exercising the option to terminate. Variable lease payments that do not depend
on an index or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the
interest rate implicit in the lease. After the commencement date, the amount
of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in the lease
term, a change in the lease payments (e.g., changes to future payments
resulting from a change in an index or rate used to determine such lease
payments) or a change in the assessment of an option to purchase the
underlying asset.
The Group's lease liabilities are presented separately in the statement of
financial position.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term
leases of machinery and equipment (i.e., those leases that have a lease term
of 12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition exemption
to leases of office equipment that are considered to be of low value. Lease
payments on short-term leases and leases of low-value assets are recognised as
an expense on a straight-line basis over the lease term.
A depreciation charge for the leased asset and an interest expense on the
lease liability is recognised in the profit and loss in accordance with IFRS
16. For classification within the statement of cash flows, the lease payments
are separated into both a principal (financing activities) and interest
(either operating or financing activities) component.
Cashflow statement
The cash flow statement is prepared under the indirect method.
Critical accounting estimates and judgements
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts in the
financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements, estimates and assumptions on
historical experience and on other various factors, including expectations of
future events, management believes to be reasonable under the circumstances.
The resulting accounting judgements and estimates will seldom equal the
related actual results.
The accounting judgements, estimates and assumptions that have a significant
risk of causing an adjustment to the carrying amounts of assets and
liabilities (refer to the respective notes) within the next financial year are
discussed below.
a) Revenue recognition where contracts are in progress
In accordance with the revenue recognition policy detailed in note 2, in
measuring revenue relating to fixed agreements the Group measures the stage of
completion with reference to costs incurred and the total costs estimated for
each contract. The total estimated costs for each contract are reviewed
monthly to ascertain the current stage of completion and requires reasonable
judgments to be made. Judgement includes allocating transaction prices to each
of the performance obligations.
b) Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value is determined by using the Binomial or
Black-Scholes model taking into account the terms and conditions upon which
the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting
period but may impact profit or loss and equity. Refer to note 32 for
valuation model inputs.
NOTE 3. REVENUE
Segmental analysis
Identification of reportable operating segments
The Group operates in one segment being provision of data integration and
analytic services. This operating segment is based on the internal reports
that are reviewed and used by the Board of Directors (who are identified as
the Chief Operating Decision Makers ('CODM')) in assessing performance and in
determining the allocation of resources.
The operating segment information is the same information as provided
throughout the consolidated financial statements and are therefore not
duplicated. Given the research and development expenditure for all types of
product, the board have determined that reportable operating segments would be
too difficult to determine.
Major customers
There are 3 customers contributing external revenue of more than 10% amounting
to £1,123,449, £968,782 and £576,671 (2022: 3 customers amounting to
£468,343, £460,240 and £392,951).
Revenue by geographical area
Revenue from the principal activities of the Group is attributable to the
following geographical areas:
2023 2022
£ £
United Kingdom 1,545,453 976,650
Australia/New Zealand 318,412 937,852
United States of America 1,182,631 135,542
Canada - 51,741
Asia - 170,898
Total revenue 3,046,496 2,272,683
Contract revenue by product
2023 2022
£ £
Airsight - 329,343
Nextcore 117,867 438,197
Cordel 2,928,629 1,505,143
3,046,496 2,272,683
NOTE 4. OTHER INCOME
2023 2022
£ £
Government grants and rebates 372,172 587,934
Other income 36,584 8,831
408,756 596,765
NOTE 5. STAFF COSTS AND KEY MANAGEMENT PERSONNEL
Total staff costs were as follows:
2023 2022
£ £
Wages 2,098,081 1,899,045
Social security costs 68,477 88,503
Other pension costs 143,468 138,383
Share-based payments 57,359 65,377
2,367,385 2,191,308
Included in other creditors at the period end there was unpaid pension costs
of £9,465 (2022: £10,853).
The average number of employees during the year was as follows:
2023 2022
Sales and marketing 4 5
Technical 17 23
Finance and administration 6 3
Average number of employees 27 31
Details of directors' remuneration is set out below:
The total remuneration in respect of the year ended 30 June 2023 and paid to
each director who held office during the year as follows:
Salary and fees Share option charge Bonus Post-employment benefits 2023 2022
£ £ £ £ £ £
Non-Executive Directors:
Ian Buddery 67,039 - - - 67,039 66,264
Jonathan Macleod 32,612 - - 4,546 37,158 35,946
Nicholas McInnes 35,750 - - - 35,750 38,195
Executive Directors:
Aaron Hoye 89,188 - - 9,365 98,553 17,549
Nicholas Smith 67,415 - - - 67,415 112,423
John Davis 57,664 1,347 - 1,397 60,408 39,140
Robert Lojszczyk 56,924 - - 5,977 62,901 88,651
Thouraya Walker 22,500 397 - 1,125 24,022 -
Total directors' remuneration 429,092 1,744 - 22,410 453,246 398,168
Number of directors accruing benefits under money purchase schemes in respect
of qualifying services were four (2022: four).
No directors exercised share options in the year ended 30 June 2023 (2022:
one).
NOTE 6. EBITDA RECONCILIATION (EARNINGS BEFORE INTEREST EXPENSE, TAXATION,
DEPRECIATION AND AMORTISATION)
2023 2022
£ £
EBITDA reconciliation
Loss before income tax (465,584) (1,204,774)
Less: Interest revenue (46) (12)
Add: Interest expense 16,819 14,398
Add: Depreciation and amortisation 117,302 166,797
EBITDA (331,509) (1,023,591)
Underlying EBITDA represents EBITDA adjusted for significant, unusual and
other one-off items.
2023 2022
£ £
Underlying EBITDA reconciliation
EBITDA and Underlying EBITDA (331,509) (1,023,591)
Details of directors' remuneration is set out below:
The total remuneration in respect of the year ended 30 June 2023 and paid to
each director who held office during the year as follows:
Salary and fees
Share option charge
Bonus
Post-employment benefits
2023
2022
£
£
£
£
£
£
Non-Executive Directors:
Ian Buddery
67,039
-
-
-
67,039
66,264
Jonathan Macleod
32,612
-
-
4,546
37,158
35,946
Nicholas McInnes
35,750
-
-
-
35,750
38,195
Executive Directors:
Aaron Hoye
89,188
-
-
9,365
98,553
17,549
Nicholas Smith
67,415
-
-
-
67,415
112,423
John Davis
57,664
1,347
-
1,397
60,408
39,140
Robert Lojszczyk
56,924
-
-
5,977
62,901
88,651
Thouraya Walker
22,500
397
-
1,125
24,022
-
Total directors' remuneration
429,092
1,744
-
22,410
453,246
398,168
Number of directors accruing benefits under money purchase schemes in respect
of qualifying services were four (2022: four).
No directors exercised share options in the year ended 30 June 2023 (2022:
one).
NOTE 6. EBITDA RECONCILIATION (EARNINGS BEFORE INTEREST EXPENSE, TAXATION,
DEPRECIATION AND AMORTISATION)
2023 2022
£ £
EBITDA reconciliation
Loss before income tax (465,584) (1,204,774)
Less: Interest revenue (46) (12)
Add: Interest expense 16,819 14,398
Add: Depreciation and amortisation 117,302 166,797
EBITDA (331,509) (1,023,591)
Underlying EBITDA represents EBITDA adjusted for significant, unusual and
other one-off items.
2023 2022
£ £
Underlying EBITDA reconciliation
EBITDA and Underlying EBITDA (331,509) (1,023,591)
The financial statements include both the statutory financial statements and
additional performance measures of EBITDA and Underlying EBITDA. The
directors believe these additional measures provide useful information on the
underlying trend in operational performance going forward without these
unusual and other one-off items.
NOTE 7. LOSS BEFORE TAX
Loss before income tax stated after charging/(crediting):
2023 2022
£ £
Depreciation - owned assets 84,824 118,976
Depreciation - right of use assets 32,478 47,821
Profit/loss on disposal of property, plant and equipment (36,423) 8,465
Fees attributable to the auditors of the parent company
- audit of the group 72,000 40,000
- other services 1,819 6,896
NOTE 8. INCOME TAX
2023 2022
£ £
Income tax expense
Adjustment recognised for prior periods - -
Aggregate income tax expense 132,566 4,081
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense (465,584) (1,204,774)
Tax at the statutory tax rate of 23% (2022: 23%) (86,161) (270,330)
Tax effect amounts which are not deductible/(taxable) in calculating taxable
income:
Research and development expenditure, net of tax credits 115,025 180,546
Income not taxable - (8,952)
Capital allowances in excess of depreciation (2,533) (3,688)
Other items 8,209 11,325
Current year tax losses not recognised 98,026 87,018
Income tax expense 132,566 (4,081)
Tax at the statutory tax rate represents the effective rate of income tax
across the jurisdictions in which each of the Group entities are domiciled.
The tax rates of the main jurisdictions are Australia 25% (2022: 25%), United
Kingdom 19.0% (2022: 19.0%), United States of America 21.0% (2022: 21.0%).
2023 2022
£ £
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised 3,013,644 2,334,006
Potential deferred tax asset at domestic tax rates applicable in the countries 572,592 443,461
concerned
The above potential tax benefit for tax losses has not been recognised in the
balance sheet due to a lack of certainty as to when the losses will reverse. A
deferred tax asset has been recognised on losses which are expected to reverse
of £101,148.
There are no other deferred tax assets/liabilities other than losses mentioned
above.
NOTE 9. DIVIDENDS
There were no dividends paid, recommended or declared during the current or
prior financial years.
NOTE 10. EARNINGS PER SHARE
2023 2022
£ £
Loss after income tax (598,150) (1,200,693)
Non-controlling interest - -
Loss after income tax attributable to the owners of Cordel Group plc (598,150) (1,200,693)
Number Number
Weighted average number of ordinary shares used in calculating basic earnings 199,488,614 170,427,186
per share
Weighted average number of ordinary shares used in calculating diluted 199,488,614 170,427,186
earnings per share
Pence Pence
Basic earnings per share (0.30) (0.70)
Diluted earnings per share (0.30) (0.70)
NOTE 11. GOODWILL
2023 2022
£ £
Goodwill 1,223,403 1,223,403
1,223,403 1,223,403
The goodwill was recognised in the year ended 30 June 2020 and no impairments
have been recognised to date.
NOTE 12. RIGHT TO USE ASSET
2023 2022
£ £
Right of Use Assets 168,937 212,111
Less: Accumulated depreciation (140,079) (113,268)
28,858 98,843
The £168,937 right of use assets represents the costs of prior year assets
brought forward, additions of £1,991 and disposals of £45,165. The £140,079
depreciation represents accumulated depreciation brought forward, £32,478 of
depreciation charged in the year, accumulated depreciation disposed of
£12,975, and an exchange rate difference of £7,308.
Right-of-use assets related to leased properties that do not meet the
definition of investment property are presented as property, plant and
equipment.
The Group leases premises with a lease term of 5 years ending 29 May 2024.
There is no option to purchase and there are no variable payments.
Cost Depreciation Depreciation Eliminated Exchange Carrying
b/fwd Additions Disposals b/fwd amount c/fwd
212,111 1,991 (45,165) (113,268) (32,478) 12,975 (7,308) 28,858
NOTE 13. PROPERTY, PLANT AND EQUIPMENT
Leasehold Office Furniture and Motor Flight R&D
improvements equipment fixtures Vehicles equipment assets Total
£ £ £ £ £ £ £
Balance at 30 June 2022 10,571 23,128 43,400 7,741 44,154 3,484 132,478
Additions 2,105 4,699 - - 43,224 8,790 58,818
Disposals - (16,620) (657) (10,376) (157,554) (5,956) (191,163)
Exchange differences (398) (379) 1,511 (224) (269) (256) (15)
Depreciation disposed - 14,178 60 7,398 132,037 4,905 158,578
Depreciation expense (5,542) (11,228) (30,433) (1,291) (32,095) (4,235) (84,824)
Balance at 30 June 2023 6,736 13,778 13,881 3,248 29,497 6,732 73,872
Non-current assets by geographical location
All property plant and equipment is located in Australia other than office
equipment with a net book value of £1,035 and Cordel units of £9,655 which
are located in the United Kingdom and equipment with a net book value of
£2,060 and Cordel units of £2,176 which are located in the United States of
America.
NOTE 14. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and
results of the following subsidiaries held by the Company in accordance with
the accounting policy described in note 2:
Name Address and country of incorporation Holding %
Maestrano Pty Ltd 2/2 Frost Drive, Mayfield West NSW 2304, Australia 100%
Cordel Limited 10 John Street, London WC 1N 2EB United Kingdom 100%
Cordel Technology Inc. 1734 E. Boston Street, Suite 103, Gilbert AZ 85295, United States of America 100%
Corridor Holdings Pty Ltd 2/2 Frost Drive, Mayfield West NSW 2304, Australia 100%
Cordel Pty Ltd 2/2 Frost Drive, Mayfield West NSW 2304, Australia 100%
Airsight Australia Pty Ltd 2/2 Frost Drive, Mayfield West NSW 2304, Australia 100%
NOTE 15. INVENTORIES
2023 2022
£ £
Inventories 143,781 246,940
143,781 246,940
The amount of inventories expensed during the period was £284,524 (2022:
£400,694).
NOTE 16. TRADE AND OTHER RECEIVABLES
2023 2022
£ £
Trade receivables 1,389,987 640,598
R&D tax offset refundable 332,021 554,413
Prepayments 242,250 114,384
Other receivables 21,698 -
1,985,956 1,309,395
Allowance for expected credit losses
The Group has recognised a loss of £nil (2022: £nil) in profit or loss in
respect of the expected credit losses for the year ended 30 June 2023. The
ageing of the receivables and allowance for expected credit losses provided
for above are as follows:
Expected credit loss rate Carrying amount Allowance for expected credit losses
2023 2022 2023 2022 2023 2022
% % £ £ £ £
Not overdue - - 1,314,566 540,280 - -
0 to 3 months overdue - - 75,421 100,318 - -
3 to 6 months overdue - - - - - -
Over 6 months overdue - - - - - -
1,389,987 640,598 - -
The Company has virtually no experience of bad debts and credit losses and the
directors do not expect any future credit losses to arise as contracts come to
termination and as a result no expected credit loss provision was recorded as
it was deemed immaterial.
NOTE 17. TRADE AND OTHER PAYABLES
2023 2022
£ £
Trade payables 240,697 386,381
Accrued expenses 314,960 151,498
Other payables 106,503 42,361
662,160 580,240
Refer to note 21 for further information on financial instruments.
There were no contract liabilities as at 30 June 2023 or 30 June 2022.
The carrying amounts of trade and other receivables and trade and other
payables approximate their fair values due to their short-term nature.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to
continue as a going concern, so that it can provide returns for shareholders
and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the balance sheet, plus
net debt. Net debt is calculated as total borrowings less cash and cash
equivalents. If net debt is negative, then the net debt adjustment is limited
to zero.
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a
business or company is seen as value adding relative to the current Company's
share price at the time of the investment. The Group is not actively pursuing
additional investments in the short term as it continues to integrate and grow
its existing businesses in order to maximise synergies.
The Group is not subject to any financing arrangement covenants and there have
been no events of default on the financing arrangements during the financial
year.
The capital risk management policy remains unchanged throughout the periods
presented.
NOTE 18. CALLED UP SHARE CAPITAL
2023 2022 2023 2022
Shares Shares £ £
Ordinary shares of £0.01 each - issued and fully paid 199,488,614 170,427,186 1,994,886 1,704,272
During the year the company issued 29,061,428 ordinary £0.01 shares with a
total nominal value of £290,614. Total consideration of £1,624,851 was
received which resulted in a share premium of £1,331,237.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the
proceeds on the winding up of the Company in proportion to the number of and
amounts paid on the shares held. The Company does not have a limited amount of
authorised capital.
On a show of hands every member present at a meeting in person or by proxy
shall have one vote and upon a poll each share shall have one vote.
NOTE 19. RESERVES
Accumulated losses represent the total losses incurred by the group to date.
Share premium is the premium paid on shares purchased in the company.
Other reserves in the balance sheet comprise the following:
2023 2022
£ £
Foreign currency reserve 361,471 378,728
Share option reserve 185,797 131,196
Capital reorganisation reserve 1,889,840 1,889,840
2,437,108 2,399,764
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the
translation of the financial statements of foreign operations to Pound
sterling.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to
employees and directors as part of their remuneration, and other parties as
part of their compensation for services.
Capital reorganisation reserve
The Group is a continuation of the original Maestrano Pty Limited group.
Cordel Group plc has therefore recorded the net assets of Maestrano Pty
Limited group at their historic carrying value at the date of acquisition as a
capital reorganisation. The reserve is used to recognise the difference
between the shares issued to affect the transaction (£200,000) and the share
capital acquired (£2,089,840).
NOTE 20. SHARE-BASED PAYMENTS
A share option plan has been established by the Group and approved by
shareholders at a general meeting, whereby the Group may, at the discretion of
the Board of Directors, grant options over equity settled ordinary shares in
the Company to certain key management personnel of the Group. The options are
issued for nil consideration and are granted in accordance with performance
guidelines established by the Board of Directors.
All options vest over a period no longer than five years and may have other
vesting conditions. Options expire when an employee ceases to be employed or
contracted by a Group company unless the Board in its discretion allows the
employee to retain all or some of their options. Options do not have a fixed
expiry date.
The share-based payment expense for the financial year was recorded as
£57,359 (2022: £65,378).
The fair value of the options granted was calculated using the Black Scholes
Model with the below inputs:
Date granted Fair value Weighted average share price Exercise price Expected volatility Risk-free interest rate Vesting period
£ £ £ years
01/07/2019 0.00369 0.01 0.013 50% 1.0% 2
01/07/2019 0.00449 0.01 0.013 50% 1.0% 3
13/03/2020 0.00863 0.01 0.020 80% 0.5% 2
17/04/2020 0.00563 0.01 0.018 80% 0.5% 1
04/05/2020 0.00979 0.01 0.019 80% 0.5% 3
03/11/2020 0.04879 0.01 0.100 75% 0.5% 3
24/11/2020 0.04879 0.01 0.100 75% 0.5% 3
10/08/2021 0.03922 0.01 0.125 45% 1.0% 3
30/11/2021 0.04416 0.01 0.125 50% 1.0% 3
20/07/2022 0.00150 0.01 0.125 35% 2.0% 2
20/07/2022 0.00590 0.01 0.083 35% 2.0% 4.5
11/11/2022 0.01770 0.01 0.070 47% 3.0% 2
17/03/2023 0.02760 0.01 0.083 47% 3.0% 5
03/04/2023 0.02680 0.01 0.063 45% 3.0% 5
26/04/2023 0.02300 0.01 0.0675 45% 3.0% 3
24/05/2023 0.02000 0.01 0.060 45% 3.0% 3
The volatility was calculated using the entity's share price over the previous
12 months and the valuations were undertaken by an independent organisation.
The following table summarises the movements in share options during the year:
2023 2022
No. of options Weighted average exercise price No. of options Weighted average exercise price
Outstanding at beginning of year 11,703,611 0.041 12,964,722 0.038
Granted 4,120,000 0.077 400,000 0.125
Exercised (490,000) 0.018 (1,661,111) 0.012
Forfeited (333,333) 0.010 - -
Outstanding at end of year 15,000,278 0.035 11,703,611 0.041
Exercisable at end of year 11,202,539 0.021 9,487,629 0.041
The weighted average remaining contractual life of options outstanding at the
end of the financial year was 2.30 (2022: 1.77 years).
There is no agreement in place between the Company and its employees for the
Company to pay taxes on behalf of its employees. The company will be liable
for employer's National Insurance due.
NOTE 21. FINANCIAL INSTRUMENTS
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk
(including foreign currency risk, price risk and interest rate risk), credit
risk and liquidity risk. The Group's overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Group. The Group uses
different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate and
foreign exchange risks and ageing analysis for credit risk.
Risk management is carried out by senior finance executives ('finance') under
policies approved by the Board of Directors ('the Board'). These policies
include identification and analysis of the risk exposure of the Group and
appropriate procedures, controls and risk limits. Finance identifies and
evaluates financial risks within the Group's operating units. Finance reports
to the Board on a regular basis.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and
is exposed to foreign currency risk through foreign exchange rate
fluctuations.
Foreign exchange risk arises from future commercial transactions and
recognised financial assets and financial liabilities denominated in a
currency that is not the entity's functional currency. The risk is measured
using sensitivity analysis and cash flow forecasting.
The Group had net assets denominated in foreign currencies of £1,271,982 as
at 30 June 2023 (2022: £972,548). Based on this exposure, had the Pound
sterling weakened by 10% / strengthened by 10% against these foreign
currencies with all other variables held constant, the Group's profit before
tax for the year would have been £127,198 lower / £127,198 higher (2022:
£97,255 lower / £97,255 higher). The actual foreign exchange loss for the
year ended 30 June 2023 was £15,136 (2022: gain of £5,436).
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group is not exposed to any significant interest rate risk. Most of the
cash and cash equivalents are held in banks in the UK where the current
interest rate is negligible and unlikely to fluctuate in the foreseeable
future.
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group
has a strict code of credit and setting appropriate credit limits. The maximum
exposure to credit risk at the reporting date to recognised financial assets
is the gross carrying amount, as disclosed in the balance sheet and notes to
the financial statements. The Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating
expected credit losses to trade receivables through the use of a provisions
matrix using fixed rates of credit loss provisioning. These provisions are
considered representative across all customers of the Group based on recent
sales experience, historical collection rates and forward-looking information
that is available.
Generally, trade receivables are written off when there is no reasonable
expectation of recovery. Indicators of this include the failure of a debtor to
engage in a repayment plan, no active enforcement activity and a failure to
make contractual payments for a period greater than 1 year.
Except for cash and cash equivalents, the Group has no other concentration of
credit risk exposure as at 30 June 2023 and 2022. No expected credit loss is
recorded for cash and cash equivalents as the Group and Company only deal with
at least "A" rated financial institutions.
Liquidity risk
Vigilant liquidity risk management requires the company to maintain sufficient
liquid assets (mainly cash and cash equivalents) to be able to pay debts as
and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves by
continuously monitoring actual and forecast cash flows and matching the
maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its
financial instrument liabilities. The tables have been drawn up based on the
undiscounted cash flows of financial liabilities based on the earliest date on
which the financial liabilities are required to be paid. The tables include
both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in
the balance sheet.
1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years Remaining contractual maturities
2023 £ £ £ £ £
Non-derivatives
Non-interest bearing
Trade payables 240,697 - - - 240,697
Other payables 106,503 - - - 106,503
Total non-derivatives 347,200 - - - 347,200
1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years Remaining contractual maturities
2022 £ £ £ £ £
Non-derivatives
Non-interest bearing
Trade payables 386,381 - - - 386,381
Other payables 15,518 - - - 15,518
Total non-derivatives 401,899 - - - 401,899
The cash flows in the maturity analysis above are not expected to occur
significantly earlier than contractually disclosed above. The Group has more
than adequate cash reserves to meet the remaining contractual maturities.
The fair value of financial liabilities is estimated by discounting the
remaining contractual maturities at the current market interest rate that is
available for similar financial liabilities.
NOTE 22. LEASES
Lease liabilities
The following non-cancellable lease commitments existed at the period end:
2023 2022
£ £
0-1 Year 32,700 44,927
1-5 Years - 62,392
32,700 107,319
Included within current liabilities is a lease liability of £32,700 (2022:
£44,927). Included within non-current liabilities is a lease liability of
£Nil (2022: £62,392).
As at 30 June 2023 the Group had not committed to any further lease
liabilities that had not yet commenced.
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for short-term leases
(leases of expected term of 12 months or less) or for leases of low value
assets. Payments made under such leases are expensed on a straight-line basis.
The total cash outflow in respect of leases in the year was £37,650 and the
interest expense for leasing arrangements was £4,685 (2022: £10,934).
NOTE 23. RELATED PARTY TRANSACTIONS
Ultimate controlling party
There is no ultimate controlling party.
Key management personnel
Disclosures relating to key management personnel are set out in note 5.
Transactions with related parties
Ian Buddery was remunerated through his personal service company during the
year. Total amounts paid during the year ended 30 June 2023 were £67,039
(2021: £66,264) and these amounts are included within the directors'
remuneration shown in note 5.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at
the current and previous reporting dates.
Loans to/from related parties
There were no loans to or from related parties at the current and previous
reporting dates.
NOTE 24. EVENTS AFTER THE REPORTING PERIOD
No matter of circumstance has arisen since 30 June 2023 that has significantly
affected, or may significantly affect the Group's operations, the results of
those operations, or the Group's state of affairs in future financial years.
COMPANY BALANCE SHEET
AS AT 30 JUNE 2023
Note 2023 2022
£ £
Non-current assets
Investments 2 1,058,993 986,419
Total non-current assets 1,058,993 986,419
Current assets
Trade and other receivables 3 2,513,599 2,990,349
Cash and cash equivalents 1,116,178 5,546
Total current assets 3,629,777 2,995,895
Current liabilities
Trade and other payables 4 2,154,892 113,000
Total current liabilities 2,154,892 113,000
Net current assets 1,474,885 2,882,895
Total assets less current liabilities 2,533,878 3,869,314
Net assets 2,533,878 3,869,314
Equity
Share capital 5 1,994,886 1,704,272
Share premium account 5 10,856,854 9,525,617
Other reserves 6 241,209 229,760
Accumulated losses 6 (10,559,071) (7,590,335)
Total equity 2,533,878 3,869,314
The Company has taken advantage of the exemption under Section 408 of the
Companies Act from presenting its own profit and loss account. The loss for
the year to 30 June 2023 amounted to £2,971,495 (2022: £524,407).
The financial statements of Cordel Group plc (company number 11098701 (England
and Wales)) were approved by the Board of Directors and authorised for issue
on 24 October 2023.
They were signed on its behalf by:
Ian
Buddery
John Davis
Chairman
Director
24 October
2023
24 October 2023
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Share Share premium Other Accumulated Total equity
capital account reserves losses
£ £ £ £ £
Balance at 1 July 2021 1,687,661 9,520,634 31,769 (7,072,258) 4,167,806
Loss after income tax expense for the year - - - (524,407) (524,407)
Foreign currency translation - - 138,943 - 138,943
Share option charge - - 59,048 6,330 65,378
Total comprehensive income for the year - - 197,991 (518,077) (320,086)
Share issue 16,611 4,983 - - 21,594
1,704,272 9,525,617 229,760 (7,590,335) 3,869,314
Balance at 30 June 2022
Share Share premium Other Accumulated Total equity
capital account reserves losses
£ £ £ £ £
Balance at 1 July 2022 1,704,272 9,525,617 229,760 (7,590,335) 3,869,314
Loss after income tax expense for the year - - - (2,971,495) (2,971,495)
Foreign currency translation - - (43,151) - (43,151)
Share option charge - - 54,600 2,759 57,359
Total comprehensive income for the year - - 11,449 (2,968,736) (2,957,287)
Share issue 290,614 1,331,237 - - 1,621,851
1,994,886 10,856,854 241,209 (10,559,071) 2,533,878
Balance at 30 June 2023
NOTES TO THE COMPANY FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The parent company financial statements of Cordel Group plc have been prepared
in accordance with the Financial Report Standard 101 'Reduced Disclosure
Framework' (FRS 101) and the Companies Act 2006.
FRS 101 enables the financial statements of the Parent Company to be prepared
in accordance with IFRS but with certain disclosure exemptions. As permitted
by FRS 101, the Company has taken advantage of all of the disclosure
exemptions available to it, including (where applicable): statement of cash
flows, new Accounting Standards not yet mandatory, presentation of comparative
information for certain assets, impairment of assets, capital risk management,
financial instruments, fair value measurement, key management personnel,
related party transactions, business combinations and share-based payments.
The accounting policies adopted for the parent company are otherwise
consistent with those used for the group which are set out on pages 35 to 44.
NOTE 2. INVESTMENT IN SUBSIDIARY
Investment in subsidiary
Investment in subsidiary is shown at initial cost plus any subsequent
contributions, less accumulated impairment.
In a Group reorganisation, initial cost is measured at the carrying amount of
the Company's share of the equity items shown in the separate financial
statements of the original parent at the date of the reorganisation. If the
original parent has net liabilities, the initial cost is recognised as nil.
The difference between the capital contributed to effect the transaction and
the initial cost recognised as the investment in subsidiary is reflected as an
adjustment directly to the capital reorganisation reserve in equity.
2023 2022
£ £
Investment in Corridor Holdings Pty Ltd - 100% of issued capital held 1,001,249 986,419
Investment in Cordel Ltd - 100% of issued capital held 5,570 -
Investment in Cordel Technology Inc. - 100% of issued capital held 52,174
1,058,993 986,419
A full list of the subsidiaries controlled by the Company is disclosed in note
14 to the consolidated financial statements.
NOTE 3. TRADE AND OTHER RECEIVABLES
2023 2022
£ £
Receivable from controlled entities 2,453,772 2,947,426
Prepayments 47,773 37,866
Other receivables - representing VAT/GST 12,054 5,057
2,513,599 2,990,349
Interest is being charged on loans between the Australian entities at 5%.
Loans between other group entities and between Australian and non-Australian
group entities are interest free. The receivables from controlled entities are
repayable on demand. A receivable balance of £2,462,581 due from Corridor
Holdings Pty Ltd was written off in the year. Corridor Holdings Pty Ltd
remains operationally essential to the ongoing growth of the Group as a whole
but is not expected to be significantly cash generating in its own right in
the medium term. No expected credit loss provision is recorded on the
remaining receivable from the controlled entities as directors believe the
receivable from controlled entities will be fully recovered from cash
generated from revenue and operations.
NOTE 4. TRADE AND OTHER PAYABLES
2023 2022
£ £
Trade payables 63,096 23,000
Payable to controlled entities 1,972,281 -
Accrued expenses 119,515 90,000
2,154,892 113,000
NOTE 5. SHARE CAPITAL
2023 2022 2023 2022
Shares Shares £ £
Ordinary shares of £0.01 each - issued and fully paid 199,488,614 170,427,186 1,994,886 1,704,272
During the year the company issued 29,061,428 ordinary £0.01 shares with a
total nominal value of £290,614. Total consideration of £1,624,851 was
received which resulted in a share premium of £1,331,237.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the
proceeds on the winding up of the Company in proportion to the number of and
amounts paid on the shares held. The Company does not have a limited amount of
authorised capital.
On a show of hands every member present at a meeting in person or by proxy
shall have one vote and upon a poll each share shall have one vote.
NOTE 6. OTHER RESERVES
Accumulated losses represent the total losses incurred by the company since to
date its incorporation.
Share premium is the premium paid on shares purchased in the company.
Other reserves in the balance sheet comprise the following:
2023 2022
£ £
Foreign currency reserve 55,413 98,564
Share option reserve 185,796 131,196
241,209 229,760
NOTE 7. RELATED PARTY TRANSACTIONS
The following balances are outstanding at the reporting date in relation to
loans with related parties:
2023 2022
£ £
Current receivables:
Loans to commonly controlled entity 4,916,353 2,947,426
Amounts written off in the year (2,462,581) -
2,453,772 2,947,426
Current payables:
Loans from commonly controlled entity 1,972,281 -
Interest is being charged between the Australian entities at 5%. Loans between
other group entities and between Australian and non-Australian group entities
are interest free. The receivables from controlled entities are repayable on
demand. Details of related party transactions are provided in note 23 to the
consolidated financial statements.
A receivable balance of £2,462,581 due from Corridor Holdings Pty Ltd was
written off in the year. Corridor Holdings Pty Ltd remains operationally
essential to the ongoing growth of the Group as a whole but is not expected to
be significantly cash generating in its own right in the medium term.
NOTE 8. SHARE-BASED PAYMENTS
A share option plan has been established by the Group and approved by
shareholders at a general meeting, whereby the Group may, at the discretion of
the Board of Directors, grant options over equity settled ordinary shares in
the Company to certain key management personnel of the Group. The options are
issued for nil consideration and are granted in accordance with performance
guidelines established by the Board of Directors.
All options vest over a period no longer than five years and may have other
vesting conditions. Options expire when an employee ceases to be employed or
contracted by a Group company unless the Board in its discretion allows the
employee to retain all or some of their options. Options do not have a fixed
expiry date.
The share-based payment expense for the financial year was recorded as
£34,274 (2022: £37,220). An adjustment has been made in the current year
resulting in a credit to the share-based payment expense of £49,485 and debit
to investments in subsidiaries for the same amount. This is due to the fact
that all share option charges were recognised in the parent entity, Cordel
Group plc, but are now appropriately recognised within the different entities
where the relevant employees are employed.
NOTE 9. ULTIMATE CONTROLLING PARTY
There is no ultimate controlling party.
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