REG - Insig AI Plc - Final Results, Posting of Report and Notice of AGM
14/08/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230814:nRSN1478Ja&default-theme=true
RNS Number : 1478J Insig AI Plc 14 August 2023
14 August 2023
Insig AI plc
("Insig AI" or the "Company")
Final results for the year ended 31 March 2023
and
Posting of the Annual Report and Accounts and Notice of Annual General Meeting
Insig AI plc (AIM:INSG), the data science and machine learning solutions
company and its subsidiaries (the "Group") is pleased to announce its
results for the year ended 31 March 2023.
The Group's Annual Report & Accounts, along with the Company's Notice of
Annual General Meeting ("AGM") will be posted to shareholders on Tuesday 15
August and will be available shortly on the Group's
website: www.insg.ai/investor-relations/
(http://www.insg.ai/investor-relations/) . The AGM will be held at The
Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE on 15 September
2023 at 12:00 p.m.
Highlights
· Revenue increase of 22% year on year to £2.1 million
· Significantly lower operating costs for Insig AI business
implemented during the year
· Loss for the year after income tax of £18.5 million, which
includes an impairment charge of £16.6 million
· Cash consumed by operating activities of £1.0 million against
£2.2 million for the previous year
· Insig AI to provide data and software platforms to the FCA's
2023 TechSprint, known as the Global Financial Innovation Network's (GFIN)
Greenwashing TechSprint
· Completion of equity fundraise post year end for £0.9 million
· Forecast that the Insig AI business will continue to achieve
increases in revenue in the current and following financial year and for
operational profitability in the current year and beyond
Richard Bernstein, Executive Chairman commented: "We have spent the last two
years developing what we believe is a world class corporate disclosure
database with over 130 million machine readable sentences. The work that we
are now doing with the FCA and several other international regulators
demonstrates the value of this core asset. In the coming months, through
partnerships, distribution agreements and direct selling, we expect to
monetise this offering to market participants for whom transparency of
disclosures matters. Alongside deploying our generative AI data science
capabilities, we are excited about both our market positioning and our
prospects."
For further information, please visit www.insg.ai (http://www.insg.ai/) or
contact:
Insig AI plc
Richard Bernstein, Executive Chairman richard.bernstein@insg.ai (mailto:richard.bernstein@insg.ai)
Colm McVeigh, CEO colm.mcveigh@insg.ai (mailto:colm.mcveigh@insg.ai)
Zeus (Nominated Adviser & Broker) +44 (0) 20 3829 5000
David Foreman / James Hornigold / Danny Phillips
Chairman's statement
I am pleased to update you on developments at Insig AI plc and in the markets
we serve. It is now two years since I came "on board." As a non-executive
director, my role involved oversight, stewardship and introductions. Three
months ago, I was delighted to become Executive Chairman. This has allowed me
to increase my involvement in the operational aspects of the business,
including directly interfacing with both clients and importantly, prospects.
In my statement last September, I was candid about the business: when I became
Chairman, it was clear that the executive team at that time lacked experience
in selling scalable software solutions. Since Colm McVeigh was appointed to
the board, that has changed and his impact has been significant. The technical
competence and machine learning capabilities within Insig AI have never been
in doubt. However, a business is an enterprise, and its primary objective must
be to convert its strengths into generating and growing sustainable revenues
and profitability.
A challenge for any emerging technology business is to decide its area of
focus. Since its formation in 2017, the core Insig AI business has served the
asset management industry. This has been its client base and the Company has
achieved considerable success in delivering valuable products and solutions.
Two years ago, we supported AB CarVal Investors LP ("AB CarVal"), now part of
Alliance Bernstein and delivered our ESG scoring tools which were incorporated
within AB CarVal's highly successful Collateralised Loan Obligation ("CLO")
fund.
The democratisation of investing is a welcome development. As well as owners
of corporations having the right to charge their boards with the obligation
for businesses to behave as responsible corporate citizens, so savers also
have the right to demand that those with the responsibility of managing those
savings, asset managers, allocate capital and invest in areas that are not
harmful to the planet and people but also result in an improved or positive
outcome.
Whilst such an approach is laudable, more recently, the "ESG" label has become
tarnished and categorised by some as being part of the "woke" agenda. This is
particularly the case in the United States, where a bifurcated political
system has resulted in several states enacting legislation to restrict the use
of ESG factors in making investment decisions. As a result, billions of
dollars of State funds have been divested. In January 2023, 25 states filed a
lawsuit in federal court seeking an injunction against the US Department of
Labor that had introduced legislation that ESG factors should form part of
fiduciary duties.
The ESG landscape requires regulation and as it evolves and matures, it also
requires greater uniformity. The three letter acronym "ESG" has become
something of a poster child for being either "pro" or "anti". This should not
be about labels but put simply, whether investors and businesses act in a
responsible manner.
Two weeks ago, Greta Thunberg, a widely acknowledged champion of highlighting
the seriousness of climate change withdrew from attending the Edinburgh Book
Festival, following reports that its sponsor, Baillie Gifford, has billions
invested in firms that profit from fossil fuels. Baillie Gifford responded by
stating that two per cent. of clients' money was invested in businesses with
some element of fossil fuels, whereas five per cent. was invested in clean
energy transition.
As regards the "E," what should an investor or asset manager be seeking to
achieve? We do not subscribe to the notion that by bypassing an investment
in say fossil fuels, that the world will automatically be a better place.
Forcing a large cap oil company to divest its oil assets may well result in
more damage to the planet if the new owner of these assets has no interest in
being a responsible investor. Instead, investment should perhaps be focused on
company level binding targets where owners of such assets are answerable and
accountable in the public markets arena. Transparency and accountability are
critical.
Whilst there has been an inevitable focus on the "E" and climate change, vital
areas of the "S" and "G" have failed to garner as much focus. Recent events at
Odey Asset Management and at Coutts & Co have brought into focus the
impact on a business and on its staff of failing to attend to the "S" and the
"G."
We remain of the view that regulatory disclosure will become mandatory.
However, until that time, and in the US in particular, a "state of flux",
seems to be an accurate characterisation of the ESG landscape. Inevitably, in
the interim, such uncertainty is causing asset managers to defer fund launches
and ESG asset allocation. With the added backdrop of a huge shift in asset
allocation to government bonds, where the risk-free rate has returned to
levels not seen for more than 20 years, it is unsurprising that purchasing and
investment decisions are being deferred. The recessionary narrative has placed
further pressures on spending budgets.
It is therefore our mission, not only to endure this transitory period but to
stake our claim as being part of the ecosystem that raises standards of
corporate disclosure. In this regard, I am pleased to report significant
progress.
Insig AI, using its machine learning expertise, has the capability to source,
analyse and categorise vast quantities of data to accelerate and enhance human
decision making. Two years ago, the Company set out to achieve an ambitious
target: to build a repository, essentially a database of corporate public
disclosures. Then, our database comprised 200 companies. Last year, we
reported that our repository of corporate disclosures had increased to 2,000
companies. Now, with a centralised library of transparent, tagged and
machine-readable data of over 5,000 companies, we believe that we possess an
unrivalled database and navigational tool for both corporations and market
participants, encompassing over 130 million machine readable sentences.
As well as our people and our technology, we regard this repository as being a
most valuable asset. Assets derive probable future economic benefit, and we
believe that we will achieve substantial economic benefits from this two year,
multi-million-pound investment. The most positive demonstration of the value
of our database and data science capabilities has been evidenced by our
partnership with the Financial Conduct Authority.
Data and technology collaboration with the Financial Conduct Authority ("FCA")
In April 2023, Insig AI was proud to announce that it would be providing the
data and software platforms to the FCA's 2023 TechSprint, known as the Global
Financial Innovation Network's (GFIN) Greenwashing TechSprint. The GFIN
Greenwashing TechSprint has brought together 13 international regulators and
110 participants in each jurisdiction, including innovative tech firms and
teams from large consultancies.
The goal of the project is to develop a tool or solution that can help
regulators tackle or mitigate the risks of greenwashing in financial services
across the globe. The project focuses on how technology, including AI and
Machine Learning, can enable regulators and supervisors to verify that
ESG-related product claims to retail consumers are accurate and complete and
how technology can help monitor, collate, and identify examples of
greenwashing from financial services firms' websites, social media platforms,
and other documentation or data which can also be shared across jurisdictions.
Insig AI is providing its data and technology platform for onboarding of
partners and participants of the GFIN Greenwashing TechSprint. The core data
set comprises our database of pdf and machine-readable corporate financial and
ESG documents with entity mapping and sentence-level classification against 15
ESG issues.
Participants have access to Insig AI's technology via the ESG Research Tool
app, which combines machine learning, Natural Language Processing and Elastic
search capability for efficient document interrogation and comparison across
the database of reports. Insig AI has facilitated the collection, tagging and
addition of new corporate documents into the database.
I am now delighted to report that we have received very positive feedback from
multiple participants. We regard our involvement as integral to the GFIN
Greenwashing TechSprint. Next month, in conjunction with the FCA, we expect to
provide a more detailed update. Let us not underestimate the scale of this
achievement and the quality of connections that it has brought. The World Bank
is but one of more than a dozen international bodies that we are now able to
interact with.
It is vital that those guilty of greenwashing, that is those who make false
and/or misleading claims, are punished. The GFIN Greenwashing TechSprint
focuses on companies, rather than on asset managers. However, rightly, asset
managers must also be held accountable. We have had direct engagement with
asset managers who are "talking the talk" of incorporating best practice on
corporate disclosures but when we "drill down," it is evident that they are
not doing so. We welcome the day when regulatory enforcement prohibits such
behaviour.
We also note and concur with recent comments from ClimateEarth regarding the
failure of the Big 6 Accounting firms to move forward with providing the
necessary audit and disclosure risk assurances that are urgently required. We
stand, ready, willing and able to work with the Big 6 Accounting firms to
raise the bar of these essential corporate disclosures. Action will have to
follow regulation but, for now, it is the regulators that are charged with
this responsibility.
Financial performance
For the year ended 31 March 2023, we are reporting a 22 per cent increase in
consolidated revenue to £2.1 million. The Group's legacy Sport in Schools
business comprised £1.4 million, with the core Insig AI business delivering
an 85 per cent. increase in revenue to £0.7 million.
During the year, Sport in Schools invested £0.1 million in a significant
marketing campaign. This culminated with Gareth Southgate, manager of the
England national football (soccer) team since 2016, providing a coaching
session to pupils coached by Sport in Schools. After this investment, which
was expensed in full, Sport in Schools delivered a modest operating profit.
Combined operating loss was £4.8 million. This was after charging
depreciation and amortisation of £2.8 million. Net cash used in operating
activities, was £1.0 million, as against £2.2 million in the previous year.
This reflects the decision taken by the Board to significantly reduce
operating costs, as software platform milestones had been delivered, we no
longer required a large development team, and we were also able to streamline
our business activities.
The Group carried out a review of the carrying value of its goodwill and other
assets during the year. These have been written down by £16.6 million and
accounted for as an exceptional item. This charge has no impact on either cash
or prospects of the Group.
Cash at bank as at 31 March 2023 was £0.3 million. Following the year end, in
April 2023, we announced a successful equity fundraise of £0.9 million, which
I refer to below.
Funding
In May 2022, I provided the Company with an unsecured convertible loan
facility of £1.0 million. The key terms were conversion at the higher of 35p
per share and the prevailing share price at the time of conversion and a
coupon of 5 per cent. per annum on funds drawn down. In June 2022, the Company
announced that it had also agreed a £0.5 million convertible loan, on the
same terms as my own facility, with David Kyte, a long term shareholder of the
Company. These loan facilities were fully utilised and were due for repayment
on 31 December 2022. In that month, both David Kyte and myself agreed to
extend these loan facilities by 12 months.
For myself, the terms of the extension included increasing the interest rate
to 8 per cent. per annum to reflect the significant increase in interest rates
and the deterioration in the debt capital markets. The conversion price was
amended to 20p which represented a 17.6 per cent. premium to the prevailing
share price and 1,666,667 warrants were granted expiring on 31 December 2025
and exercisable at a price of 30p, which represented a 76.5 per cent. premium
to the prevailing share price.
For David Kyte's facility, the terms of extension included increasing the
interest rate to 8 per cent. per annum to reflect the significant increase in
interest rates and the deterioration in the debt capital markets. The
conversion price was amended to 18p, which represented a 5.9 per cent premium
to the prevailing share price and 1,388,889 warrants were granted expiring
on 31 December 2025 and exercisable at a price of 25p, which represented a
47.1 per cent premium to the current share price.
In September 2022, I provided a further convertible loan facility of up
to £0.75 million. This facility has been fully utilised. The key terms were
a conversion price of 35p per share and a coupon of 5 per cent. per annum on
funds drawn down. This loan was secured against the share capital held by the
Company in Westside Sports Limited, which has interests in Ultimate Player
Limited, Pantheon Leisure plc, Sport in Schools Limited and the Elms Group
Limited. The loan was due to be repaid on 30 June 2023. As previously
announced, the Company and myself agreed to extend the repayment date by six
months.
Successful equity funding
In April 2023, the Company announced that it had completed an equity
subscription raising £0.9 million at 17p per share, being the closing price
on 20 April 2023. I subscribed for £0.15 million. Funds are being utilised to
invest in sales and marketing as well as for working capital purposes.
The subscribed for shares were issued from shares held in treasury, being
shares gifted to the Company in December 2022 by Insight Capital founders and
directors of the Company, Steve Cracknell and Warren Pearson, Chief Product
Officer and Chief Technology Officer respectively. As a result, effectively,
existing shareholders suffered no equity dilution.
AB CarVal partnership
In February 2022, the Company announced a landmark agreement with AB CarVal to
develop and launch a new line of high yield ("HY") and investment grade ("IG")
ESG scoring tools to be used by AB CarVal to optimise HY and/or IG portfolios
based on ESG considerations. As previously stated, our share of fees is based
on AB CarVal's assets under management ("AUM") raised in connection with these
HY and/or IG focused investment pools and we continue to anticipate that as AB
CarVal secures mandates, our fees will increase commensurably and continue for
several years.
In July 2022, AB CarVal was acquired by Alliance Bernstein, which we hope will
provide further opportunities. In April 2023, we reported that over the last
year, we have worked closely with AB CarVal on refining the ESG scoring tools
and that we believe that these tools are now ready for commercialisation. We
continue to expect a slow and gradual ramp up of sustainable revenues from
this partnership. Whilst the recent uncertain ESG landscape in the US
described above will inevitably make the ESG fundraising environment slower
and more challenging, we remain of the view that AB CarVal has a market
leading product, which over time, will garner support with growing traction.
Generative AI and new product breakthrough delivering alpha
Of late, many column inches have been devoted to the pros and cons of
generative AI. What seems beyond dispute is that the output from generative AI
is a function of its input, or its source data. At Insig AI, we are now able
to successfully use generative AI because of the integrity, objectivity, and
transparency of our source data of 130 million machine-readable sentences.
We have also recently been able to utilise this capability to construct a
fixed income model portfolio, which, based on momentum and value criteria, is
able to deliver 160 basis points of additional alpha. We now intend to partner
with an asset manager to test this portfolio optimisation tool on an existing
portfolio.
Board composition
We were greatly saddened by the sudden and untimely death in April of John
Murray. His wise counsel is sorely missed. Whilst John is truly irreplaceable,
we are currently seeking to strengthen the board.
Prospects
It remains early in the Group's current financial year. We have been awarded a
financial database assignment from a new client, as well as an annual
licencing agreement for our ESG data from another new client asset manager. In
the first quarter, we also secured additional business from an existing
client. We remain frustrated by the very slow pace of decision making at
prospects - even though, the business case in our opinion, is so strong.
We continue to forecast further sales growth for the Insig AI business. The
board remains optimistic that it will achieve operating profitability in
FY-24. Also, we are benefiting from decisions taken earlier in the year that
materially lowered our operating costs.
We have previously commented on the current bear market for asset managers and
that many have characterised this as being the harshest investment climate for
a generation. Against such a backdrop, we remain realistic as to the pace of
sales growth in the very short term. That is why the decisive action we took
last autumn to adapt to this tough environment has proven to be the right
strategy.
We are using our machine learning and data science optimisation capabilities
to drive better performance outcomes, to reduce risk and to improve decision
making and the standard of corporate disclosure.
We are delighted with recent progress from our data and collaboration
agreement with the FCA. The feedback received from participants is that our
repository, our Natural Language Processing classifiers, and their ability to
use keywords to surface patterns of reporting are both unique and valuable. We
regard this as being a core asset, ideally suited to partnership
opportunities, where we will be able to significantly broaden our user base
and translate this into increasing revenues and profits.
Richard Bernstein
Chairman
13 August 2023
Consolidated statement of financial position
Group Company
Note 31 March 2023 31 March 31 March 2023 31 March
£ 2022 £ 2022
£ £
Non-Current Assets
Property, plant and equipment 12 37,648 65,664 - -
Right of Use Assets 13 28,266 38,545 - -
Intangible assets 14 20,309,278 38,217,155 - -
Investment in subsidiaries 15 - - 20,383,136 39,179,029
20,375,192 38,321,364 20,383,136 39,179,029
Current Assets
Trade and other receivables 16 719,840 289,819 151,699 89,414
Cash and cash equivalents 17 280,584 473,390 3,749 61,314
1,000,424 763,209 155,448 150,728
Total Assets 21,375,616 39,084,573 20,538,584 39,329,757
Non-Current Liabilities
Lease liabilities 19 16,868 28,593 - -
Deferred tax liabilities 20 2,586,096 4,160,088 - -
2,602,964 4,188,681 - -
Current Liabilities
Trade and other payables 18 932,927 810,331 382,636 308,544
Lease liabilities 19 10,386 9,048 - -
Convertible loan notes 19 2,261,769 - 2,261,769 -
3,205,082 819,379 2,644,405 308,544
Total Liabilities 5,808,046 5,008,060 2,644,405 308,544
Net Assets 15,567,570 34,076,513 17,894,179 39,021,213
Equity attributable to owners of the Parent
Share capital 22 3,109,804 3,109,804 3,109,804 3,109,804
Share premium 22 39,077,403 39,077,403 39,077,403 39,077,403
Other reserves 24 377,381 325,583 377,381 325,583
Share based payments reserve 23 18,845 17,240 18,845 17,240
Retained losses (26,964,846) (8,400,850) (24,689,254) (3,508,817)
Equity attributable to shareholders of the parent 15,618,587 34,129,180 17,894,179 39,021,213
parent company
Non-controlling interests (51,017) (52,667) - -
Total Equity 15,567,570 34,076,513 17,894,179 39,021,213
The Company has elected to take the exemption under Section 408 of the
Companies Act 2006 from presenting the Parent Company Income Statement and
Statement of Comprehensive Income. The loss for the Company for the year ended
31 March 2023 was £21,180,437 (31 March 2022: loss of £267,798).
The Financial Statements were approved and authorised for issue by the Board
of Directors on 13 August 2023 and were signed on its behalf by:
Colm McVeigh
Chief Executive Officer
Consolidated Income statement
Continued operations Note Year ended 31 March 2022
Year ended 31 March 2023 £
£
Revenue 5 2,092,161 1,707,790
Cost of sales 5 (732,966) (719,068)
Gross profit 1,359,195 988,722
Administrative expenses 7 (6,124,769) (5,256,104)
Other gains/(losses) 8 (23,368) 7,838
Other income 9 444 119,025
Impairments 14 (16,558,296) -
Operating loss (21,346,794) (4,140,519)
Finance income 10 101 3,878
Finance costs 10 (81,518) (14,010)
Loss before exceptional item (21,428,211) (4,150,651)
Exceptional items 11 - 905,851
Loss before income tax (21,428,211) (3,244,800)
Tax credit/(charge) 27 2,865,865 (941,919)
Loss for the year after income tax (18,562,346) (4,186,719)
Loss for the year attributable to owners of the Parent (18,563,996) (4,199,720)
Profit/(Loss) for the year attributable to Non-controlling interests 1,650 13,001
Basic and Diluted Loss Per Share attributable to owners of the Parent during 28 (17.89)p (4.40)p
the period (expressed in pence per share)
Year ended 31 March 2023 Year ended 31 March 2022
£ £
Loss for the year (18,562,346) (4,186,719)
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Other comprehensive loss for the year, net of tax - -
Total comprehensive loss (18,562,346) (4,186,719)
Total comprehensive loss attributable to owners of the Parent (18,563,996) (4,199,720)
Total comprehensive profit/(loss) attributable to Non-controlling interests 1,650 13,001
Consolidated statement of changes in equity
Note Share capital Share premium Share based payments reserve Other reserves Retained earnings Total Non Controlling Interest Total
£ £ £ £ /(losses) £ £ £
£
Balance as at 1 April 2021 2,479,664 3,039,531 - 427,727 (4,201,130) 1,745,792 (65,668) 1,680,124
Loss for the period - - - - (4,199,720) (4,199,720) 13,001 (4,186,719)
Other comprehensive loss for the period
Items that may be subsequently reclassified to profit or loss - - - - - - -
-
Total comprehensive loss for the period - - - - (4,199,720) (4,199,720) 13,001 (4,186,719)
Issue of new shares 630,140 36,201,388 - - - 36,831,528 - 36,831,528
Equity component of CLN issued in period - - - (124,343) - (124,343) - (124,343)
Share issue costs - (163,516) - 22,199 - (141,317) - (141,317)
Share based payments - - 17,240 - - 17,240 - 17,240
Total transactions with owners, recognised directly in equity
630,140 36,037,872 17,240 (102,144) - 36,583,108 - 36,583,108
Balance as at 31 March 2022
3,109,804 39,077,403 17,240 325,583 (8,400,850) 34,129,180 (52,667) 34,076,513
Balance as at 1 April 2022
3,109,804 39,077,403 17,240 325,583 (8,400,850) 34,129,180 (52,667) 34,076,513
Profit/(Loss) for the year - - - - (18,563,99) (18,563,996) 1,650 (18,562,346)
Other comprehensive loss for the year
Items that may be subsequently reclassified to profit or loss - - - - - - - -
Total comprehensive loss for the year - - - (18,563,99) (18,563,996) 1,650 (18,562,346)
-
Share based payments - - 1,605 - - 1,605 - 1,605
Equity component of CLN issued in period - - - 51,798 - 51,798 - 51,798
Total transactions with owners, recognised directly in equity
- - 1,605 51,798 - 53,403 - 53,403
Balance as at 31 March 2023
3,109,804 39,077,403 18,845 377,381 (26,964,846) 15,618,587 (51,017) 15,567,570
Consolidated statements of cash flows
Group Company
Note 12 month period ended 12 month period ended 12 month period ended 31 March 2023 12 month period ended 31 March 2022
31 March 2023 31 March 2022 £ £
£ £
Cash flows from operating activities
(Loss)/profit before income tax (18,562,346) (4,186,719) (21,180,437) 267,798
Adjustments for:
Depreciation and amortisation 2,839,889 2,239,017 - -
Share based payments 23 1,605 17,240 1,605 17,240
Impairments 16,558,296 20,408,199
Net finance (income)/costs 81,518 13,546 63,566 (58,104)
Provision for deferred tax liabilities (1,573,992) 941,918 - -
Provision for R&D tax credits (552,000) - - -
R&D provision for prior year (749,873) -
Proceeds from R&D tax credits 749,873 683,143 - -
Fair value uplift on unlisted investment - (1,759,221) - (1,759,222)
Loss on disposal of lease liability - (7,725) - -
Changes in working capital:
(Increase)/Decrease in trade and other receivables 118,704 36,658 (62,285) 52,849
Increase/(Decrease) in trade and other payables 121,131 (170,024) 74,092 (56,110)
Net cash used in operating activities (967,195) (2,192,167) (695,260) (1,535,549)
Cash flows from investing activities
Sale/(Purchase) of property, plant and equipment 12 (8,788) (34,053) - -
Acquisition of subsidiaries net of cash acquired - (1,528,518) - (1,742,478)
Purchase of intangible assets 14 (1,456,436) (2,304,860) - -
Loans granted to subsidiaries - - (1,612,305) (3,148,487)
Net cash used in investing activities (1,465,224) (3,867,431) (1,612,305) (4,890,965)
Cash flows from financing activities
Proceeds from issue of share capital - 6,145,490 - 6,145,490
Transaction costs of share issue - (141,516) - (141,317)
Proceeds from Borrowings 2,250,000 - 2,250,000 -
Repayment of borrowings - (290,000) - -
Repayment of leasing liabilities (10,387) (115,939) - -
Net cash generated from financing activities 2,239,613 5,598,035 2,250,000 6,004,173
Net decrease/(increase) in cash and cash equivalents (192,806) (461,563) (57,565) (422,341)
Cash and cash equivalents at beginning of year 473,390 934,953 61,314 483,655
Cash and cash equivalents at end of year 17 280,584 473,390 3,749 61,314
Major Non-Cash Transactions:
On 21 December 2022, Steven Cracknell and Warren Pearson, Chief Product
Officer and Chief Technology Officer gifted at nil value, their shares to the
Company to be held in treasury and to be used at the discretion of the
Company. Steven Cracknell gifted 4,500,000 ordinary shares of 1p each and
Warren Pearson has gifted 2,500,000.
Notes to the financial statements
1. General information
Insig AI plc is a public company limited by shares, domiciled and incorporated
in England and Wales and its activities are as described in the strategic
report on pages 7-12.
These financial statements are prepared in pounds sterling being the currency
of the primary economic environment in which the Group operates.
2. Summary of significant accounting policies
The principal Accounting Policies applied in the preparation of these
Consolidated Financial Statements are set out below. These Policies have been
consistently applied to all the periods presented, unless otherwise stated.
2.1. Basis of preparation of Financial Statements
The Group and Company Financial Statements have been
prepared in accordance with UK-adopted international accounting standards. The
Group and Company Financial Statements have also been prepared under the
historical cost convention.
The Financial Statements are presented in Pound
Sterling rounded to the nearest pound.
The preparation of Financial Statements in conformity
with UK adopted International Accounting Standards (IAS) requires the use of
certain critical accounting estimates. It also requires management to exercise
its judgement in the process of applying the Accounting Policies. The areas
involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Group and Company Financial
Statements are disclosed in Note 4.
2.2. New and amended standards
(i) New and amended standards adopted by
the Group and Company
The International Accounting Standards Board (IASB) issued various amendments
and revisions to International Financial Reporting Standards and IFRIC
interpretations. The amendments and revisions were applicable for the period
ended 31 March 2023 but did not result in any material changes to the
financial statements of the Group or Company.
Of the other IFRS and IFRIC amendments, none are expected to have a material
effect on future Group or Company Financial Statements.
(ii) New standards, amendments and
interpretations in issue but not yet effective or not yet endorsed and not
early adopted
Standards, amendments and interpretations that are not yet effective and have
not been early adopted are as follows:
Standard Impact on initial application Effective date
IFRS 17 (Amendments) Insurance contracts 1 January 2023
IAS 1 (Amendments) and IFRS Practice Statement 2 Disclosure of Accounting Policies 1 January 2023
IAS 8 (Amendments) Definition of Accounting Estimate 1 January 2023
IAS 12 Income Taxes (Amendments) Deferred Tax Related to Assets and Liabilities Arising from a Single 1 January 2023
Transaction
IAS 1 (Amendments) Classification of liabilities as current or non-current 1 January 2024
IFRS 16 (Amendments) Lease Liability in a Sale and Leaseback 1 January 2024
None are expected to have a material effect on the Group or Company Financial
Statements.
2.3. Basis of Consolidation
The Consolidated Financial Statements consolidate the financial statements of
the Company and its subsidiaries made up to 31 March 2023. Subsidiaries are
entities over which the Group has control. Control is achieved when the Group
is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over
the investee.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· The contractual arrangement with the other vote holders of the
investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the period are included in the
consolidated financial statements from the date the Group gains control until
the date the Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within
the parent company financial statements. Where necessary, adjustments are made
to the financial statements of subsidiaries to bring the accounting policies
used in line with those used by other members of the Group. All significant
intercompany transactions and balances between Group enterprises are
eliminated on consolidation.
2.4. Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable, and represent amounts receivable for goods supplied, stated net of
discounts, returns and value added taxes. Under IFRS 15 there is a five-step
approach to revenue recognition which is adopted across all revenue streams.
The process is:
· Step 1: Identify the contract(s) with a customer;
· Step 2: Identify the performance obligations in the contract;
· Step 3: Determine the transaction price;
· Step 4: Allocate the transaction price to the performance
obligations in the contract; and
· Step 5: Fees are recognised once the work is completed and
provided to the client.
The Group has two types of revenue streams being machine learning and data
services and sports activities.
Machine learning and Data services revenue comprises of:
1. ESG Research Tool
Fees are recognised as the agreed work is conducted.
2. Machine Readable Data
Fees are recognised as the agreed work is conducted.
3. Bespoke Data Science Solutions
Charged on a project basis and includes work related to data migration, design
fees, communication fees and technological services. The fees are recognised
as the agreed work in conducted.
For the services detailed above, revenue is recognised and invoiced in
accordance with milestones agreed within each contract with the customer,
which can vary on a case-by-case basis. In all scenarios, the revenue is
recognised in accordance with the provision of the agreed services provided
or, where the quantum and timing of the services can be difficult to predict,
rateable over the period of the agreement. Depending on the client, invoices
can be monthly, quarterly or ad-hoc. Invoices can be adjusted in situations
where the agreed scope of work is exceeded or additional work is applied.
Sports activities revenue is recognised once performance obligations have been
satisfied and work is completed with payment due in advance of the performance
obligations. Under the Group's standard contract terms, customers may be
offered refunds for cancellation of sports and leisure activities. It is
considered highly probable that a significant reversal in the revenue
recognised will not occur given the consistent low level of refunds in prior
years.
2.5. Going concern
The preparation of financial statements requires an assessment on the validity
of the going concern assumption. The Directors have reviewed projections for a
period of at least 12 months from the date of approval of the financial
statements as well as potential opportunities. Any potential short falls in
funding have been identified and the steps to which Directors are able to
mitigate such scenarios and/or defer or curtail discretionary expenditures
should these be required have been considered. The directors have noted in
their going concern assessment that the convertible loan notes provided to the
Company are due for repayment on 31 December 2024 and the Company has forecast
the receipt of a research and development refund in the coming months.
In approving the financial statements, the Board have recognised that there is
a material uncertainty. The financial statements do not include any
adjustments that may arise in the event of the Group not being a going
concern. However, having made enquiries and considered the uncertainties
outlined above, the Directors have a reasonable expectation that the Group
will continue to be able to raise finance as required over this period to
enable it to continue in operation and existence for the foreseeable future.
Accordingly, the Board believes it is appropriate to adopt the going concern
basis in the preparation of the financial statements.
2.6. Foreign currencies
(a) Functional and presentation currency
Items included in the Financial Statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates (the 'functional currency'). The functional currency of the UK
parent
entity and UK subsidiaries is Pounds Sterling, The Financial Statements are
presented in Pounds Sterling which the Company's functional and Group's
presentational currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where such items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement.
2.7. Intangible assets
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of subsidiary entities at the date of acquisition.
Goodwill is initially recognised as an asset at cost and is subsequently
measured at cost less any accumulated impairment losses. Goodwill which is
recognised as an asset is reviewed for impairment at least annually. Any
impairment is recognised immediately in the statement of comprehensive income
and is not subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to each of the
Group's cash generating units expected to benefit from synergies of the
combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the cash
generating unit is less than the carrying amount of the unit, the impairment
loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit then to the other assets of the unit pro-rata on the
basis of the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, associate or jointly controlled entity, the
amount of goodwill is included in the determination of the profit or loss on
disposal.
Goodwill arising on acquisitions before the date of transition to IFRS's has
been retained at the previous UK GAAP amounts subject to being tested for
impairment at that date.
Development costs are expensed in arriving at the operating profit or loss for
the year unless the Directors are satisfied as to the technical, commercial
and financial viability of individual project. In this situation, the
expenditure is recognised as an asset and is reviewed for impairment on an
annual basis. Amortisation is provided on all development costs to write off
the cost less estimated residual value of each asset over its expected useful
economic life on a straight line basis at the following annual rates:
Technology assets - 7 years straight line
Customer relationships - 13 years straight line
Databases - 7 years straight line
Any impairment is recognised immediately in the income statement in
administrative expenses.
2.8. Investments in subsidiaries
Investments in Group undertakings are stated at cost, which is the fair value
of the consideration paid, less any impairment provision.
2.9. Property, plant and equipment
Property, Plant and equipment is stated at cost less accumulated depreciation
and any accumulated impairment losses. Depreciation is provided on all
property, plant and equipment to write off the cost less estimated residual
value of each asset over its expected useful economic life on a straight line
basis at the following annual rates:
Office Equipment - 25% and 10% straight line
Plant and Equipment - 25% and 10% straight line
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced part
is derecognised. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount. If an impairment review is conducted following an
indicator of impairment, assets which are not able to be assessed for
impairment individually are assessed in combination with other assets within a
cash generating unit.
Gains and losses on disposal are determined by comparing the proceeds with the
carrying amount and are recognised within 'Other (losses)/gains' in the Income
Statement.
2.10. Impairment of non-financial assets
Assets that have an indefinite useful life, for example, intangible assets not
ready to use, and goodwill, are not subject to amortisation and are tested
annually for impairment. Property, plant and equipment is reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units). Non-financial assets that
suffered impairment are reviewed for possible reversal of the impairment at
each reporting date.
2.11. Financial Instruments
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument. Financial assets and financial
liabilities are only offset and the net amount reported in the consolidated
statement of financial position and income statement when there is a currently
enforceable legal right to offset the recognized amounts and the Group intends
to settle on a net basis or realise the asset and liability simultaneously.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in
profit or loss.
Debt instruments are classified as financial assets measured at fair value
through other comprehensive income where the financial assets are held within
the company's business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets, and the contractual terms
of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Financial assets
All Group's recognised financial assets are measured subsequently in their
entirety at either amortised cost or fair value, depending on the
classification of the financial assets.
Classification of financial assets
Financial assets that meet the following conditions are measured subsequently
at amortised cost using the effective interest rate method:
• the financial asset is held within a business model whose objective
is to hold financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments
of principal and interest on the principal amount outstanding.
The company classifies the following financial assets at fair value through
profit or loss (FVPL):
• debt instruments that do not qualify for measurement at either
amortised cost (see above) or FVOCI;
• equity investments that are held for trading; and
• equity investments for which the entity has not elected to
recognised fair value gains and losses through OCI.
The Group does not hold any financial assets that meet conditions for
subsequent recognition at fair value
through other comprehensive income ("FVTOCI").
Impairment of financial assets
The Group recognises a financial asset only when the contractual rights to the
cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially all the risks
and rewards of ownership and continues to control the transferred asset, the
Group recognises its retained interest in the asset and an associated
liability for amounts it may have to pay. If the Group retains substantially
all the risks and rewards of ownership of a transferred financial asset, the
Group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
Financial liabilities
The classification of financial liabilities at initial recognition depends on
the purpose for which the financial liability was issued and its
characteristics. All purchases of financial liabilities are recorded on trade
date, being the date on which the Group becomes party to the contractual
requirements of the financial liability. Unless otherwise indicated the
carrying amounts of the Group's financial liabilities approximate to their
fair values.
The Group's financial liabilities consist of financial liabilities measured at
amortised cost and financial liabilities at fair value through profit or loss.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer
in a business combination, (ii) held for trading, or (iii) designated as at
FVTPL, are measured subsequently at amortised cost using the effective
interest method. The Group's financial liabilities measured at amortised cost
comprise convertible loan notes, trade and other payables, and accruals.
The effective interest method is a method of calculating the amortised cost of
a financial asset/liability and of allocating interest income/expense over the
relevant period. The effective interest rate is the rate that discounts
estimated future cash receipts/payments through the expected life of the
financial asset/liability or, where appropriate, a shorter period.
Convertible loan notes
On issue of a convertible loan, the fair value of the liability component is determined by discounting the contractual future cash flows using a market rate for a non-convertible instrument with similar terms. This value is carried as a liability on the amortised cost basis unless is designated as a Fair Value Through Profit and Loss ("FVTPL") at inception.
Financial instruments designated as FVTPL are classified in this category irrevocably at inception and are derecognised when extinguished. They are initially measured at fair value and transaction costs directly attributable to their acquisition are recognised immediately in profit or loss. Subsequent changes in fair values are recognised in the income statement with profit or loss.
Equity instruments are instruments that evidence a residual interest in the assets of an entity after deducting all of its liabilities. Therefore, when the initial carrying amount of a compound financial instrument is allocated to its equity and liability components, the equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. The value of any derivative features (such as a call option) embedded in the compound financial instrument other than the equity component (such as an equity conversion option) is included in the liability component.
Derecognition of financial liabilities
A financial liability (in whole or in part) is recognised when the Group has
extinguished its contractual obligations, it expires or is cancelled. Any gain
or loss on derecognition is taken to the income statement.
Fair value measurement hierarchy
The Group classifies its financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement. The fair value hierarchy has the following levels:
• quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices) (level 2); and
• inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
The level in the fair value hierarchy within the financial asset or financial liability is determined on the basis of the lowest level input that is significant to the fair value measurement.
2.12. Leases
The Group leases certain property, plant and equipment.
The lease liability is initially measured at the present value of the lease
payments that are not paid. Lease payments generally include fixed payments
less any lease incentives receivable. The lease liability is discounted using
the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. The Group estimates the
incremental borrowing rate based on the lease term, collateral assumptions,
and the economic environment in which the lease is denominated. The lease
liability is subsequently measured at amortized cost using the effective
interest method. The lease liability is remeasured when the expected lease
payments change as a result of new assessments of contractual options and
residual value guarantees.
The right-of-use asset is recognised at the present value of the liability at
the commencement date of the lease less any incentives received from the
lessor. Added to the right-of-use asset are initial direct costs, payments
made before the commencement date, and estimated restoration costs. The
right-of-use asset is subsequently depreciated on a straight-line basis from
the commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The right-of-use asset is
periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
Each lease payment is allocated between the liability and finance charges. The
corresponding rental obligations, net of finance charges, are included in
lease liabilities, split between current and non-current depending on when the
liabilities are due. The interest element of the finance cost is charged to
the Statement of Profit and Loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. Assets obtained under finance leases are depreciated over
their useful lives. The lease liabilities are shown in Note 19.
Exemptions are applied for short life leases and low value assets, with
payment made under operating leases charged to the Consolidated Statement of
Comprehensive Income on a straight-line basis of the period of the lease.
2.13. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.14. Equity
Equity comprises the following:
· "Share capital" represents the nominal value of the Ordinary
shares;
· "Share Premium" represents consideration less nominal value of
issued shares and costs directly attributable to the issue of new shares;
· "Treasury shares" are the portion of shares that a company keeps
in its own treasury. These can be gifted or purchased.
· "Other reserves" represents the merger reserve, revaluation
reserve and share option reserve where;
o "Merger reserve" represents the difference between the fair value of an
acquisition and the nominal value of the shares allotted in a share exchange;
o "Revaluation reserve" represents a non-distributable reserve arising on
the acquisition of Insig Partners Limited;
o "Share option reserve" represents share options awarded by the group;
· "Retained earnings" represents retained losses.
2.15. Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity, as a
deduction, net of tax, from the proceeds provided there is sufficient premium
available.
2.16. Share based payments
The Group operates a number of equity-settled, share-based schemes, under
which the Group receives services from employees or third party suppliers as
consideration for equity instruments (options and warrants) of the Group. The
fair value of the third party suppliers' services received in exchange for the
grant of the options is recognised as an expense in the Income Statement or
charged to equity depending on the nature of the service provided. The value
of the employee services received is expensed in the Income Statement and its
value is determined by reference to the fair value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance
vesting conditions (for example, profitability or sales growth targets, or
remaining an employee of the entity over a specified time period); and
· including the impact of any non-vesting conditions (for example,
the requirement for employees to save).
The fair value of the share options and warrants are determined using the
Black Scholes valuation model.
Non-market vesting conditions are included in assumptions about the number of
options that are expected to vest. The total expense or charge is recognised
over the vesting period, which is the period over which all of the specified
vesting conditions
are to be satisfied. At the end of each reporting period, the entity revises
its estimates of the number of options that are expected to vest based on the
non-market vesting conditions. It recognises the impact of the revision to
original estimates, if any, in the Income Statement or equity as appropriate,
with a corresponding adjustment to a separate reserve in equity.
When the options are exercised, the Group issues new shares. The proceeds
received, net of any directly attributable transaction costs, are credited to
share capital (nominal value) and share premium when the options are
exercised.
2.17. Taxation
Corporation tax is the main tax that a limited company must pay based on their
profits, in addition to any gains from the sale of assets. For the year ended
31 March 2023, corporation tax is calculated as 19% of a company's profit for
the year. No current tax is yet payable in view of the losses to date.
Deferred tax is recognised for using the liability method in respect of
temporary differences arising from differences between the carrying amount of
assets and liabilities in the consolidated financial statements and the
corresponding tax bases used in the computation of taxable profit. However,
deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill; deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets (including those arising from
investments in subsidiaries), are recognised to the extent that it is probable
that taxable profits will be available against which deductible temporary
differences can be utilised.
Deferred income tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries only to the extent that it is
probable the temporary difference will reverse in the future and there is
sufficient taxable profit available against which the temporary difference can
be used.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred tax assets and liabilities relate to income taxes levied
by the same taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances on a net
basis.
Deferred tax is calculated at the tax rates (and laws) that have been enacted
or substantively enacted by the statement of financial position date and are
expected to apply to the period when the deferred tax asset is realised or the
deferred tax liability is settled.
Deferred tax assets and liabilities are not discounted.
3. Financial risk management
3.1. Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk,
credit risk and liquidity risk. The Group's overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance. None of these
risks are hedged.
Risk management is carried out by the management team under policies approved
by the Board of Directors.
Market risk
The Group is exposed to market risk, primarily relating to interest rate and
foreign exchange. The Group has not sensitised the figures for fluctuations in
interest rates and foreign exchange as the Directors are of the opinion that
these fluctuations would not have a significant impact on the Financial
Statements at the present time. The Directors will continue to assess the
effect of movements in market risks on the Group's financial operations and
initiate suitable risk management measures where necessary.
Credit risk
Credit risk arises from cash and cash equivalents as well as loans to
subsidiaries and outstanding receivables. Management does not expect any
losses from non-performance of these receivables. The amount of exposure to
any individual counter party is subject to a limit, which is assessed by the
Board.
The Group considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk.
Impairment provisions for loans to subsidiaries are recognised based on a
forward-looking expected credit loss model. The methodology used to determine
the amount of the provision is based on whether there has been a significant
increase in credit risk since initial recognition of the financial asset. At
year end it was assessed credit risk was low due to future profits forecast
therefore no provision was required.
For those where the credit risk has not increased significantly since initial
recognition of the financial asset, twelve month expected credit losses along
with gross interest income are recognised. For those for which credit risk has
increased significantly, lifetime expected credit losses along with the gross
interest income are recognised. For those that are determined to be credit
impaired, lifetime expected credit losses along with interest income on a net
basis are recognised. At year end all receivables were less than 60 day
outstanding and deemed highly likely to be received therefore no provision was
required.
Liquidity risk
In keeping with similar sized groups, the Group's continued future operations
depend on the ability to raise sufficient working capital through the issue of
equity share capital or debt. The Directors are reasonably confident that
adequate funding will be forthcoming with which to finance operations.
Controls over expenditure are carefully managed.
With exception to deferred taxation, financial liabilities are all due within
one year.
3.2. Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern, to enable the Group to continue its
activities, and to maintain an optimal capital structure to reduce the cost of
capital. In order to maintain or adjust the capital structure, the Group may
adjust the issue of shares or sell assets to reduce debts.
The Group defines capital based on the total equity of the Company. The Group
monitors its level of cash resources available against future activities and
may issue new shares in order to raise further funds from time to time.
4. Critical accounting estimates and judgements
The preparation of the Financial Statements in conformity with IFRS requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of expenses
during the period.
Estimates and judgements are regularly evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Items subject to such estimates and assumptions, that have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial years, include but are not limited to:
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value
in use of the cash generating units to which the goodwill has been allocated.
The value in use calculation requires the entity to estimate the future cash
flows expected to arise from the cash generating unit and a suitable discount
rate in order to calculate present value. The carrying amount of goodwill is
the deemed cost on first time application of IFRS.
Details of the carrying value of goodwill at the period end and the impairment
review assessment are given in Note 14.
Impairment of intangible assets
The Company follows the guidance of IAS 36 to determine when impairment
indicators exist for its intangible assets. When impairment indicators exist,
the Company is required to make a formal estimate of the recoverable amount of
its intangible assets. This determination requires significant judgement. In
making this judgement, management evaluates external and internal factors,
such as significant adverse changes in the technological market, economic or
legal environment in which the Company operates as well as the results of its
ongoing development programs. Management also considers the carrying amount of
the Company's net assets in relation to its market capitalisation as a key
indicator.
Capitalised development costs
Development costs incurred in building the Group's key platform for future
expansion have been capitalised in accordance with the requirements of IAS38.
The majority of these costs consist of salary expenses to which an estimated
proportion of development time has been applied. Salary expenses are
capitalised because the work done is expected to lead to future economic
benefits for the Group.
Deferred tax asset
At the present time the Directors' do not consider that there is sufficient
certainty regarding the utilisation of tax losses available in the Group. As a
result, no deferred tax asset has been recognised.
Investment in Subsidiaries
The Company considers the recoverability of the investment in subsidiaries to
be a key area of judgment, and this is held at its carrying amount which is
expected to be recovered from the subsidiary. The directors believe that the
investment in subsidiaries balance at year end is recoverable based on the
directors' expectation around the potential that the subsidiaries have to
generate sufficient economic benefits in the foreseeable future.
The investment in subsidiaries includes loans as detailed in note 15. The
loans are considered recoverable by management, and the investments made have
been impaired in line with their level of recoverability.
Going Concern
As discussed more fully in the in the Strategic Report on page 10, these
financial statements have been prepared on the going concern basis. This
approach is based on management's judgement that cashflow requirements for the
continued development can be achieved through operating activities and
additional fundraising if required.
5. Segment information
Business segments are identified according to the different trading activities
in the Group.
31 March 2023 Machine learning and Data services Sport in Schools Total
£ £ £
Revenue 693,734 1,398,427 2,092,161
Cost of sales (51) (732,915) (732,966)
Administrative expenses (5,484,356) (640,413) (6,124,769)
Other gains/(losses) (15,796) (7,572) (23,368)
Other income 1,291,873 444 1,292,317
Finance income 101 - 101
Finance costs (81,518) - (81,518)
Impairments (16,558,296) - (16,558,296)
Profit/(Loss) before tax per reportable segment (20,154,309) 17,971 (20,136,338)
Additions to intangible asset 1,456,436 - 1,456,436
Reportable segment assets 20,809,036 566,580 21,375,616
Reportable segment liabilities 5,544,528 263,518 5,808,046
During the year, the Group's trading segments were machine learning and data
services representing revenue of £693,734 (2022: £373,680) and its sports
and leisure activities, comprising sports tuition at schools representing its
revenue of £1,398,427 (31 March 2022: £1,334,110). All revenue was generated
in the UK.
31 March 2022 Machine learning and Data services Sport in Schools Total
£ £ £
Revenue 373,680 1,334,110 1,707,790
Cost of sales (14,335) (704,733) (719,068)
Administrative expenses (4,697,299) (558,805) (5,256,104)
Other gains/(losses) 7,838 - 7,838
Other income 9,953 109,072 119,025
Finance income 3,878 - 3,878
Finance costs (11,236) (2,774) (14,010)
Exceptional items 905,851 - 905,851
Profit/(Loss) before tax per reportable segment (3,421,670) 176,870 (3,244,800)
Additions to intangible asset 38,217,000 - 38,217,000
Reportable segment assets 38,633,000 450,000 39,083,000
Reportable segment liabilities 4,780,000 226,000 5,006,000
6. Revenue
31 March 2023 Machine learning and Data services Sport in Schools Total
£ £ £
Revenue 693,734 1,398,427 2,092,161
31 March 2022 Machine learning and Data services Sport in Schools Total
£ £ £
Revenue 373,680 1,334,110 1,707,790
Lodbrok Capital LLP were the only customer that accounted for over 10% of the
Group's revenue for the year, contributing £334,657.
7. Administrative expenses
Year ended Year ended
31 March 2023 31 March 2022
£ £
Employee salaries and costs 1,374,989 1,149,262
Director remuneration 351,828 430,144
Office and expenses 152,481 77,703
Travel & subsistence 47,587 29,498
Professional & consultancy fees 635,774 927,649
IT & Software 81,902 71,595
Subscriptions 291,281 175,147
Insurance 106,719 84,819
Depreciation and amortisation 2,839,889 2,239,017
Share option expense 1,605 17,240
Exchange related costs 67,452 -
Other expenses 173,262 54,030
Total administrative expenses 6,124,769 5,256,104
Services provided by the Company's auditor and its associates
During the year, the Group (including overseas subsidiaries) obtained the
following services from the Company's auditors and its associates:
Group
Year ended 31 March 2023 Year ended 31 March 2022
£ £
Auditors' remuneration 70,500 90,998
8. Other gain/(losses)
Group
Year ended Year ended
31 March 2023 31 March 2022
£ £
Other Losses 23,368 -
Loss on disposal of Right of Use asset - 7,838
Other gain/(losses) 23,368 7,838
9. Other operating income
Group
Year ended Year ended
31 March 2023 31 March 2022
£ £
Local Government grants - 119,025
Sale of equipment 444 -
444 119,025
10. Finance income/(costs)
Group
Year ended Year ended
31 March 2023 31 March 2022
£ £
Interest received from cash and cash equivalents 101 3,878
Finance Income 101 3,878
Loan interest (81,518) (14,010)
Finance Costs (81,518) (14,010)
11. Exceptional Items
Group
Year ended Year ended
31 March 2023 31 March 2022
£ £
Fair value uplift upon acquisition - 1,759,221
Readmission and acquisition costs - (853,370)
- 905,851
12. Property, plant and equipment
Group
Plant and equipment Total
£ £
Cost
As at 1 April 2021 105,567 105,567
Additions 34,310 34,310
Acquired upon acquisition 66,452 66,452
As at 31 March 2022 206,329 206,329
As at 1 April 2022 206,329 206,329
Additions 10,616 10,616
Disposals (54,332) (54,332)
As at 31 March 2023 162,613 162,613
Depreciation
As at 1 April 2021 102,605 102,605
Charge for the year 17,322 17,322
Acquired upon acquisition 20,738 20,738
As at 31 March 2022 140,665 140,665
As at 1 April 2022 140,665 140,665
Charge for the year 23,593 23,593
Disposal (39,293) (39,293)
As at 31 March 2023 124,965 124,965
Net book value as at 31 March 2022 65,664 65,664
Net book value as at 31 March 2023 37,648 37,648
All tangible assets shown above are assets in use by the Group's subsidiary
undertakings.
13. Right of use Assets
Group
Office assets Other Total
£ £ £
Cost
As at 1 April 2021 - 154,180 154,180
Additions 294,635 - 294,635
Acquired upon acquisition 407,731 - 407,731
Disposal (702,366) - (702,366)
As at 31 March 2022 - 154,180 154,180
As at 1 April 2022 - 154,180 154,180
Additions - - -
Disposal - - -
As at 31 March 2023 - 154,180 154,180
Depreciation
As at 1 April 2021 - 102,787 102,787
Charge for the year 117,202 12,848 130,050
Acquired upon acquisition 101,934 - 101,934
Disposal (219,136) - (219,136)
As at 31 March 2022 - 115,635 115,635
As at 1 April 2022 - 115,635 115,635
Charge for the year - 10,279 10,279
Disposal - - -
As at 31 March 2023 - 125,914 125,914
Net book value as at 31 March 2022 - 38,545 38,545
Net book value as at 31 March 2023 - 28,266 28,266
Right of Use Assets represent leasehold premises from which the Group operates
in relation to its sports and leisure activities.
All right of use assets shown above are assets in use by the Group's
subsidiary undertakings.
14. Intangible assets
Intangible assets comprise goodwill and development costs.
Assets - Cost and Net Book Value Goodwill Development Costs Technology assets Customer Databases Total
£ £ £ relationships £ £
£
Cost
As at 1 April 2021 60,000 1,085,000 - - - 1,145,000
Additions - 2,304,727 - - 2,304,727
Acquired from business combination 21,561,803 - 14,081,000 1,207,000 1,094,000 37,943,803
As at 1 April 2022 21,621,803 1,085,000 16,385,727 1,207,000 1,094,000 41,393,530
Additions - 1,456,436 - - - 1,456,436
As at 31 March 2023 21,621,803 2,541,436 16,385,727 1,207,000 1,094,000 42,849,966
Amortisation
As at 1 April 2021 - (1,085,000) - - - (1,085,000)
Amortisation - - (1,964,556) (74,724) (52,095) (2,091,375)
As at 1 April 2022 - (1,085,000) (1,964,556) (74,724) (52,095) (3,176,375)
Amortisation - (537,328) (2,018,000) (94,404) (156,285) (2,806,017)
Impairment (11,655,908) (919,108) (2,742,498) (355,162) (885,620) (16,558,296)
As at 31 March 2023 (11,655,908) (2,541,436) (6,725,054) (524,290) (1,094,000) (22,540,688)
Net book value 2022 21,621,803 - 14,421,171 1,132,276 1,041,905 38,217,155
Net book value 2023 9,965,895 - 9,660,673 682,710 - 20,309,278
· Goodwill of £60,000 included above relates to the acquisition of
Pantheon Leisure Plc which is included at its deemed cost on first time
application of IFRS.
· Goodwill of £19,041,000 included as at 31 March 2022 above to
the acquisition of Insig Partners Limited.
· Goodwill of £2,520,000 included as at 31 March 2022 relates to
the acquisition of Insig Data (formerly FDB Systems Limited).
Development costs are predominantly capitalised staff costs associated with
enhancements to the technology being developed by Insig Partners Limited. The
Group's technology, customer relationships and database technology are
acquired from the acquisitions undertaken during the period.
Goodwill is recognised when a business combination does not generate cash
flows independently of other assets or groups of assets. As a result, the
recoverable amount, being the value in use, is determined at a cash-generating
unit (CGU) level. These CGUs represent the smallest identifiable group of
assets that generate cash flows. The CGUs are deemed to be the assets within
the operating units. Each CGU to which goodwill is allocated represents the
lowest level within the Group at which the goodwill is monitored for internal
management purposes.
The total intangible value in use for each CGU, incorporating goodwill and the
intangible asset value, is determined using discounted cash flow projections
derived from the total historical revenue profile of each identifiable CGU.
The assumptions which are applied to each CGU including the useful economic
life are set out in Note 2.7.
The original CGUs for the group were ESG Research Application, Portfolio
Insights, Dash-Plus ML Framework, Crystal Ball, Insig Docs and Entity Master.
These were combined and renamed to simplify marketing to customers. ESG
Research Application is now named ESG Disclosures Research Tool; which is used
to compare companies against ESG progress with the use of the Group's ESG
framework.
The other CGUs are now part of a component catalogue which is licensed and
deployed as part of Bespoke FinTech Data Science projects. These provide
mid-sized investment managers the ability to utilise machine learning models.
The CGUs used by the group are consistent with the purchase price allocation
exercise completed in the year ended 31 March 2022 which are as follows:
· Insig ESG (ESG Disclosures Research Tool.)
· Insig Portfolio (Bespoke FinTech Data Science)
· Insig Excelton (Bespoke FinTech Data Science)
· Insig Data (ESG Disclosures Research Tool)
· Insig Docs (Bespoke FinTech Data Science)
The key assumptions for the value in use calculations are those regarding
growth rates particularly in respect of the growth in revenue and discount
rates. The discount rate is reviewed annually to take into account the
current market assessment of the time value of money and the risks specific to
the cash generating units and rates used by comparable companies. The
discount rate used to calculate the value in use is 24.9%. The long term
growth rate used for the terminal value calculation was 2%.
An impairment review of the Group's development costs, technology, customer
relationships and database technology is carried out on an annual basis.
The recoverable amounts of the cash-generating units are determined from
value in use calculations. The key assumptions for the value in use
calculations are those regarding forecast revenues, discount rates and
operating costs. Management have considered the following elements:
(i) Based on current assessments of the
Insig Partners activities made by the Directors, they consider that whilst
revenues are forecast to grow in 2024 and exponentially grow from 2025-2027,
these forecasts are reduced from previous forecasts prepared.
(ii) The reduction of activities in Insig
Data have led to the Directors assessing the need for an impairment.
(iii) Operational costs are monitored and
controlled
Following their assessment, the Directors concluded an impairment charge of
£16,558,296 was necessary for the year ended 31 March 2023 due to the reduced
future sales forecast and sale performance in the current and prior years.
15. Investments in subsidiary undertakings
Company
Shares in Group Undertakings Investment in subsidiaries Loans to Group Undertakings
Cost
31 March 2022 35,145,004 4,034,025
Additions - 1,612,305
Impairment (19,550,467) (857,731)
31 March 2023 15,594,537 4,788,599
Company
Shares in Group Undertakings and Group Loans NBV 31 March 2023 NBV 31 March 2022
£ £
Cost
Insig Partners 15,594,537 31,145,004
Insig Data - 4,000,000
Loans to Group undertakings 4,788,599 4,034,025
Total 20,383,136 39,179,029
Investments in Group undertakings are stated at cost, which is the fair value
of the consideration paid, less any impairment provision.
During the year, the £4,000,000 investment in Insig Data was fully impaired
after Management concluded that it was appropriate to reduce the scale of
Insig Data's business. It no longer has any employees, in addition to having a
minimal cost base. After assessing the recoverability of the investments, the
Directors also agreed that the intangible assets of Insig Data, being Customer
Relationships and Database should be impaired. Further information on this is
provided in note 14.
Although Insig Data's trading activity reduced significantly during the year,
it hasn't ceased its trade.
During the year, £15,550,466 of the investment held in Insig Partners was
impaired after reviewal from Management. This impairment was determined after
comparing the total investment value of £31,145,004 with the value in use
total. There was also an impairment of the intangible assets held within Insig
Partners. This was applied as a result of a revised forecast dated from March
2023 to March 2030. The revised sales expected for the Company's products and
cost base led to a reduced enterprise value of Insig Partners' intangible
assets. Further information on this is provided in note 14.
During the year, the loans granted to Insig Data by Insig AI plc, totalling
£363,610; and the loans granted to Westside Sports, totalling £89,947, were
fully impaired. The loans grated to Pantheon Leisure were partially impaired
by £404,174. These impairments were agreed based on the recoverability of the
loans, after taking the net assets of the mentioned subsidiaries into account.
The Company has provided a guarantee in respect of the outstanding liabilities
of the subsidiary companies listed below in accordance with Section 479A -
479C of the Companies Act 2006 as these subsidiary companies of the Group are
exempt from the requirements of the Companies Act 2006 relating to the audit
of the accounts by virtue of Section 479A of this Act.
Subsidiaries
The following companies were subsidiaries at the balance sheet date and the
results and year end position of these companies have been included in these
consolidated financial statements.
Name of subsidiary Registered office address Country of incorporation and place of business Proportion of ordinary shares held (%) Nature of business
Insig Partners Limited 6 Heddon Street, London, W1B 4BT United Kingdom 100% Artificial Intelligence
Westside Sports Limited 6 Heddon Street, London, W1B 4BT United Kingdom 100% Holding company
Insight Capital Consulting Limited*** 6 Heddon Street, London, W1B 4BT United Kingdom 100% Artificial Intelligence
Insig Data Limited 6 Heddon Street, London, W1B 4BT United Kingdom 100% Artificial Intelligence
Ultimate Player Limited 6 Heddon Street, London, W1B 4BT United Kingdom 100% Dormant
Pantheon Leisure Plc * 6 Heddon Street, London, W1B 4BT United Kingdom 85.87% Activities of head office
Sport In Schools Limited** 6 Heddon Street, London, W1B 4BT United Kingdom 85.87% Sports coaching in schools
The Elms Group Limited ** 6 Heddon Street, London, W1B 4BT United Kingdom 85.87% Dormant
* Shares held indirectly through Westside Sports Limited
** Shares held indirectly through Pantheon Leisure Plc
*** Shares held indirectly by Insig Partners Limited
16. Trade and other receivables
Group Company
Current 31 March 2023 31 March 2022 31 March 2023 31 March 2022
£ £ £ £
Trade receivables 125,030 239,550 - -
Amounts due from subsidiary undertakings - - 106,864 30,151
Prepayments 38,498 8,374 26,749 -
VAT receivable - 25,109 18,086 59,263
Research and development receivable 542,000 - - -
Other receivables 14,312 16,786 - -
Total 719,840 289,819 151,699 89,414
The ageing of trade receivables is as follows:
As at 31 March 2023 As at 31 March 2022
£ £
Up to 3 months 125,030 239,550
Total 125,030 239,550
17. Cash and cash equivalents
Group Company
31 March 2023 31 March 2022 31 March 2023 31 March 2022
£ £ £ £
Cash at bank and in hand 280,584 473,390 3,749 61,314
18. Trade and other payables
Group Company
31 March 2023 31 March 2022 31 March 2023 31 March 2022
£ £ £ £
Trade payables 266,978 271,103 149,346 196,341
Accruals 371,056 183,311 233,290 109,000
Deferred income 50,000 100,407 - -
Other creditors 4,852 69,568 - -
Taxes and social security 240,041 185,942 - 3,203
932,927 810,331 382,636 308,544
The ageing of trade and other payables is as follows:
As at 31 March 2023 As at 31 March 2022
£ £
Up to 3 months 170,849 412,000
3 to 6 months 296,448 114,000
6 to 12 months - -
Total 467,297 526,000
19. Leases and borrowings
Group
Company
31 March 2023 31 March 2022 31 March 2023 31 March 2022
£ £ £ £
Not later than one year:
Convertible loan note 2,261,769 - 2,261,769 -
Right of use liability 10,386 8,675 - -
Later than one year:
Right of use liability 16,868 28,966 - -
Total 2,289,023 37,641 2,261,769 -
Convertible loan notes
31 March 2023
£
Convertible loan note
Proceeds of issue of convertible loan notes - May 2022 1,000,000
Proceeds of issue of convertible loan notes - June 2022 750,000
Proceeds of issue of convertible loan notes - September 2022 500,000
Interest
Total interest payable to date (5%) 63,567
Equity
Derivative Split (51,798)
Total 2,261,769
On the 4 May 2022, the Company entered into a formal agreement for a £1.0m
convertible loan note to be provided by Richard Bernstein, Chairman of the
Company. A total of £1,000,000 has been drawn down by the Company. The loan
facility when issued was repayable on or before 31 December 2022, and interest
accrued from the date monies were drawn down at a rate of 5%. The convertible
loan note can be converted at the noteholder's discretion.
On 17 June 2022, the Company entered into a convertible loan facility
agreement with David Kyte, a long-term shareholder in the Company for
£500,000. A total of £500,000 has been drawn down by the Company. The loan
facility when issued was repayable on or before 31 December 2022, and interest
accrued from the date monies were drawn down at a rate of 5%. The convertible
loan note can be converted at the noteholder's discretion.
On 22 December 2022, the Company agreed revised terms for both the convertible
loan note (CLN) agreements with Richard Bernstein and David Kyte for £1m and
£0.5m respectively.
The following revisions were made:
- Interest owed on the first CLN will be rolled up into
the loan expiring 31 December 2023, with an interest of 8% per annum.
- A conversion price of 20 pence for Richard Bernstein,
and 18 pence for David Kyte.
- The issuance of 1,666,667 warrants expiring on 31
December 2025 exercisable at a price of 30 pence for Richard Bernstein.
- The issuance of 1,388,889 warrants expiring on 31
December 2025 exercisable at a price of 25 pence for David Kyte.
On the 12 September 2022, the Company entered into a formal agreement for a
£750,000 convertible loan note to be provided by Richard Bernstein,
Non-Executive Chairman of the Company. A total of £750,000 has been drawn
down by the Company.
The loan facility is repayable on or before 30 June 2023, and interest will be
accrued from the date monies are drawn down
at a rate of 5%. The loan facility has a conversion price which is set at the
higher of 35 pence per ordinary share or the prevailing share price at the
date of conversion. The convertible loan note can be converted at the
noteholder's discretion.
20. Deferred tax
An analysis of the deferred tax liability is set out below.
Cost
£
Deferred tax liability
As at 31 March 2021 -
Deferred tax acquired on acquisition 3,218,747
Deferred tax liability for intangibles 941,341
As at 31 March 2022 4,160,088
Deferred tax liability for intangibles (1,573,992)
As at 31 March 2023 2,586,096
21. Financial Instruments by Category
Group
31 March 2023 31 March 2022
Amortised cost Total Amortised cost Total
Assets per Statement of Financial Position £ £ £ £
Trade and other receivables 681,341 681,341 256,336 256,336
Cash and cash equivalents 280,584 280,584 473,390 473,390
961,925 961,925 729,726 729,726
31 March 2023 31 March 2022
Amortised cost Total Amortised cost Total
Liabilities per Statement of Financial Position £ £ £ £
Trade and other payables 2,964,025 2,964,025 526,612 526,612
Right of use lease liabilities 27,254 27,254 37,641 37,641
2,991,279 2,991,279 564,253 564,253
The convertible loan notes provided during the year by Richard Bernstein and
David Kyte have been included in the payables as they are classed as financial
liabilities.
Company
31 March 2023 31 March 2022
Amortised cost Total Amortised cost Total
Assets per Statement of Financial Position £ £ £ £
Trade and other receivables 106,864 106,864 30,151 30,151
Due from subsidiary undertakings 4,788,599 4,788,599 4,034,025 4,034,025
Cash and cash equivalents 3,749 3,749 61,314 61,314
4,899,212 4,899,212 4,125,490 4,125,490
31 March 2023 31 March 2022
Amortised cost Total Amortised cost Total
Liabilities per Statement of Financial Position £ £ £ £
Trade and other payables 382,636 382,636 305,341 305,341
382,636 382,636 305,341 305,341
The Company's financial instruments comprise cash and cash equivalents,
receivables and payables which arise in the normal course of business. As a
result, the main risks arising from the Company's financial instruments are
credit and liquidity risks. Please refer to Note 3.1.
22. Share capital and premium
Group and Company Number of shares Share capital
31 March 31 March 31 March 2023 31 March 2022
2023 2022
Ordinary shares 105,675,645 105,675,645 1,056,757 1,056,757
Deferred shares 22,811,638 22,811,638 2,053,047 2,053,047
Total 128,487,283 128,487,283 3,109,804 3,109,804
Number of Ordinary shares Share capital Share premium Total
Issued at 0.01 pence per share £ £ £
As at 31 March 2022 105,675,645 1,056,000 39,077,000 40,133,000
As at 31 March 2023 105,675,645 1,056,000 39,077,000 40,133,000
Deferred Shares (nominal value of 0.09 pence per share) Number of Deferred shares Share capital
£
As at 31 March 2022 22,811,638 2,053,047
As at 31 March 2023 22,811,638 2,053,047
The Company has an authorised share capital limit in place, which will be
considered by shareholders at the next annual general meeting.
23. Share based payments
The Company has established a share option scheme for Directors, employees and
consultants to the Group. Share options and warrants outstanding and
exercisable at the end of the period have the following expiry dates and
exercise prices:
Options & Warrants
Grant Date Vesting Date Expiry Date Exercise price in £ per share 31 March 2023 31 March 2022
Options
1 August 2019 31 January 2020 31 July 2023 0.20 666,666 666,666
1 August 2019 31 July 2021 31 July 2023 0.20 333,333 333,333
1 August 2019 31 July 2020 31 January 2024 0.40 333,333 333,333
1 August 2019 31 July 2021 31 January 2024 0.40 666,666 666,666
1 August 2019 31 January 2022 31 January 2025 0.60 666,666 666,666
1 August 2019 31 January 2022 31 July 2025 0.60 666,666 666,666
1 August 2019 31 July 2022 31 July 2025 0.60 666,670 666,670
8 March 2022 4 October 2024 7 March 2032 0.48 2,000,000 2,000,000
8 March 2022 4 August 2024 7 March 2032 0.48 900,000 900,000
8 March 2022 4 January 2025 7 March 2032 0.48 150,000 150,000
8 March 2022 4 March 2025 7 March 2032 0.48 300,000 300,000
Warrants
5 October 2021 5 October 2021 10 May 2027 0.84 396,582 396,582
22 December 2022 22 December 2022 31 December 2025 0.30 1,666,667 -
22 December 2022 22 December 2022 31 December 2025 0.25 1,388,889 -
Lapsed
13 April 2022 4 January 2025 7 March 2032 0.48 (100,000) -
10 June 2022 4 August 2024 7 March 2032 0.48 (75,000) -
15 January 2023 4 January 2025 7 March 2032 0.48 (50,000) -
15 January 2023 4 March 2025 7 March 2032 0.48 (50,000) -
27 January 2023 4 August 2024 7 March 2032 0.48 (250,000) -
4 February 2023 4 March 2025 7 March 2032 0.48 (250,000) -
10,027,138 7,746,582
The Company and Group have no legal or constructive obligation to settle or
repurchase the options or warrants in cash.
During the year, a total of 775,000 options lapsed as a result of employees
leaving the group.
Warrants
2023 2022
Outstanding at beginning of period 396,582 -
Exercised - -
Vested 3,055,556 396,582
Outstanding as at period end 3,452,138 396,582
Exercisable at period end 3,452,138 396,582
The movements in the weighted average exercise price of the warrants were as
follows:
2023 2022
Outstanding at beginning of period 0.84 -
Granted 0.28 0.84
Outstanding as at period end 1.12 0.84
Exercisable at period end 0.46 0.84
In accordance with IFRS2, the fair value of the warrants issued and recognised
as a charge in the accounts for the 12 month period is £1,605 (12 months
ended 31 March 2022 - £Nil). In arriving at this amount, the expected
volatility is based on historical volatility, the expected life is the average
expected period to exercise, and the risk-free rate of return is the yield on
a zero-coupon UK government bond for a term consistent with the assumed option
life.
The fair value of the equity instruments granted was determined using the
Black Scholes Model. The inputs into the model for warrants outstanding at the
year-end were as follows
2022 Warrants
Granted on: 22 December 2022
Life (years) 3 years
Share price (pence per share) 15p
Exercise price 25p
Shares under option 3,055,556
Vesting period (years) 3 years
Small company discount factor 20%
Total fair value (pence per option) 0.33
Options
In January 2011, the Company adopted an unapproved share option scheme and on
1 August 2019, the Company granted options over 4,000,000 ordinary shares in
the Company as part of a Director's compensation agreement. In March 2022, the
Company granted options over 3,350,000 ordinary shares to a Director and
certain employees. Details of the options are set out below:
2023 2022
Outstanding at beginning of period 7,350,000 4,000,000
Lapsed during period (775,000) -
Exercised - -
Granted - 3,350,000
Outstanding as at period end 6,575,000 7,350,000
Exercisable at period end 4,000,000 3,333,000
2023 2022
Outstanding at beginning of period 46.0 45.0
Lapsed 48.0 45.0
Exercised - -
Granted - 48.0
Outstanding as at period end 44.0 46.0
Exercisable at period end 44.0 46.0
The movements in the weighted average exercise price of the options were as
follows:
The fair value of the equity instruments granted was determined using the
Black Scholes Model. The only conditions attached to the options is continuing
employment. The inputs into the model for options outstanding at the year-end
were as follows:
2019 Options 2019 Options 2019 Options 2022 Options
Granted on: 1 August 2019 1 August 2019 1 August 2019 8 March 2022
Life (years) 3 years 3 years 3 years 10 years
Share price (pence per share) 17p 17p 17p 27.5p
Exercise price 20p 40p 60p 48p
Shares under option 1,000,000 1,000,000 2,000,000 3,350,000
Risk free rate 0.57% 0.57% 0.57% 0.57%
Expected volatility 43.1% 43.1% 43.1% 43.1%
Vesting period (years) 1 to 3 years 1 to 4 Years 2 to 5 Years 8 to 9 years
Small company discount factor 35% 35% 35% 35%
Total fair value (pence per option) 2.5 2.5 0.7 0.02
The expected volatility is based on historical volatility, the expected life
is the average expected period to exercise, and the risk-free rate of return
is the yield on a zero-coupon UK government bond for a term consistent with
the assumed option life.
In accordance with IFRS 2, the fair value of the share options issued and
recognised as a charge in the accounts for the 12 month period is £nil (31
March 2022 - £17,000).
The weighted average contractual life of options outstanding on 31 March 2023
was 4.3 years (31 March 2022: 2.4 years).
24. Other reserves
Merger reserve Total
£ £
Equity reserve for convertible loan notes
At 31 March 2022 - 325,583 325,583
325,583 377,381
At 31 March 2023 51,798
25. Employee benefit expense
Group Company
Staff costs (excluding Directors) Year ended Year ended Year ended Year ended
31 March 2023 31 March 2022 31 March 2023 31 March 2022
£ £ £ £
Salaries and wages 2,081,959 2,227,000 - -
Social security costs 305,479 270,789 - -
Pension contributions 128,743 108,830 - -
Other employment costs 13,668 5,933 - -
2,529,849 2,612,552 - -
The average monthly number of employees for the Group during the year was 112
(31 March 2022: 119) and the average monthly number of employees for the
Company was nil (31 March 2022: nil).
Of the above Group staff costs, £1,167,769 (31 March 2022: £1,463,000) has
been capitalised in accordance with IAS 38 as development costs and are shown
as an intangible addition in the year
There were no employees in the Company apart from Directors whose remuneration
is disclosed in Note 26.
26. Directors' remuneration
31 March 2023
Salary Pension Total
£ £ £
Executive Directors
Richard Bernstein 35,000 - 35,000
Steven Cracknell 146,667 10,000 156,667
Warren Pearson 146,667 10,000 156,667
Colm McVeigh 233,333 9,333 242,666
Non-executive Directors
John Murray 35,000 - 35,000
Richard Cooper 43,826 - 43,826
640,493 29,333 669,826
Directors who were appointed during the year:
· Richard Cooper - appointed 11 April 2022
Directors who retired after the year end:
· John Murray - deceased 24 April 2023
Of the above Group directors' remuneration, £288,665 (year ended 31 March
2022: £375,210 has been capitalised in accordance with IAS 38 as development
related costs and are shown as an intangible addition in the year.
31 March 2022
Remuneration Share based payments Total
£ £ £
Executive Directors
Richard Bernstein 22,167 - 22,167
Steven Cracknell 216,843 - 216,843
Warren Pearson 228,924 - 228,924
Colm McVeigh 124,679 - 124,679
Matthew Farnum-Schneider 140,258 17,000 157,258
Non-executive Directors
John Murray 31,237 - 31,237
Peter Rutter 22,487 - 22,487
David Coldbeck 10,551 - 10,551
John Zucker 10,551 - 10,551
David Hillel 15,827 - 15,827
823,524 17,000 840,524
The fair value of the share options issued to Matthew Farnum-Schneider and
recognised as a charge in the accounts for the 12 month period is £17,000.
The remuneration of Directors and key executives is determined by the
remuneration committee having regard to the performance of individuals and
market trends.
27. Income tax expense
Group
Year ended Year ended
31 March 2023 31 March 2022
£ £
Deferred Tax
Fixed assets and short-term temporary difference (1,573,992) (538,501)
Intangibles on business combinations - (402,840)
Losses and other deductions - -
Total deferred tax (1,573,992) (941,341)
Current Tax
UK corporation tax on profit for the year (542,000) -
Adjustments in respect of prior periods (749,873) -
Total current tax (1,291,873) -
Total income tax expense (2,865,865) (941,341)
Group
Year ended Year ended
31 March 2023 31 March 2022
£ £
Loss before tax (21,428,211) (3,243,000)
Tax at the applicable rate of 19% (2022: 19%) (4,071,360) (616,000)
Effects of:
Expenditure not deductible for tax purposes 2,940,457 1,456,000
Additional deduction for R&D expenditure (401,421) -
Surrender of tax losses for R&D tax credit refund 168,207 -
R&D expenditure credits 8,461 -
Group relief surrendered/(claimed) (20,948) -
Adjustments in respect of prior periods regarding R&D (749,873) -
Effect of tax rate change on deferred tax opening balance (209,040) -
Effect of tax rate change on deferred tax acquired in business combinations - 226,000
Unrecognised deferred tax asset in relation to carried forward losses (530,348) (2,008,000)
Tax charge (2,865,865) (942,000)
The Group has unutilised tax losses of approximately £13,828,392 (31 March
2022 £11,707,000) available to carry forward against future taxable profits.
No deferred tax asset has been recognised on accumulated tax losses because of
uncertainty over the timing of future taxable profits against which the losses
may be offset.
28. Loss per share
Group
The calculation of the total basic loss per share of (17.89) pence (31 March
2022: (4.40) pence) is based on the loss attributable to equity holders of the
parent company of £18,563,996 (31 March 2022: £4,199,720) and on the
weighted average number of ordinary shares of 103,757,837 (31 March 2022:
95,267,869) in issue during the year.
In accordance with IAS 33, basic and diluted loss per share are identical for
the Group as the effect of the exercise of share options would be to decrease
the loss per share. Details of share options that could potentially
dilute earnings per share in future periods are set out in Note 23.
29. Contingent liabilities
In the prior year, there was an ongoing legal dispute between the Company and
a former employee for breach of contract. A settlement was agreed in relation
to this dispute on 17(th) March 2023 and the matter is now closed.
30. Related party transactions
Loans to Group undertakings
Amounts receivable as a result of loans granted to subsidiary undertakings are
as follows:
Company
31 March 2023 31 March 2022
£ £
Insig Partners 4,655,904 3,333,269
Insig Data (formerly FDB Systems Limited) - 71,850
Insight Capital Consulting Limited 31 -
Pantheon Leisure 132,664 538,959
Westside Sports Limited - 89,947
4,788,599 4,034,025
Insig Partners Limited
Loans totalling £1,322,635 were provided to Insig Partners Limited from Insig
AI Plc during the year to cover operating costs (31 March 2022: £3,113,269).
Insig Data Limited (formerly FDB Systems Limited)
Loans totalling £291,761 were provided to Insig Data from Insig AI Plc during
the year to cover operating costs (31 March 2022: £71,850).
At the end of the year, the loan balance was fully impaired.
Insight Capital Consulting Limited
Loans totalling £31 were provided to Insight Capital Consulting from Insig
Partners Limited during the year to cover operating costs (31 March 2022:
£15,718).
Westside Sports Limited
At the end of the year, the loan balance was fully impaired
Pantheon Leisure Plc
Loans totalling £2,121 were provided to Pantheon Leisure from Insig AI Plc
during the year to cover operating costs (31 March 2022: £26,645).
At the end of the year, the loan balance was partially impaired by £404,174.
These amounts are unsecured and repayable on demand.
All intra Group transactions are eliminated on consolidation.
Other transactions
The Group defines its key management personnel as the Directors of the Company
as disclosed in the Directors' Report.
Luclem Estates, a limited company of which Richard Cooper is a director, was
paid a fee of £32,112 for the year ended 31 March 2023 (31 March 2022: £nil)
for the provision of corporate management and consulting services to the
Company. There was a balance of £7,362 owing at year end (31 March 2022:
£Nil).
On the 4 May 2022, the Company entered into a formal agreement for a £1.0m
convertible loan note to be provided by Richard Bernstein. The loan facility
when issued was repayable on or before 31 December 2022, and interest accrued
from the date monies were drawn down at a rate of 5%.
On the 12 September 2022, the Company entered into a formal agreement for a
£750,000 convertible loan note to be provided by Richard Bernstein. A total
of £750,000 has been drawn down by the Company. The loan facility is
repayable on or before 30 June 2023, and interest will be accrued from the
date monies are drawn down at a rate of 5%.
On 21 December 2022, Steven Cracknell and Warren Pearson, Chief Product
Officer and Chief Technology Officer gifted at nil value, their shares to the
Company to be held in treasury and to be used at the discretion of the
Company. Steven Cracknell gifted 4,500,000 ordinary shares of 1p each and
Warren Pearson has gifted 2,500,000.
On 22 December 2022, the Company agreed revised terms for the convertible loan
note, being Interest owed on the first CLN to be rolled up into the loan
expiring 31 December 2023, with an interest of 8% per annum.
In addition the Company also granted Richard Bernstein 1,666,667 warrants as
part of the revision to the terms.
31. Ultimate controlling party
The Directors believe there is no ultimate controlling party.
32. Events after the reporting date
On 24 April 2023 the Company announced that it had successfully raised £0.9
million by way of equity subscription for 5,294,118 ordinary shares of 1 pence
each in the Company at 17 pence per Ordinary Share. The shares will be issued
from Treasury, from shares gifted to the Company in December 2022 by founders
Steve Cracknell and Warren Pearson, Chief Product Officer and Chief Technology
Officer. Specifically, 1,764,705 Subscription Shares were issued on 27 April
2023 with the balance of 3,529,413 Subscription Shares being issued on 23 June
2023.
On 4 July 2023, the Company announced that it had agreed revised terms for the
convertible loan note (CLN) agreement with Richard Bernstein as announced on
12 September 2022 for £0.75 million. The Company and Loan Note Holder agreed
to extend the term of the CLN by six months to 30 December 2023.
END
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR NKNBQDBKBCFDRecent news on Insig Ai
See all newsREG - Insig AI Plc - Share subscription, director dealing and TVR
AnnouncementREG - Insig AI Plc - Director/PDMR Shareholding
AnnouncementREG - AIM - AIM Notice - 10/04/2024
AnnouncementREG - Insig AI Plc - Funding facility, share allotment & PDMR dealing
AnnouncementREG - Insig AI Plc - Trading update & equity funding facility proposal
Announcement