REG - itim Group PLC - Full Year Results and Notice of AGM
14/04/2023 07:00
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RNS Number : 1771W itim Group PLC 14 April 2023
14 April 2023
itim Group plc
("itim" or "the Company" and together with its subsidiaries "the Group")
Full year results for the year ended 31 December 2022 and Notice of AGM
itim Group plc, a SaaS based technology company that
enables store-based retailers to optimise their businesses to improve
financial performance, is pleased to announce its audited results for the
year ended 31 December 2022.
Financial Highlights
· Group revenues increased by 4% to £14 million (2021: £13.5 million)
· Annual recurring revenue ("ARR") is £13.2 million (2021: £11.1 million)
· Group Adjusted EBITDA* £0.2 million (2021: £2.2 million)
· Adjusted EBITDA* margin decreased by 19 percentage points ("PPT") to 2% (2021:
17%)
· Adjusted Earnings per share** -2.01 pence (2021: 3.75 pence)
· Closing cash balances were £3.9 million at 31 December 2022, down from £6.2
million at 31 December 2021
* EBITDA has been adjusted to exclude share-based payment charges, exceptional
items, along with depreciation, amortisation, interest and tax from the
measure of profit
** The profit measure has been adjusted to exclude exceptional items and share
option charge
Copies of the Annual Report and Accounts for FY2022 with the notice of annual
general meeting have been posted to shareholders today and are available on
the Company's website www.itim.com. The Company intends to hold its annual
general meeting at 11am on 12th May 2023 at the offices of DMH Stallard LLP, 6
New Street Square, London EC4A 3BF.
Enquiries:
Itim Group plc Ali Athar, CEO 0207 598 7700
Ian Hayes CFO
WH Ireland (NOMAD & Broker) Katy Mitchell 0207 220 1666
Harry Ansell
Darshan Patel
IFC Advisory Graham Herring 0207 3934 6630
Florence Chandler
ABOUT ITIM
itim was established in 1993 by its founder, and current Chief Executive
Officer, Ali Athar. itim was initially formed as a consulting business,
helping retailers effect operational improvement. From 1999 the Company began
to expand into the provision of proprietary software solutions and by 2004 the
Company was focused exclusively on digital technology. itim has grown both
organically and through a series of acquisitions of small, legacy retail
software systems and associated applications which itim has redeveloped to
create a fully integrated end to end Omni-channel platform.
CHAIRMAN'S STATEMENT
I am pleased to report that itim's focus on product development, strengthening
recurring revenues and diversifying its customer base has insulated it from
significant impact in the difficult economic climate which prevailed in 2022
following Russia's invasion of Ukraine early in the year. It is also a credit
to the team that we achieved some important strategic milestones in the year
to ensure we remained in line with customer requirements in the prevailing
business environment.
I said in my report last year that itim entered 2022 in a solid financial
position following the IPO fundraise and growing subscription revenues and
client activity. A keynote is that we continued to invest significant sums in
our R&D programme in 2022 alongside investing in our staff base.
Furthermore, we have identified exciting growth opportunities for 2023
including a relaunch of our consultancy business as a complement to our
technology offering and to enable our customers to gain the maximum benefit
from it.
We also see a great opportunity in launching a payment hub designed to meet
the needs of our retailer customers with the potential to offer them
considerable cost savings when compared to traditional bank offerings.
Overall, excellent progress was made.
Financial results
Revenues increased by 4% year on year increasing from £13.5m in 2021 to £14m
in 2022. Importantly, annual recurring revenues ("ARR") at the year-end
increased significantly from £11.1m to £13.2m an increase of 19% with
recurring revenues representing 84% of total revenues (2021: 77%). Gross
margins fell however to 32% (2021: 41%) principally due to vital investment in
headcount and ensuring the team remain committed and incentivised, but also
due to the fact that many of our new customer contracts are subscription only
with no up-front fees as previously with income consequently being delayed
later into the cycle. This one-off impact should reverse out over time as
subscription revenues kick in.
People
Itim's business is built around its people and products and as mentioned we
have invested heavily in both. The team's commitment and passion to deliver
first-rate services to our customers is evident and I continue to be immensely
impressed with their high calibre and commitment. We review the effectiveness
of the team and any areas where we could benefit from bringing in new
expertise on an ongoing basis and I am pleased to report that a considerable
number of new appointments were made during the year.
Outlook
We believe the need for itim's products and services is greater than ever as
it becomes paramount for our customers to maintain profitability by driving
efficiencies throughout their businesses. With the investment we have made in
team, technology and products we are well placed to deliver on these
requirements. We believe these factors together with the new developments
outlined above will maintain momentum during 2023 and I am optimistic that
2023 will see continued growth in revenues and profits.
The Board and I extend our thanks to our loyal team, our partners and
customers for their support.
Michael Jackson
Chairman
13th April 2023
CHIEF EXECUTIVE'S REVIEW
I am pleased to report that the solid platform for growth that was laid in
2021 has indeed led to the growth in sales in 2022 in what can only be
described as a difficult trading period. Revenues in the year increased by 4%
over 2021 with booked recurring revenue for the year of £11.8m representing
84% of Group turnover.
Itim currently has close to 80 customers using all or some elements of our
platform providing us with a stable, recurring revenue base. We also have a
good mix of business in the UK and growing international revenues.
The challenges caused by inflationary pressures should result in our customers
homing in on all possible [cost effective] efficiencies to improve or at least
maintain performance. Itim's business is designed precisely to meet such
objectives and we therefore anticipate that although 2023 is likely to be a
challenging year for retailers, itim's business will nevertheless fare well in
this climate.
Within our own business we focused on two objectives in 2022. First, we
focused on improving our EBITDA margin as investor sentiment turned to cash
conservation, and we have taken various steps in this regard. Second, we
looked to ensure that sales growth is matched by cash generation. To these
ends we have and will continue to reduce the incentives we have previously
offered customers. We are also keenly aware that rapid sales growth has
sometimes resulted in pressures on cash flows. We have therefore amended our
business plan to seek out growth opportunities that satisfy these two
objectives. Alongside these steps and in order to protect itim for the future,
we have continued to invest in R&D, increasing spend in 2022 and invested
in building and protecting our staff base.
Key business developments planned for 2023 are:
To relaunch our consultancy business with the objective of assisting customers
maximise the benefits from deploying itim's technology and enabling them to
remain firmly focused on their own businesses. We firmly believe that many of
our customers would welcome our expertise to help them maximise the benefits
of our technology.
To launch an extension to our Retail Suite to allow us to provide
Merchandising applications like line cards, and WSSI. Critical processes for
retailers.
A second development planned for 2023 is to launch a payment hub which we have
been funding over the past two years.
Itim provides an application called Didos which does invoice matching for
about 30 major UK retailers. Invoice matching is how retailers approve
supplier invoices. We have been approached by fintechs who want to collaborate
with us in facilitating international payments to suppliers and also allowing
retailers to offer invoice discounting services.
Itim provides EDI services and our 'itim hub' application to allow retailers
and suppliers to digitally collaborate.
The payment hub is an extension of both those offerings. It is an application
in the 'itim hub' that will allow us to collaborate with some of these fintech
businesses.
In summary, our existing applications and new developments and consulting
services will I believe ensure that itim is well placed to continue to win new
customers and we see numerous opportunities within our existing customer base
to increase our revenues.
Ali Athar
Chief Executive Officer
13th April 2023
CHIEF FINANCIAL OFFICER'S REVIEW
Income Statement
Overview
Our 2022 financial year was overshadowed by global events which drove double
digit inflation which in turn fed into costs. The year post IPO was forecast
as an investment year with additional headcount being taken on to deliver
projects and improve quality. With headcount costs representing over 60% of
our cost base and average pay increases of over 11% during the year management
expected a detrimental impact on the full years result.
Revenue
With the uncertainty of global events and the impact on retailers of
increasing cost of goods, wage pressure and spiralling transportation costs,
we observed that retailer's decision making timescales lengthened which we
believe was due to them hunkering down to weather the uncertainties. This led
to longer sales cycles for itim but also slowed project delivery timescales.
However despite this, the Group still achieved an uplift on revenues during
2022 of 4.2% moving revenue to £14.0m from £13.5m in 2021 with Annual
Recurring Revenue (ARR) increasing 19% to £13.2m at the year-end (2021:
£11.1m). Additionally the quality and certainty of 2022 revenues improved
with 84% of turnover coming from recurring revenues (2021: 77%).
Gross profit
2022 was the first full year in which the Group had secured new contracts that
were subscription only with no upfront services fees. Where no services fees
are being charged to the customer for implementation, the cost of
implementation is being absorbed by the business. As a consequence, with no
revenues in the year of implementation of a project - margins and EBITDA will
be depressed in that year. Additionally with the gearing up of headcount ahead
of projects and the inflationary impact on cost of sales it was inevitable
that the gross margin of the group would drop in the year. This should improve
over time when the subscriptions revenues commence. As a result the overall
gross margin dropped to 32% in 2022 (2021: 41%) but should improve on the
commencement of the subscription revenue of those contracts.
Administrative expenses
The 30% increase in administrative expenditure over the 2021 cost was caused
by three main factors. Firstly inflationary increases on salaries, secondly
pulling forward investment in sales and administrative hires that were
scheduled for 2023 into 2022, and lastly the full year's impact of being a
listed business over the six monthly cost incurred in 2021.
Foreign exchange rates
With 35% of revenues denominated in foreign currencies, the table below sets
out the percentage of annual contracts in the foreign currencies we trade in
and the impacts of those foreign currencies at the Balance Sheet date and the
average movements over the course of the year for P&L purpose.
Foreign exchange rates have remained volatile during the year with an overall
weakening of Sterling against all our functional currencies throughout the
year and at the year end. The most significant impact for itim has been the
16% depreciation of Sterling against the Brazilian Real between December 2021
and December 2022 as 18% of our contracts are denominated in Reals. The
Sterling to Euro rate has experienced similar volatility with Sterling ending
the year 5% weaker at 31st December 2022 when compared to 31st December 2021
with 9% of our contracts in Euro's.
Despite phasing of movements over the current and prior year the weighted
monthly average exchange rate of translating from functional currencies also
remained volatile, with the Brazilian Real and US Dollar strengthening against
Sterling by 14% and 10% respectively.
FX Rates 31-Dec-21 31-Dec-22 31-Dec-22 2021 Average 2022 Average 2022
(% of ARR at year end) FX rate FX rate Variance % FX rate FX rate Variance %
£GBP/Euro (ARR 9%) 1.191 1.129 -5% 1.163 1.150 -1%
£GBP/BRL (ARR 18%) 7.612 6.386 -16% 7.42 6.389 -14%
£GBP/USD (ARR 8%) 1.354 1.209 -11% 1.376 1.238 -10%
Financing costs
Total net interest costs in the year were nil (2021: £67k).
The reduction in interest payable on external loans was due to repayment of
borrowing during the year ended 31st December 2021 leaving the business debt
free.
Exceptional items
Exceptional costs incurred during the year were £nil (2021:
£0.7m). The comparative cost relates to the initial public offering and
admission to AIM which could not be directly attributed to the raising of new
equity and therefore were expensed through the P&L.
Taxation
The Group continues to take advantage of R&D tax credits as it continues
to innovate its technology offering. The current year tax credit is made of up
of a net current tax credit of
£0.62m (2021: £0.26m) and a deferred tax charge of £0.03m (2021: £0.2m).
Earnings/(Loss) per share
Basic EPS for the year was -2.2p (2021: 0.88p) and the diluted EPS was -2.2p
(2021: 0.78p).
On an adjusted profit basis after adjusting for exceptional items and the
share option charge the adjusted earnings basic EPS was -2.01p (2021: 3.75p)
and the adjusted earnings diluted EPS was -2.01p (2021: 3.32p).
Dividend
The Board does not propose to pay a dividend in respect of the financial year
(2021: £nil).
Group Statement of Financial position
The Group had net assets of £12m at 31st December 2022 (2021: £13m) a
decrease of £1m attributable to the loss for the year.
Cash flow and working capital
The Group ended the year with a cash balance of £3.9m (2021: £6.2m).
Cash generated from operating activities for the year amounted to £0.5m
(2021: £2.1m). There were no further inflows from investing activities during
the year (2021: £7.7m).
Cash expended was on capitalised product development of £2.2m (2021: £1.4m)
payment of debt, interest, lease liabilities and equipment of £0.5m
(2021:£4.3m). Additionally a further loan of £0.1m was made to a fintech
start up to explore the disintermediation of banks on retailer's cost of bank
payments. Which taken together with our opening cash balance of £6.2m gives
the closing cash balance at the year- end.
IPO and admission to AIM
In June 2021 itim was admitted to AIM, a market of the London Stock Exchange
after a successful initial public offering raising £8m (gross) to support its
growth strategy as it continues to transition to a subscription-based revenue
model.
Equity
There were no changes in equity during the year.
On the 28th June 2021 the Company issued 5,194,806 new 5p shares at 154p each
raising £8m in new equity.
In May 2021 as part of the listing process, the Company purchased 110,251,743
deferred shares for 1p and subsequently cancelled that class of share whilst
creating a capital redemption reserve of the same value.
Additionally, the Company undertook a capital reduction transferring
£10,468,919 of share premium to retained earnings.
Ian Hayes
Chief Financial Officer
13th April 2023
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2022
Total Total
Note
2022 2021
£'000 £'000
Revenue 4,5 14,034 13,474
Cost of sales (9,538) (7,953)
Gross profit 4,496 5,521
Administrative expenses (4,285) (3,297)
EBITDA 211 2,224
Amortisation of intangible assets 13 (889) (746)
Share option charge 24 (58) (151)
Depreciation 14 (42) (38)
Depreciation of right-of-use/HP assets 20,14 (452) (297)
Profit on disposal of right-of-use assets 20 - 10
(Loss) / profit from operations (1,230) 1,002
Finance costs 10 - (67)
Other interest (45) (42)
Exceptional items 6 - (667)
(Loss) / profit on ordinary activities before taxation 6 (1,275) 226
Taxation 11 589 26
(Loss) / profit for the year (686) 252
Other comprehensive income
Exchange differences on retranslation of foreign operations 124 (119)
Total comprehensive (loss) / income for the year net of tax (562) 133
Earnings/(Loss) per Share
Basic 12 (2.20)p 0.88p
Diluted 12 (2.20)p 0.78p
All comprehensive income for continuing operations is shown above.
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Share Capital Foreign Retained
Share Share options redemption exchange profits/
capital premium reserve reserve reserve (losses) Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 2,379 10,469 304 - 145 (8,283) 5,014
Comprehensive income for the year - - - - - 252 252
Foreign exchange movement - - - - (119) - (119)
Total comprehensive income - - - - (119) 252 133
Share option charge - - 151 - - - 151
Share buyback of deferred shares (1,103) - - 1,103 - - -
Cancellation of share premium - (10,469) - - - 10,469 -
Shares issued in the period - IPO 260 7,740 - - - - 8,000
Share option conversion 25 156 - - - - 181
IPO expenses - (498) - - - - (498)
At 31 December
2021
1,561 7,398
455 1,103
26 2,438 12,981
Comprehensive income for the year - - - - - (686) (686)
Foreign exchange movement - - - - 124 - 124
Total comprehensive income - - - - 124 (686) (562)
Share option charge - - 58 - - - 58
At 31 December 2022 1,561 7,398 513 1,103 150 1,752 12,477
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
2022 2021
Note £'000 £'000
Non-current assets
Intangible assets 13 10,069 8,733
Plant and equipment 14 721 280
Right-of-use assets 20 442 649
Deferred tax 11 164 65
Total non-current assets 11,396 9,727
Current assets
Trade and other receivables 16 4,603 3,702
Cash and cash equivalents 3,922 6,172
Total current assets 8,525 9,874
Total assets 19,921 19,601
Current liabilities
Trade and other payables 17 (5,776) (5,218)
Right-of-use liability 20 (297) (290)
Total current liabilities (6,073) (5,508)
Non-current liabilities
Trade and other payables due in more than one year 18 (540) (176)
Right-of-use liability 20 (201) (434)
Deferred tax 11 (630) (502)
Total non-current liabilities (1,371) (1,112)
Total liabilities (7,444) (6,620)
Net assets 12,477 12,981
Capital and reserves
Called up share capital 22 1,561 1,561
Share premium account 23 7,398 7,398
Share options reserve 23 513 455
Capital redemption reserve 23 1,103 1,103
Foreign exchange reserve 23 150 26
Retained profit 23 1,752 2,438
Shareholders' funds 12,477 12,981
These financial statements were approved and authorised for issue by the Board
of Directors on 13th April 2023
Signed on behalf of the Board of Directors
I D Hayes
Director
The notes form part of these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Note 2022 2021
£'000 £'000
Non-current assets
Intangible assets 13 - -
Plant and equipment 14 647 213
Investments 15 5,071 5,071
Deferred tax 11 - 55
5,718 5,339
Current assets
Trade and other receivables 16 13,774 10,738
Cash and cash equivalents 1,041 3,209
14,815 13,947
Total assets 20,533 19,286
Current liabilities
Trade and other payables 17 (647) (498)
Deferred tax 11 (84) -
(731) (498)
Non-current liabilities
Trade and other payables due in more than one year 18 (540) (176)
Total liabilities (1,271) (674)
Net assets 19,262 18,612
Equity
Called up share capital 22,25 1,561 1,561
Share premium account 23,25 7,398 7,398
Share options reserve 23,25 513 455
Capital redemption reserve 23,25 1,103 1,103
Retained profit 23,25 8,687 8,095
Equity shareholders' funds 19,262 18,612
These financial statements were approved and authorised for issue by the Board
of Directors on 13th April 2023
Signed on behalf of the Board of Directors
I D Hayes
Director
The notes form part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2022
2022 2021
Note £'000 £'000
Cash flows from operating activities
Profit/(loss) after taxation (686) 252
Adjustments for:
Taxation 11 (589) (26)
Finance costs 10 - 67
Share option charge 24 58 151
Other interest on leases 20 45 42
Amortisation and depreciation 13,14, 20 1,383 1,081
(Profit)/Loss on disposal of right-of-use assets 20 - (10)
Cash flows from operations before changes in working capital 211 1,557
Movement in trade and other receivables 16 (384) (354)
Movement in trade and other payables 17 371 335
Cash generated from operations 198 1,538
Finance costs 10 - (4)
Corporation tax 280 543
Net cash flows from operating activities 478 2,077
Cash flows from investing activities
Capital expenditure on intangible assets 13 (2,140) (1,361)
Purchase of plant and equipment 14 (49) (49)
Proceeds from shares issued - IPO 22 - 8,000
Proceeds from share option conversion 22 - 181
IPO expenses 22 - (498)
Net cash flows from investing activities (2,189) 6,273
Cash flows from financing activities
Loan Repayments 19 - (3,659)
Interest repayments 19 - (98)
Payment of lease liabilities 20 (438) (335)
Loan issued 16 (140) (210)
Net cash flows from financing activities (578) (4,302)
Net increase/(decrease) in cash and cash equivalents (2,289) 4,048
Cash and cash equivalents at beginning of year 6,172 2,127
Exchange gains/(losses) on cash and cash equivalents 29 39 (3)
Cash and cash equivalents at end of year 3,922 6,172
The notes form part of these financial statements.
COMPANY CASH FLOW STATEMENT
Year ended 31 December 2022
2022 2021
£'000 £'000
Cash flows from operating activities
Profit/(loss) after taxation 592 (501)
Adjustments for:
Taxation 11 139 40
Depreciation 14 170 5
Finance costs 15 63
Finance income (25) (18)
Share option charge 24 58 151
Cash flows from operations before changes in working capital 949 (260)
Movement in trade and other receivables 16 (2,895) (721)
Movement in trade and other payables 17 - 49
Cash generated from operations (1,946) (932)
Finance income 25 18
Net cash flows from operating activities (1,921) (914)
Cash flows from investing activities
Proceeds from share capital issued - IPO 22 - 8,000
Proceeds from share option conversion 22 - 181
IPO expenses 22 - (498)
Net cash flows from investing activities (7,683)
Cash flows from financing activities
Loan repayments 19 - (3,409)
Interest paid 19 - (98)
Payment of lease liability (107) -
Loan issued 16 (140) (210)
Net cash flows from financing activities (247) (3,717)
Net (decrease) /increase in cash and cash equivalents (2,168) 3,052
Cash and cash equivalents at beginning of year 3,209 157
Cash and cash equivalents at end of year 1,041 3,209
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate Information
The consolidated financial statements of ITIM Group plc and its subsidiaries
(collectively, the Group) for the year ended 31 December 2022 were authorised
for issue in accordance with a resolution of the directors on 13th April 2023.
itim Group plc ("the Company") is a public limited company incorporated and
domiciled in the UK. The nature of the operations and principal activities of
the Company and its subsidiary undertakings (the "Group") are set out in the
Strategic Report on pages 4 to 11 and the Directors' report on pages 25 to 27.
2. Basis of preparation
The consolidated financial statements of the Group are prepared under IFRS and
International Financial Reporting Interpretations Committee ("IFRIC")
interpretations in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 applicable to
companies reporting under IFRS.
The Company's financial statements have been prepared under IFRS and
International Financial Reporting Interpretations Committee ("IFRIC")
interpretations in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and as permitted by
section 408 of the Companies Act 2006, no income statement is presented for
the company. The Company made a profit of £591,650 for the year ended 31
December 2022 (2021 loss: £501,537)
The financial statements are presented in GBP, which is also the company's
functional currency.
Amounts are rounded to the nearest thousand, unless otherwise stated.
The financial statements have been prepared on the going concern basis.
3. Summary of significant accounting policies
Basis of consolidation
The Group financial statements consolidate the financial statements of the
company and its subsidiary undertakings drawn up to 31 December each year. The
results of subsidiaries acquired or sold are consolidated for the periods from
or to the date on which control passed. Acquisitions are accounted for under
the acquisition method.
Subsidiaries
Subsidiaries are all entities over which the Group has the ability to exercise
control and are accounted for as subsidiaries. The results of subsidiaries are
included in the Group income statement from the date of acquisition until the
date that such control ceases. Intercompany transactions and balances between
Group companies are eliminated upon consolidation.
Revenue recognition
Revenue was recognised to the extent that it was probable that the economic
benefits would flow to the Group and the revenue could be reliably measured.
Revenue represents the amounts (excluding value added tax) derived from the
provision of goods and services to third party customers during the year by
the group. Revenue is derived from the Group's principal activity and excludes
VAT.
The Group derives revenue from two principal sources as noted below:
1. Recurring revenue Recurring revenue consists of:
• Subscriptions - revenue from subscriptions derive from the Group's hosted
software-as-a-service subscription application, which allows customers to use
hosted software over the contract period without taking possession of the
software. Revenue is recognised over the contract period, commencing on the
date of the service go live which gives the customer the right-to-use and
access the platform.
• Support and maintenance - derive from support services and software upgrades
offered to customers using the Group's software products. Revenue is
recognised over the contract period, commencing on the go-live date of the
implementation which gives the customer the right to access support services
and the right to receive upgrades.
2. One off revenue
One off revenue consists of:
· Licences - the performance obligation for the provision of licences is
considered to be satisfied when the agreement is signed by the customer and
they are given access to the related software intellectual property ("IP")
without any requirement to provide updates. It is recognised in full at the
transaction price and over the period of implementation before the go live
date of the implementation.
· Services - Services revenue relate to design and implementation services for
each customer. Services enhance an asset that the customer controls and the
Group creates specific fit for purpose assets which cannot be used elsewhere.
The transaction price is the amount determined by fixed price contracts or on
a time and materials basis where the Group has a right for consideration for
work performed to date. Under the terms of the contracts, the Group has a
right to invoice at the achievement of various milestones in the contract.
· Services are recognised over time and management consider the time spent as a
proportion of total time expected is the most appropriate basis for
recognition of this revenue stream as staff time is the main input into the
delivery of the service. Any differences to the revenue measured by the above
method and the amounts invoiced are included in the balance sheet. Further
information on the contracts assets or contract liabilities are included in
note 4.
Intangible assets - Goodwill
Goodwill is not amortised but tested for impairment annually and whenever
impairment indicators require. In most cases the Group identified its cash
generating units as one level below that of an operating segment. Cash flows
at this level are substantially independent from other cash flows and this is
the lowest level at which goodwill is monitored. A goodwill impairment loss is
recognised in the Statement of Comprehensive Income whenever and to the extent
that the carrying amount of a cash-generating unit exceeds the unit's
recoverable amount, which is the greater of value in use and fair value less
cost to sell.
Negative goodwill relating to intangible fixed assets requires immediate
recognition in the Statement of Comprehensive Income.
In calculating goodwill, the total consideration, both actual and deferred, is
taken into account. Where the deferred consideration is contingent and
dependent upon future trading performance, an estimate of the present value of
the likely consideration payable is made. This contingent consideration is
re-assessed annually. The difference between the present value and the total
amount payable at a future date gives rise to a finance charge which is
charged to the Statement of Comprehensive Income and credited to the liability
over the period in which the consideration is deferred. The discount used
approximates to market rates.
Intangible assets - research and development expenditure
Research expenditure is written off as incurred. Internally generated
development expenditure is also written off, except where the directors are
satisfied as to the technical, commercial and financial viability of
individual projects. In such cases, the identifiable expenditure is
capitalised and amortised over the period during which the group is expected
to benefit. This period is seven years. Provisions are made for any
impairment.
Intangible assets - other
Other intangible assets recognised in these financial statements consist of
Customer contracts and relationships and Intellectual Property Rights acquired
on the acquisition of EDI Plus Limited.
Amortisation is calculated to write off their cost or valuation less any
residual value over their estimated useful lives as follows:
Customer contracts and relationships - straight line over 10 years
Intellectual Property Rights - straight line over 10 years
The amortisation of intangible fixed assets is shown as a separate line in the
Consolidated Statement of Comprehensive Income.
The carrying values of intangible assets are reviewed for impairment whenever
events or changes in circumstances indicate the carrying value may not be
recoverable.
Impairment non-current assets
For the purposes of impairment testing, goodwill is allocated to each of the
Group's cash-generating units. A cash-generating unit to which goodwill has
been allocated is 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 its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit
pro-rata based on the carrying amount of each asset in the unit.
Any impairment loss for goodwill is recognised directly in profit or loss. An
impairment loss recognised for goodwill is not reversed in subsequent periods.
Foreign currencies
Transactions denominated in a foreign currency are translated into sterling at
the rate of exchange ruling at the date of the transaction. At the balance
sheet date, monetary assets and liabilities denominated in foreign currency
are translated at the rate ruling at that date. All exchange differences are
dealt with in the Statement of Comprehensive Income.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the
initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair
value is determined. The gain or loss arising on translation of non-monetary
measured at fair value is treated in line with the recognition of gain or loss
on change in fair value in the item.
For consolidation purposes, the assets and liabilities of overseas subsidiary
undertakings are translated at the functional currency at the rate of exchange
ruling at the reporting date. Profit and loss accounts of such undertakings
are consolidated at the average rate of exchange during the year. Exchange
differences arising are included in a separate component of equity.
Plant and equipment
Plant and equipment is carried at cost less accumulated depreciation and any
recognised impairment in value. Cost comprises the aggregate amount paid to
acquire asset and includes costs directly attributable to making the asset
capable of operating as intended.
Depreciation of plant and equipment is calculated to write off their cost or
valuation less any residual value over their estimated useful lives as
follows:
Computer equipment - straight line over 3 years
Office equipment - straight line over 3 years
Fixtures and fittings - straight line over 3 years
The assets' residual values, useful lives and methods of depreciation are
reviewed, and adjusted if appropriate on an annual basis. An asset is
de-recognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on de-recognition of the
asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the income statement in the
period that the asset is derecognised. The carrying values of tangible fixed
assets are reviewed for impairment in periods if events or changes in
circumstances indicate the carrying value may not be recoverable.
Fixed asset investments
Subsidiaries are measured at cost less impairment. Investments are reviewed
for impairment at the end of the first full financial year following the
acquisition and in other periods if events or changes in circumstances
indicate that the carrying value may not be recoverable. Provision is made for
any impairment.
Trade and other receivables
Trade and other receivables are initially stated at their fair value plus
transaction costs, then subsequently at amortised cost using the effective
interest method if applicable, less impairment losses. Provisions against
trade and other receivables are made when there is objective evidence that the
Group will not be able to collect all amounts due to them in accordance with
the original terms of those receivables. The amount of the write down is
determined as the difference between the asset's carrying amount and the
present value of estimated future cash flows.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short- term deposits with
an original maturity of three months or less. Bank overdrafts that are
repayable on demand and form an integral part of cash management are included
as components of cash and cash equivalents for the purposes of the cash flow
statement.
Trade and other payables
Trade and other payables are recognised at original cost.
Loans and borrowings
Loans and borrowings are recorded at amortised cost using the effective
interest method, with interest-related charges recognised as an expense in
finance cost in the statement of comprehensive income.
Leases - as a lessee
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of fixed
lease payments. The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined, the lessee's
incremental borrowing rate is used, being the rate that the lessee would have
to borrow the funds necessary to obtain an asset of similar value to the
right-of-use asset with similar terms, security and conditions.
Lease payments are allocated between principal and finance costs. The finance
cost is charged to profit or 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.
Right-of-use assets are measured at cost comprising the initial measurement of
lease liability, any lease payments made at or before the commencement date
less any lease incentives received, and any initial direct costs.
Right-of-use assets are depreciated over the shorter of the asset's useful
life and the lease term on a straight-line basis. Payments associated with
low-value items and leases of a duration less than 1 year are recognised as an
expense in profit or loss on a straight-line basis.
Income taxes
Current income tax assets and liabilities for the current period are measured
at the amount expected to be recovered from or paid to the taxation
authorities based on the tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the balance sheet date.
Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date. Deferred tax is calculated
on an undiscounted basis at the tax rates that are expected to apply in the
period when the liability is settled based on the tax rates and tax laws
enacted or substantively enacted by the balance sheet date.
Deferred tax liabilities are recognised for all taxable temporary differences,
except when the deferred tax liability arises from the initial recognition of
goodwill or an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences,
carry forward of unused tax credits and unused tax losses, to the extent that
it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry forward of unused tax credits
and unused tax losses can be utilised except when the deferred tax asset
relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax
asset to be utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax asset to be recovered.
Finance costs
Finance costs comprise interest payable on loans from directors and third
parties and are recognised on an accruals basis.
Share-based payments
The group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value (excluding the
effect of non- market-based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity-settled share-based payments
is expensed on a straight-line basis over the vesting period, based on the
group's estimate of shares that will eventually vest and adjusted for the
effect of non-market-based vesting conditions
Fair value is measured by use of the Black Scholes Model. The expected life
used in the model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions, and behavioural
considerations.
Pension contributions
The company operates a defined contribution scheme for its employees.
Contributions are charged to the Statement of Comprehensive Income in the year
they are payable. The assets of the scheme are held separately from those of
the group.
Financial instruments
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged,
cancelled or expires.
Government grants
Government grants are recognised where there is reasonable assurance that the
grant will be received and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised as income on a
systematic basis over the periods that the costs, which it is intended to
compensate, are expensed. The other income included in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income relates entirely to
government support through the furlough scheme.
Where the grant relates to an asset, it is recognised as income in equal
amounts over the expected useful life of the related asset.
Use of assumptions and estimates
The Group makes judgements, estimates and assumptions that effect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The resulting accounting estimates calculated using these
judgements and assumptions will, by definition, seldom equal the related
actual results but are based on historical experience and expectations of
future events. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision effects only that period, or
in the period of revision and future periods if the revision effects both
current and future periods.
The judgements and key sources of estimation uncertainty that have a
significant effect on the amounts recognised in the financial statements are
discussed below.
Useful economic lives of intangible assets
Intangible assets are amortised over their useful lives. Useful lives are
based on management's estimates, which are periodically reviewed for continued
appropriateness. Changes to estimates can result in variations in the carrying
values and amounts charged to the statement of comprehensive income in
specific periods.
Change in accounting policies
The following new standards and amendments to standards are mandatory for the
first time for the financial year beginning 1st January 2022.
a) New and amended standards adopted by the Company:
There are no new standards which have had a material impact in the annual
financial statements for the year ended 31 December 2022.
b) New standards, interpretations, and amendments not yet effective:
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early. These include:
· Annual Improvements to IFRS Standards 2018-2020 Cycle - IFRS 9 Financial
Instruments and IFRS 16 Leases
· Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting
Policies
· Amendments to IAS 8 - Definition of Accounting Estimates
· Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
4. Segmental reporting
The chief operating decision maker ("CODM") for the purpose of IFRS 8 is the
Board. Segments are determined by reference to the internal reports reviewed
by the Board. The group's operations relate to the provision of technology
solutions to help clients drive revenues and profit.
The Group measures the performance of its operating segments through a measure
of segment profit or loss which is referred to as EBITDA. This measure is
reported to the CODM for the purposes of resource allocation and assessment of
performance. The measure is the same as reported in the historic financial
information.
Information about geographic location by key segments
Year ended 31 December 2022
UK Portugal Total
£'000 £'000 £'000
Revenue 9,191 4,843 14,034
Non-current assets 9,614 1,783 11,397
Year ended 31 December 2021
UK Portugal Total
£'000 £'000 £'000
Revenue 9,191 4,283 13,474
Non-current assets 8,219 1,508 9,727
Information about major customers
Transactions with a single customer exceeding 10% of total revenue amounted to
£2,656K in the year (2021: £2,541K) and related to 1 customer (2021: 1).
5. Revenue
The analysis of the Group's revenue by geographical destination is set out
below.
2022 2021
£'000 £'000
United Kingdom 8,670 8,611
Europe 456 271
Rest of World 4,908 4,592
14,034 13,474
A breakdown of revenue by the two revenue streams as detailed in accounting
policies is shown below:
2022 2021
£'000 £'000
Recurring revenue 11,824 10,324
One off revenue 2,210 3,150
14,034 13,474
Revenue is either recognised at a point in time or over the period of the
contract in line with the accounting policy (note 2).
The following table provides information on contract assets and contract
liabilities from contracts with customers:
2022 2021
£'000 £'000
Contract assets 90 418
Contract liabilities 2,605 2,498
Contract assets ("accrued income") are recognised where there are excess of
revenues earned over billings. Contracts are classified assets when only the
act of invoice is pending, there is an unconditional right to receive cash and
only the passage of time is required as per contractual terms.
Contract liabilities ("deferred income") are recognised when there are
billings in excess of revenues. Contracts are classified as liabilities when
there is an obligation to transfer goods or services to a customer for which
the Group has received consideration from the customer (or the payment is due)
but the transfer has not yet completed. These arise based on the billing cycle
of the Group's revenues and all are expected to be reversed in under one year.
6. Profit/(Loss) on operating activities before taxation
Profit/(Loss) on ordinary activities before taxation is stated after charging:
2022 2021
£'000 £'000
Share based payments 58 151
Exceptional items - 667
Deprecation of tangible fixed assets
- owned 42 38
Depreciation of leased assets 452 297
Amortisation of intangible assets 889 746
Profit/(Loss) on disposal of right-of-use assets - (10)
Auditors' remuneration (see note 7) 60 139
Exceptional items relate to costs incurred in relation to the initial public
offering and the admission to the AIM Market of the London Stock Exchange.
7. Auditors' remuneration
The analysis of auditors' remuneration is as follows:
2022 2021
£'000 £'000
Fees payable to the company's auditors for the audit of the company's annual 31 13
accounts
Fees payable to the company's auditors and their associates for other services
to the group
- The audit of the company's subsidiaries pursuant to legislation 24 27
- Tax compliance services 5 3
- Other fees - 96
Total other services 60 126
8. Employee information
Their aggregate emoluments were:
2022 2021
£'000 £'000
Wages and salaries 7,783 6,549
Social security costs 1,169 987
Other pension costs 261 210
Other benefits 369 340
9,582 8,086
The average monthly number of employees (including directors) during the year
for the group was as follows:
2022 2021
No. No.
Selling and administration 27 22
Technical 147 138
174 160
9. Directors' emoluments
2022 2021
£'000 £'000
Aggregate emoluments 925 896
Pension contributions (money purchase schemes) 38 41
963 937
Total directors' emoluments disclosed above is equivalent to total key
management personnel compensation in the period. Directors' emoluments
disclosed above include the following payments to the highest director:
2022 2021
£'000 £'000
Aggregate emoluments 332 269
Pension contributions (money purchase schemes) 16 13
348 282
2022 2021
£'000 £'000
Number of directors to whom relevant benefits are accuring under:
Money purchase schemes 2 4
The above is equivalent to total key management personnel compensation. There
were no other key management personnel other than the Directors.
Further details of Directors remuneration can be found in the remuneration
report on pages 23 to 24.
Share based compensation
The Group operates an equity-settled share based compensation plan for
Directors and executives. In accordance with IFRS 1, the Group has elected to
implement the measurement requirements of IFRS 2 in respect of only those
equity-settled share options that were granted after 7 November 2002 and that
had not vested as at 1 January 2005. The fair value of the employee services
received in exchange for the grant of options is recognised as an expense over
the vesting period. The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options granted at the grant
date.
At each year end date, the Group revises its estimate of the number of options
that are expected to vest. It recognises the impact of the revision of
original estimates, if any, in the Statement of Consolidated Income, and a
corresponding adjustment to equity over the remaining vesting period. When
share options are cancelled the Group accounts for the cancellation as an
acceleration of vesting and therefore recognises immediately the amount that
otherwise would have been recognised for services received over the remainder
of the vesting period. 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. The fair value of share options has
been assessed using the Black Scholes Model.
No share options were granted to Directors in the period (2021 - Nil).
Included on the face of the Statement of Comprehensive Income, is a total
charge for share based payments of £58,341 (2021:£151,000) which arises
wholly from transactions accounted for as equity settled share based payments.
10. Finance Costs
2022 2021
£'000 £'000
Other interest and similar charges - 67
11. Taxation
a) Taxation charge:
2022 2021
£'000 £'000
Total current income tax credit charged in the income statement
Research and development tax credit (600) (300)
Portugal corporate tax 22 40
Adjustment in respect of prior years (40) -
Total current income tax (618) (260)
Deferred tax (income) / expense
Current year 29 234
29 234
Total income tax (589) (26)
b) Taxation reconciliation:
The current income tax credit for the year is explained below:
2022 2021
£'000 £'000
(Loss)/Profit before tax (1,275) 226
(Loss)/Profit at the standard UK income tax rate of 19% (2021: 19%) (242) 43
Effects of:
Expenses not deductible for tax purposes 130 253
Capital allowances in excess of depreciation (123) (45)
Tax losses utilised as part of research and development tax credit (600) (300)
Unrelieved tax losses and other deductions arising in the year 383 (112)
B/fwd losses group relieved (36) (72)
Adjustment in respect of earlier year (40) -
Difference in overseas tax rates and temporary GAAP differences (90) (27)
Recognition of deferred tax asset in respect of losses (15) 92
Other deferred tax timing differences 44 142
Total income tax credited in the income statement (589) (26)
c) Deferred tax
Deferred tax balances consist of the following timing differences
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Deferred tax asset
Acceleration capital allowances-UK (603) (466) - (40)
Tax losses available for carry forward - UK 760 528 - 95
Other timing differences-UK 7 3 - -
164 65 - 55
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Deferred tax asset
Acceleration capital allowances-UK (123) (123) -
Tax losses available for carry forward - UK 39 39 -
Acceleration capital allowances-Portugal (361) (292) - -
Arising on business combinations - UK (185) (210) - -
(630) (502) (84) -
The Group has not recognised all deferred tax assets in respect of tax losses
due to timing uncertainty regarding the recoverability against future profits.
If all tax losses were recognised the deferred tax asset would increase as
below in each year.
2022 2021
£'000 £'000
Deferred tax asset
Acceleration capital allowances-UK (603) (467)
Tax losses available for carry forward - UK 2,049 1,817
Other timing differences-UK 7 3
Deferred tax asset 1,453 1,353
Increase in deferred tax asset if all losses recognised 1,289 1,288
The movement in deferred tax assets during the period are:
Group
Accelerated
capital allowances
Accelerated on Development Tax losses available for carry forward- UK Other timing differences-
capital allowances on costs- UK UK
Deferred tax assets PPE- UK Total
£'000 £'000 £'000 £'000 £'000
At 31 December 2020 1 (326) 620 3 298
Charged to profit and loss account (47) (94) (92) 0 (233)
At 31 December 2021 (46) (420) 528 3 65
Charged to profit and loss account (86) (174) 271 4 15
Transfer to liability 123 - (39) - 84
At 31 December 2022 (9) (594) 760 7 164
Company
Accelerated Tax losses available for carry forward-
Deferred tax assets capital allowances on PPE- UK UK Total
£'000 £'000 £'000
At 31 December 2021 (40) 95 55
Charged to profit and loss account (83) (56) (139)
Transferred to liability 123 (39) 84
At 31 December 2022 - - -
The movement in deferred tax liabilities during the period are:
Group
Accelerated
capital allowances on Development Timing differences on acquired intangible assets- UK
Accelerated Tax losses available for carry forward- UK costs- Portugal
capital allowances on
Deferred tax liabilities PPE- UK Total
£'000 £'000 £'000 £'000 £'000
At 31 December 2020 (266) (235) (501)
Charged to profit and loss account (26) 25 (1)
At 31 December 2021 (292) (210) (502)
Charged to profit and loss account (69) 25 (44)
Transfer from asset (123) 39 - - (84)
At 31 December 2022 (123) 39 (361) (185) (630)
Company
Accelerated Tax losses available for carry forward-
Deferred tax liabilities capital allowances on PPE- UK UK Total
£'000 £'000 £'000
At 31 December 2021 - - -
Transferred from asset (123) 39 (84)
At 31 December 2022 (123) 39 (84)
12. Earnings/(Loss) per share
Basic and diluted loss per share is calculated by dividing the profit
attributable to owners of the parent by the weighted average number of
ordinary shares in issue during the period. For the avoidance of doubt the
deferred shares have been excluded as they have no rights to profits or
capital. Additionally, the Company's ordinary shares were subject to a share
consolidation where 5 ordinary shares were converted into 1 ordinary share.
The comparative period weighted average number of shares has been adjusted for
this to aid comparison. The Company's share options have a dilutive effect
over the two year period.
2022 2021
£'000 £'000
Profit/(Loss) after tax for the year (686) 252
Exceptional items - 667
Share option charge 58 151
Adjusted Profit after tax for the year (628) 1,070
Weighted average number of shares:
Basic - 000 31,211 28,536
Potentially dilutive share options - 000 3,657 3,668
Diluted average number of shares - 000 34,868 32,204
Earnings/(Loss) per share:
Basic - pence on continuing operations (2.20) 0.88
Diluted - pence on continuing operations (2.20) 0.78
Adjusted earnings/(loss) - Basic - pence on continuing operations (2.01) 3.75
Adjusted Diluted - pence on continuing operations (2.01) 3.32
13. Intangible assets
Group
Acquired intellectual property
Development rights Customer contracts
cost Goodwill
Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2022 13,386 8,712 300 1,000 23,398
Foreign exchange differences 139 - - - 139
Additions 2,159 - - - 2159
At 31 December 2022 15,684 8,712 300 1,000 25,696
Amortisation
At 1 January 2022 9,711 4,759 45 150 14,665
Foreign exchange differences 73 - - - 73
Charge for the period 759 - 30 100 889
At 31 December 2022 10,543 4,759 75 250 15,627
Net book value
At 31 December 2022 5,141 3,953 225 750 10,069
At 31 December 2021 3,675 3,953 255 850 8,733
Goodwill arising prior to 1 January 2020 relates to acquisition prior to the
date of transition to IFRS of 1 January 2015 and therefore the exemption for
business combinations completed before that date has been applied and the
amounts not restated.
The Board consider that there is only one Cash Generating Unit. In accordance
with the accounting policy, goodwill is tested annually for impairment,
Management have used a fair value less cost of sales methodology supported by
offers for the Group and consider that the value supports the carrying value
of goodwill at each period end.
Company
Development
costs
Total
£'000 £'000
Cost
At 1 January 2022 and at 31 December 2022 13 13
Amortisation
At 1 January 2022 and at 31 December 2022 13 13
Net book value
At 31 December 2022 - -
At 31 December 2021 - -
Development costs for The Retail Suite have been capitalised in accordance
with IAS 38 "Intangible assets". Production commenced in 2008, from which date
the related costs were written off over 7 years.
14. Plant and equipment
Group
Fixtures and equipment Total
£'000 £'000
Cost
At 1 January 2022 1,235 1,235
Foreign exchange differences 6 6
Additions 49 49
Additions leased assets 604 604
Disposals (32) (32)
At 31 December 2022 1,862 1,862
Depreciation
At 1 January 2022 955 955
Foreign exchange differences 6 6
Charge for the period owned assets 42 42
Charge for the period leased assets 170 170
Disposals (32) (32)
At 31 December 2022 1,141 1,141
Net book value
At 31 December 2022 721 721
At 31 December 2021 280 280
Company
Fixtures and equipment
Total
£'000 £'000
Cost
At 1 January 2022 233 233
Additions 604 604
At 31 December 2022 837 837
Depreciation
At 1 January 2022 20 20
Charge for the period 170 170
At 31 December 2022 190 190
Net book value
At 31 December 2022 647 647
At 31 December 2021 213 213
15. Investments
The principal subsidiaries of itim Group plc, all of which have been included
in these consolidated financial statements, are as follows:
Company
Shares in group undertaking Other investments
Total
£'000 £'000 £'000
Cost
At 1 January 2022 and at 31 December 2022 8,005 46 8,051
Provision for impairment
At 1 January 2022 and at 31 December 2022 2,934 46 2,980
Net book value
At 31 December 2021 5,071 - 5,071
At 31 December 2020 5,071 - 5,071
The company holds more than 20% of the share capital of the following
companies:
Subsidiary undertakings Country of Incorporation Percentage holding Profit/ (loss) Net assets/ (liabilities)
Class of share Principal activity £'000 £'000
England and Wales Ordinary 'A' Ordinary Deferred Software consultancy and supply
ITIM Limited 100% (1,762) (8,714)
EDI Plus Limited England and Wales 100% Ordinary Data exchange services 91 1,012
Profimetrics Software Solutions S.A Ordinary Preferred Development and distribution of software
Portugal 100% 498 2,202
The registered address of ITIM limited and EDI Plus Limited are same as ITIM
Group Plc.
The registered address of Profimetrics Software Solutions S.A. is R. Lionesa
446, Edifício C Loja L, 4465-671 Leça do Balio, Portugal.
16. Trade and other receivables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade receivables 2,925 2,133 - -
Corporation tax 648 324
Amounts owed by group undertakings due within one year - - 11,485 8,359
Amounts owed by group undertakings due in greater than one year - - 1,881 1,908
Other receivables 134 333 - 235
Loan receivables 350 210 350 210
Prepayments and accrued income 546 702 58 26
4,603 3,702 13,774 10,738
17. Trade and other payables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade payables 818 687 32 21
Corporation tax 23 40 - -
Other taxation and social security 796 650 68 55
Other payables 225 96 188 41
Loans and borrowings (see note 19 below) 318 318 318 318
Accruals 991 929 41 63
Deferred income 2,605 2,498 - -
5,776 5,218 647 498
18. Trade and other payables due in more than one year
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Other payables 540 176 540 176
540 176 540 176
19. Loans and borrowings
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Accrued interest 318 318 318 318
318 318 318 318
Analysis of maturity of loans and borrowings
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Amounts payable
Within one year 318 318 318 318
318 318 318 318
Net obligations under finance leases are secured by fixed charges on the
assets concerned.
20. Leases
The Group leases five units within properties from which it operates and also
leases computer equipment for the hosting centre. Lease payments are fixed
throughout the contract period.
Right-of-use - Right-of-use
Property - Equipment Total
£'000 £'000 £'000
Cost
At 1 January 2022 1,178 234 1,412
Foreign exchange differences 14 - 14
Additions 71 - 71
Disposals (66) - (66)
At 31 December 2022 1,197 234 1,431
Depreciation
At 1 January 2022 674 89 763
Foreign exchange differences 10 - 10
Charge for the year 235 47 282
Disposals (66) - (66)
At 31 December 2022 853 136 989
Net book value
At 31 December 2022 344 98 442
At 31 December 2021 504 145 649
Lease liabilities:
2022 2021
£'000 £'000
At 1 January 724 977
Foreign exchange movement 4 (11)
Interest expense 30 42
Lease payments (331) (335)
Additions 71 51
At 31 December 498 724
Amounts payable are as follows:
2022 2021
£'000 £'000
Due within 1 year 297 290
Due 2-5 years 171 404
Due over 5 years 30 30
Total 498 724
The Company's right of use assets consist of the Company's premises, data
centres' and sundry office equipment. The expiry of the leases varies between
1 and 8 years.
21. Financial instruments
Financial risk factors
The Group's financial assets comprise cash and cash equivalents, trade
receivables and accrued income. These are all measured at amortised cost. The
financial liabilities comprise loans and borrowings, trade payables and
accruals, lease liabilities and deferred consideration payable for
acquisitions of subsidiaries. These are measured at amortised cost.
The majority of the financial instruments arise directly from the operations
with the exception of loans and borrowings and lease liabilities which have
been used to finance the operations.
Fair values of financial instruments
For the following financial assets and liabilities: trade and other payables,
trade and other receivables and cash at bank and in hand, the carrying amount
approximates the fair value of the instrument due to the short-term nature of
the instrument. The Directors consider that there is no material difference
between book value and fair value for any of the financial instruments held.
Financial risk management
The Group's activities expose the Group to a number of risks including capital
management risk, interest rate risk, foreign exchange risk, credit risk and
liquidity risk.
It is the Group's policy that no trading in financial instruments should be
undertaken.
There have been no substantive changes in the Group's exposure to financial
instrument risks, its objectives, policies and processes for managing those
risks or the methods used to measure them from previous periods unless
otherwise stated in this note.
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Group's finance function. The Board receives monthly
reports from the Finance Department through which it reviews the effectiveness
of the processes put in place and the appropriateness of the objectives and
policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out below:
Interest rate risk
There is no interest rate risk as there are no borrowings in the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations.
The Group's largest financial assets are the cash balances held in banks and
it is exposed to credit risk on those balances. It is the Group's policy only
to make deposits with banks with an acceptable credit rating.
The Group is mainly exposed to credit risk from credit sales. It is Group
policy, implemented locally, to assess the credit risk of new customers before
entering contracts. Such credit ratings are taken into account by local
business practices. An ageing analysis of trade receivables is detailed below:
Total Current 30-60 days > 60 days
2022 £'000 £'000 £'000 £'000
Trade and other receivables 2,925 1,299 967 659
Contract assets 90 90 - -
3,015 1,389 967 659
Total Current 30-60 days > 60 days
2021 £'000 £'000 £'000 £'000
Trade and other receivables 2,133 1,642 117 374
Contract assets 418 418 - -
2,551 2,060 117 374
Trade receivables are recognised initially at the transaction price. They are
subsequently measured less any provision for impairment in relation to
expected credit losses. At each reporting date the Group assesses the expected
credit losses and changes in credit risk since initial recognition of the
receivable and a provision for impairment is recognised when considered
necessary. The Group considers the ageing to be reasonable and has no history
of significant bad debts. No provisions have been made in in these financial
statements. The Board do not consider the credit risk to be significant for
the financial assets currently held.
Foreign exchange risk
Foreign exchange risk arises when individual Group entities enter into
transactions denominated in a currency other than their functional currency.
The Group's policy is, where possible, to allow Group entities to settle
liabilities denominated in their functional (currency). Where Group entities
have liabilities denominated in a currency other than their functional
currency (and have insufficient reserves of that currency to settle them),
cash already denominated in that currency will, where possible, be transferred
from elsewhere within the Group.
The Group's main exposure to foreign currency risk is on the trade receivables
in the Portuguese subsidiary which are not held in Euros. The Directors have
considered the balances at year end and based on the level of foreign currency
balances and the expected timing of settlement of those amounts that the
foreign exchange risk is not material.
Liquidity risk
Liquidity risk is the risk that ITIM Group may encounter difficulty in meeting
its obligations associated with the financial liabilities that are settled by
delivering cash or other financial assets. The Group actively maintains a
mixture of long-term and short-term debt finance that is designed to ensure
the Group has sufficient available funds for operations and planned
expansions.
The Group would normally expect that sufficient cash is generated in the
operating cycle to meet the contractual cash flows through effective cash
management. The maturity analysis of the financial liabilities are included
below:
Carrying amount 1 year or less 1<2 years 2-5years 5 years
As at 31 December 2022 £'000
£'000 £'000 £'000 £'000
Trade and other payables 2,574 2,034 540 - -
Right of use liability 498 297 85 86 30
Other loans and borrowings 318 318 - - -
3,390 2,649 625 86 30
Carrying amount 1 year or less 1<2 years 2-5years 5 years
As at 31 December 2021 £'000
£'000 £'000 £'000 £'000
Trade and other payables 1,888 1,712 176 - -
Right of use liability 724 290 269 135 30
Other loans and borrowings 318 318 - - -
2,930 2.320 445 135 30
Capital management risk
The Group's main objective when managing capital is to protect returns to
shareholders by ensuring the Group will continue to trade for the foreseeable
future. The Group also aims to optimise its capital structure of debt and
equity so as to minimise its cost of capital. The Group in particular reviews
its levels of borrowing and the repayment dates, setting these out against
forecast cash flows and reviewing the level of available funds.
22. Share Capital
2022 2021
£'000 £'000
Authorised:
37,949,651 Ordinary shares of 5p each 1,898 1,898
1,898 1,898
2022 2021
£'000 £'000
Allotted, called up and fully paid:
31,210,607 Ordinary shares of 5p each 1,561 1,561
1,561 1,561
In May 2021, the Company bought back 110,251,743 deferred shares of £0.01
each for £0.01 which were then subsequently cancelled. This reduced share
capital by £1,102,517 and created a capital redemption reserve of the same
value. At the same time, the share premium account was reduced by £10,469,000
and this was credited to the Company's profit and loss reserve.
On 18th June 2021 250,000 £0.05 Ordinary shares were issued for consideration
of £19,938. The share premium on the issue was £7,438.
On 28th June 2021 231,548 £0.05 Ordinary shares were issued for consideration
of £160,000. The share premium on the issue was £148,422.
On 28th June 2021 5,194,806 £0.05 Ordinary shares were issued for
consideration of £8,000,001. The share premium on the issue was £7,740,261.
IPO expenses on the new share issue of £497,641 were written off against the
share premium account. A summary of the rights of the different classes of
share is given below:
Voting
All Ordinary shares are entitled to one vote each. The holders of deferred
shares are not entitled to receive notice of, to attend, to speak or to vote
at any general meeting of the Company.
Dividends
The profits of the Company available for distribution shall be used to pay
dividends to the holders of Ordinary Shares a dividend equivalent to such
amounts as the Directors may determine and as is approved by the Ordinary
Shareholders in general meeting.
23. Reserves
Share premium
This reserve records the amount above the nominal value received for shares
sold, less transaction costs.
Share options reserve
The share options reserves represent the fair value of equity-settled share
options granted using the Black Scholes model.
Capital redemption reserve
This reserve arises on the purchase of the company's own shares.
Foreign exchange reserve
This reserve includes any exchange differences arising on the retranslation of
foreign subsidiaries on consolidation.
Retained earnings
This balance represents the cumulative profit and loss made by the Group net
of distributions to owners.
24. Share-based payments
Share options
The Company has a share option scheme for certain employees of the Group.
Options are granted with a fixed exercise price. The vesting period varies
from vesting immediately to vesting over 2 years from the date of grant. If
the options remain unexercised after a period of ten years from the date of
grant the options expire. Options are forfeited if the employee leaves the
Group before the options vest.
Details of equity settled share options outstanding during the year are as
follows:
Year ended 31 December 2022
Outstanding
at 31 December
Outstanding at 1 January 2022 2022 Exercise period Exercise
Grant date Granted Exercised Lapsed price
14/04/2015 150,000 - - - 150,000 10 years 1.595p
10/04/2017 2,615,000 - - - 2,615,000 10 years 3.000p
31/03/2021 400,000 - - - 400,000 10 years 14.000p
19/04/2021 492,041 - - - 492,041 10 years 70.000p
3,657,041 - - - 3,657,041
Year ended 31 December 2021
Outstanding
Outstanding at 1 January at 31 December
Grant date 2021 Share Consolidation Granted Exercised Lapsed 2021 Exercise period Exercise
price
08/08/2011 1,250,000 (1,000,000) - (250,000) - - 10 years 1.595p
14/04/2015 750,000 (600,000) - - - 150,000 10 years 1.595p
10/04/2017 13,075,000 (10,460,000) - - - 2,615,000 10 years 3.000p
31/03/2021 2,000,000 (1,600,000) - - - 400,000 10 years 14.000p
19/04/2021 - - 723,589 (231,548) - 492,041 10 years 70.000p
17,075,000 (13,660,000) 723,589 (481,548) - 3,657,041
Details of the share options and weighted average exercise price (WAEP) during
the years are as follows:
31 December 2022 31 December 2021
Number WAEP Number WAEP
Outstanding at the beginning of the year 3,657,041 28.13p 17,075,000 4.124p
Share consolidation - - (13,660,000) 0.000p
Granted during the year - - 723,589 70.000p
Exercised during the year - (481,548) (37.79)
Lapsed during the year - - - -
Forfeited during the year - - - -
3,657,041 28.13p 3,657,041 28.13p
The weighted average contractual life of share options outstanding as at 31
December 2022 was 5 years (31 December 2021: 6 years).
ITIM recognises equity settled share-based payment expenses based on the fair
value determined by the Black Scholes model. The model is internationally
recognised as being appropriate to value employee share options schemes. The
inputs into the option issues were as follows:
Year ended 31 December Year ended 31 December
2022 2021
£'000 £'000
Share price 78p 78p
Exercise price 69p 69p
Expected volatility 25% 25%
Expected life 10 years 10 years
Risk free rate 0.5% 0.5%
Risk-free rate
The risk-free interest rate is based on the Bank of England's base rate.
Volatility
The measure of volatility is based management's estimate after considering the
historical volatility of guideline companies operating within the same
industry as ITIM Group, over a 10-year time period.
25. Company statement of changes in equity
Capital Redemption
Share capital Share premium Share options Reserve Retained
£'000 £'000 reserve £'000 losses Total
£'000 £'000 £'000
At 1 January 2021 2,379 10,469 304 - (1,873) 11,279
Total comprehensive income for the year (501) (501)
Share options exercised - - 151 - - 151
Share buyback of deferred shares (1,103) - - 1,103 - -
Cancellation of share premium - (10,469) - - 10,469 -
Shares issued in the period 260 7,740 - - - 8,000
- IPO
Share option conversion 25 156 - - - 181
IPO expenses - (498) - - - (498)
At 1 January 2022 1,561 7,398 455 1,103 8,095 18,612
Total comprehensive income for the year - - - - 592 592
Share options exercised - - 58 - 58
-
At 31 December 2022 1,561 7,398 513 1,103 8,687 19,262
The profit for the year dealt with in the financial statements of the parent
company is shown above. As permitted by section 408 of the Companies Act 2006,
no separate income statement is presented in respect of the parent company.
26. Pension commitments
The group makes contributions to individual pension schemes (money purchase).
The amount paid during the year was £269,779 (2021: £209,553). Outstanding
contributions at the balance sheet date amounted to £36,042 (2021: £26,042).
27. Contingent liabilities
itim Group plc and its subsidiary undertakings have given cross guarantees and
been granted rights to set-off in respect of group undertaking overdrafts and
loans.
28. Related party transactions
The Group has taken advantage of the exemption available under IAS 2 Related
Party Disclosures not to disclose details of transactions between Group
undertakings which are eliminated on consolidation.
29. Supporting statement for cash flows
Brought forward Cash flow Non cash Carried forward
Year ended 31 December 2022 £'000 £'000 £'000 £'000
Loans and borrowings (318) - - (318)
Leases (724) 331 (105) (498)
Brought forward Cash flow Non cash Carried forward
Year ended 31 December 2021
£'000 £'000
£'000 £'000
Loans and borrowings (4,011) 3,757 (64) (318)
Leases (977) 355 (102) (724)
30. Controlling party
There is no single ultimate controlling party.
NOTICE OF ANNUAL GENERAL MEETING
Registered number: 03486926
itim Group plc
NOTICE IS HEREBY GIVEN that the annual general meeting of itim Group plc (the
"Company") will be held at the offices of DMH Stallard LLP, 6 New Street
Square, London EC4A 3BF on 12th May 2023 at 11.00 a.m. to consider and, if
thought fit, to pass the following resolutions, of which resolutions 1 to 4
(inclusive) will be proposed as ordinary resolutions and resolutions 5 and 6
will be proposed as special resolutions. Resolutions 5 to 6 (inclusive) are
items of special business.
ORDINARY RESOLUTIONS
1. To receive the Company's annual accounts for the financial year
ended 31 December 2022 together with the directors' report, the directors'
remuneration report and the auditors' report on those accounts.
2. To re-appoint RPG Crouch Chapman LLP as auditors of the Company to
hold office until the conclusion of the next annual general meeting of the
Company to be held in 2024 and to authorise the directors to fix their
remuneration.
3. To re-elect Damian Hopkins who, having been appointed since the
Company's last annual general meeting, retires in accordance with article 77
of the articles of association of the Company and who, being eligible, offers
herself for re-election as a director.
4. That, in substitution for any equivalent existing and unexercised
authorities and powers, the directors of the Company be and they are hereby
generally and unconditionally authorised for the purpose of section 551 of the
Companies Act 2006 (the "Act") to exercise all or any of the powers of the
Company to allot shares of the Company or to grant rights to subscribe for, or
to convert any security into, shares of the Company up to an aggregate nominal
value of £520,177 to such persons at such times and generally on such terms
and conditions as the directors may determine (subject always to the articles
of association of the Company), provided that this authority shall, unless
previously renewed, varied or revoked by the Company in general meeting,
expire at the conclusion of the next annual general meeting of the Company to
be held in 2024 or, if earlier, 12 August 2024, save that the directors of the
Company may, before the expiry of such period, make an offer or agreement
which would or might require such securities to be allotted after the expiry
of such period and the directors of the Company may allot such securities in
pursuance of such offer or agreement as if the authority conferred hereby had
not expired.
SPECIAL RESOLUTIONS
5. That, subject to and conditional upon the passing of resolution 4
and in substitution for any equivalent existing and unexercised authorities
and powers, the directors of the Company be and are hereby empowered pursuant
to sections 570 and 573 of the Act to allot equity securities (as defined in
section 560(1) of the Act) for cash pursuant to the authority conferred upon
them by resolution 4 and/or where the allotment constitutes an allotment of
equity securities by virtue of section 560(3) of the Act, as if section 561 of
the Act did not apply to any such allotment provided that this authority and
power shall be limited to the allotment of equity securities up to an
aggregate nominal amount of £78,027 (representing approximately 5 per cent.
of the current issued share capital of the Company) provided that this
authority shall, unless previously renewed, varied or revoked by the Company
in general meeting, expire at the conclusion of the next annual general
meeting of the Company to be held in 2024 or, if earlier, 12 August 2024, save
that the directors of the Company may, before the expiry of such period, make
an offer or agreement which would or might require such securities to be
allotted after the expiry of such period and the directors of the Company may
allot such securities in pursuance of such offer or agreement as if the
authority conferred hereby had not expired.
6. That the Company be and is hereby generally and unconditionally
authorised for the purpose of section 701 of the Act to make market purchases
(within the meaning of section 693(4) of the Act) of ordinary shares in the
capital of the Company ("Ordinary Shares") provided that:
a. the maximum aggregate number of Ordinary Shares which may be
purchased is 3,121,060 (representing approximately 10 per cent. of the
Company's existing issued share capital);
b. the minimum price (exclusive of expenses) which may be paid for
each Ordinary Share is £0.05 (being its nominal value);
c. the maximum price (exclusive of expenses) which may be paid for
each Ordinary Share is the higher of: (i) an amount equal to 105 per cent. of
the average of the middle market quotations for an Ordinary Share as derived
from the Daily Official List of the London Stock Exchange plc for the 5
business days immediately preceding the day on which the Ordinary Share in
question is purchased; and (ii) the value of an Ordinary Share calculated on
the basis of the higher of the price quoted for the last independent trade of
an Ordinary Share and the highest current independent bid for an Ordinary
Share as derived from the London Stock Exchange Trading System;
d. unless previously renewed, revoked or varied, the authority hereby
conferred shall expire at the conclusion of the next annual general meeting of
the Company to be held in 2024 or, if earlier, 12 August 2024; and
e. the Company may make a contract or contracts to purchase Ordinary
Shares under the authority hereby conferred prior to the expiry of such
authority which contract or contracts will or may be executed wholly or partly
after the expiry of such authority, and may make a purchase of Ordinary Shares
in pursuance
BY ORDER OF THE BOARD
Ian Hayes Secretary
Date: 13th April 2023
Registered office: 2nd Floor Atlas House, 173 Victoria Street, London, SW1E
5NH
NOTES:
1. Pursuant to the Company's Articles of Association, a member of the
Company entitled to attend and vote at the meeting convened by this notice is
entitled to appoint one or more proxies to exercise any of his rights to
attend, speak and vote at that meeting on his behalf.
2. If a member appoints more than one proxy, each proxy must be
entitled to exercise the rights attached to different shares. If you submit
more than one valid proxy appointment in respect of the same shares, the
appointment received last before the latest time for the receipt of proxies
will take precedence.
3. A proxy may only be appointed using the procedures set out in these
notes and the notes to the form of proxy. To validly appoint a proxy, a member
must complete, sign and date the enclosed form of proxy and deposit it at the
office of the Company's registrars, Neville Registrars, at Neville House,
Steelpark Road, Halesowen, West Midlands B62 8HD, by 11.00a.m. on 10(th) May
2023 (or, in the event that the meeting is adjourned, not less than 48 hours,
excluding non-working days, before the time fixed for the holding of the
adjourned meeting). Any power of attorney or any other authority under which
the form of proxy is signed (or a duly certified copy of such power or
authority) must be enclosed with the form of proxy.
4. In order to revoke a proxy appointment, a member must sign and date
a notice clearly stating his intention to revoke his proxy appointment and
deposit it at the office of the Company's registrars, Neville Registrars, at
Neville House, Steelpark Road, Halesowen, West Midlands B62 8HD prior to
commencement of the meeting. If the revocation is received after the time
specified, the original proxy appointment will remain valid unless the member
attends the meeting and votes in person.
5. Pursuant to the Articles of Association, any corporation which is a
member of the Company may authorise one or more persons (who need not be a
member of the Company) to attend, speak and vote at the meeting as the
representative of that corporation. A certified copy of the board resolution
of the corporation appointing the relevant person as the representative of
that corporation in connection with the meeting must be deposited at the
office of the Company's registrars, Neville Registrars, at Neville House,
Steelpark Road, Halesowen, West Midlands B62 8HD prior to the commencement of
the meeting. If the revocation is received after the time specified, the
original corporate representative appointment will remain valid unless the
member attends the meeting and votes in person.
6. In the case of joint holders, where more than one of the joint
holders purports to appoint a proxy in respect of the same shares, only the
appointment submitted by the most senior holder will be accepted. Seniority is
determined by the order in which the names of the joint holders appear in the
Company's register of members in respect of the joint holding (the first named
being the most senior).
7. The right to vote at the meeting shall be determined by reference
to the register of members of the Company. Pursuant to Regulation 41 of the
Uncertificated Securities Regulations 2001 (as amended), only those persons
whose names are entered on the register of members of the Company at 6.00 p.m.
on 10(th) May 2023 (or, in the event of any adjournment, at 6.00 p.m. on the
date which is two business days prior to the adjourned meeting) shall be
entitled to attend and vote in respect of the number of shares registered in
their names at that time. Changes to entries on the register of members after
that time shall be disregarded in determining the rights of any person to vote
at the meeting.
8. CREST members who wish to appoint a proxy or proxies through the
CREST electronic proxy appointment service may do so for the meeting and any
adjournment(s) thereof by using the procedures described in the CREST Manual
(available via www.euroclear.com). CREST personal members or other CREST
sponsored members, and those CREST members who have appointed a voting service
provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
9. In order for a proxy appointment or instruction made by means of
the CREST service to be valid, the appropriate CREST message (a "CREST Proxy
Instruction") must be properly authenticated in accordance with Euroclear UK
& International Limited's ("Euroclear") specifications and must contain
the information required for such instructions, as described in the CREST
Manual. The message, regardless of whether it constitutes the appointment of a
proxy or is an amendment to the instruction given to a previously appointed
proxy must, in order to be valid, be transmitted so as to be received by the
Company's agent (ID 7RA11) by the latest time for proxy appointments set out
in paragraph 3 above. For this purpose, the time of receipt will be taken to
be the time (as determined by the timestamp applied to the message by the
CREST Applications Host) from which the Company's agent is able to retrieve
the message by enquiry to CREST in the manner prescribed by CREST. After this
time any change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
10. CREST members and, where applicable, their CREST sponsors or voting
service providers should note that Euroclear does not make available special
procedures in CREST for any particular messages. Normal system timings and
limitations will therefore, apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member or sponsored member or has
appointed a voting service provider(s), to procure that his CREST sponsor or
voting service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable,
their CREST sponsors or voting service providers are referred, in particular,
to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings. The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001 (as amended).
11. As at 12(th) April 2023, the latest practicable date prior to the date
of this notice, the Company's issued share capital consisted of 31,210,607
ordinary shares of £0.05 each, carrying one vote each and, therefore, the
total number of voting rights in the Company as at 12(th) April 2023 were
31,210,607.
12. You may not use any electronic address (within the meaning of section
333(4) of the Companies Act 2006) provided in this notice or in any related
documents (including the form of proxy and the annual report and accounts) to
communicate with the Company for any purposes other than those expressly
stated.
13. Your personal data includes all data provided by you, or on your behalf,
which related to you as a shareholder, including your name and contact
details, the votes you cast and your reference number (as attributed to you by
the Company or its registrars). The Company determines the purposes for which,
and the manner in which, your personal data is to be processed. The Company
and any third party to which it discloses the data (including the Company's
registrars) may process your personal data for the purposes of compiling and
updating the Company's records, fulfilling its legal obligations and
processing the shareholder rights you exercise.
EXPLANATORY NOTES:
Resolutions 1 to 4 (inclusive) are proposed as ordinary resolutions. For each
of these to be passed, more than half of the votes cast must be in favour of
the relevant resolution.
Resolutions 5 and 6 are proposed as special resolutions. For each of these
resolutions to be passed, at least three quarters of the votes cast must be in
favour of the resolution. An explanation of each of the resolutions is set out
below:
Resolution 1 - Annual Report and Accounts
The Directors are required to present to the annual general meeting the
audited accounts and the Directors' and Auditors' Reports for the financial
year ended 31 December 2022.
Resolutions 2 - Auditors
The Company is required to appoint an auditor at every general meeting of the
Company at which accounts are presented to shareholders. Accordingly, this
resolution proposes the re-appointment of RPG Crouch Chapman LLP as the
auditors of the Company. It is normal practice for a company's directors to be
authorised to agree how much the auditors should be paid and Resolution 2
grants this authority to the directors.
Resolution 3 - Re-election of Directors
Article 77 of the Company's articles of association requires any directors who
have been appointed by the Board since the last annual general meeting and any
directors who were not appointed or reappointed at one of the preceding two
annual general meetings to retire from office. Any such director is entitled
to offer himself for re-election.
Resolutions 4 and 5 - Directors' general power to allot relevant securities
Resolution 4 is proposed to renew the directors' power to allot shares.
Resolution 4 seeks to grant the directors authority to allot, pursuant to
section 551 of the Act, shares or grant rights to subscribe for or to convert
any security into shares in the Company up an aggregate nominal value of
£520,177 which is equal to one third of the nominal value of the current
issued ordinary share capital of the Company as at 12th April 2023 (being the
latest practicable date prior to the publication of this notice). Unless
previously renewed, revoked or varied, the authorities sought under this
resolution will expire at the conclusion of the next annual general meeting of
the Company next annual general meeting of the Company to be held in 2024 or
12 August 2024 (whichever is the earlier). The Directors have no present
intention of exercising either of the authorities under this resolution, but
the Board wishes to ensure that the Company has maximum flexibility in
managing the financial resources of the Company. As at the date of this
notice, no shares are held by the Company in treasury.
Resolution 5 is to approve the partial disapplication of pre-emption rights in
respect of the allotment of equity securities for cash. The passing of this
resolution (together with resolution 4) would allow the directors to allot
shares for cash and/or sell treasury shares without first having to offer such
shares to existing shareholders in proportion to their existing holdings. The
authority would be limited to allotments or sales up to an aggregate nominal
amount of £78,027 which represents approximately 5 per cent. of the nominal
value of the current issued ordinary share capital of the Company as at 12th
April 2023 (being the latest practicable date prior to the publication of this
notice). Unless previously renewed, revoked or varied, the authorities sought
under this resolution will expire at the conclusion of the next annual general
meeting of the Company next annual general meeting of the Company to be held
in 2024 or 12 August 2024 (whichever is the earlier).
Resolution 6 - Authority for the market purchase by the Company of its own
shares
The authority sought by resolution 6 limits the number of shares that could be
purchased to a maximum of 3,121,060 ordinary shares (equivalent to 10 per
cent. of the Company's issued ordinary share capital as at 12th April 2023
(being the latest practicable date prior to the publication of this notice))
and sets a minimum and maximum price. Unless previously renewed, revoked or
varied, the authority will expire at the conclusion of the annual general
meeting of the Company to be held in 2024 or 12 August 2024 (whichever is the
earlier). The Directors have no present intention of exercising the authority
to purchase the Company's ordinary shares but will keep the matter under
review, taking into account the financial resources of the Company, the
Company's share price and future funding opportunities. The Directors will
exercise this authority only when to do so would be in the best interests of
the Company and of its shareholders generally, and could be expected to result
in an increase in earnings /(loss) per share of the Company. Any purchases of
ordinary shares would be by means of market purchase through the London Stock
Exchange plc. Any shares the Company buys under this authority may either be
cancelled or held in treasury. Treasury shares can be re-sold for cash,
cancelled or used for the purposes of employee share schemes. No dividends are
paid on shares whilst held in treasury and no voting rights attach to treasury
shares. The Directors believe that it is desirable for the Company to have
this choice as holding the purchased shares as treasury shares would give the
Company the ability to re-sell or transfer them in the future and so provide
the Company with additional flexibility in the management of its capital base.
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