REG - RegTech Open Project - Interim Report
28/03/2024 17:45
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RNS Number : 8054I RegTech Open Project PLC 28 March 2024
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU, WHICH IS PART OF DOMESTIC LAW OF THE UNITED KINGDOM OF
GREAT BRITAIN AND NORTHERN IRELAND ("UK") PURSUANT TO THE MARKET ABUSE
(AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK
MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
28 March 2024
RegTech Open Project plc
("RTOP" or the "Company")
Interim Results for the period ended 31 December 2023
RegTech Open Project plc (LSE: RTOP), the technology business specialised in
the automation, management, and optimisation of regulatory compliance
operations, announces its unaudited results for the period ended 31 December
2023.
Financial summary
• Revenue of £0.4 million represents trading for approximately 4.5 months from
14 August 2023, the date the Company assumed control of the Italian trading
business, to 31 December 2023. This figure includes £0.2 million of
subscription and maintenance revenues which are recurring in nature, the
balance being for professional services and licences.
• These 4.5 months show an adjusted EBITDA loss of £0.9 million which
represents the company's underlying trading.
• The overall loss before tax of £8.4 million includes £1.0 million of
exceptional listing costs and £6.0 million of non-cash costs related to the
issue of warrants as outlined in the prospectus.
• £1,046,566 of funding received under the Shareholder Loan Agreement as at 31
December 2023.
Operational summary
• August 2023: Board members appointed, with Ian Halliday-Pegg as CEO and Albert
Ganyushin as Board Chair, and RTOP listed on the main market of the London
Stock Exchange.
• RTOP executed comprehensive operational enhancements to prepare for scale-up
including, inter alia, Company branding and website, marketing and sales
operations, and engaged our customers to evaluate their usage of our products
to clearly understand their path to increasing maturity in Operational
Resilience and how we can support that journey with our solutions.
• The appointment of the CFO on 5 December 2023 has allowed the company to
undertake a thorough review of its financial systems and procedures.
• The sales team has worked to grow the pipeline of new sales to a total of
£1.1 million as at 31 December 2023, of which 45% was sales to existing
customers, and 70% of the pipeline is new subscriptions (recurring revenues).
• RTOP benefitted from partnerships, collaborating on customer projects and
tenders in the private and public sector with the 'big four' consultancies in
Italy, and with its long-term strategic software partner Everbridge.
• In addition, RTOP has worked as part of a consortium with the Association of
Italian Banking (ABI) developing the Italian banking industry's new framework
for operational resilience, supporting compliance with European Digital
Operational Resilience Act ("DORA"). This will position RTOP at the forefront
in Italy and Europe for the provision of DORA-ready resilience solutions to
banking and financial services.
• The business received £1,046,566 in funds from the shareholder loan, which
partially performed in the period. The board has managed the business
prudently in light of this and has considered alternative sources of capital
to mitigate the partial performance.
Current trading and outlook
• Q1 renewals include an approximate 10% increase in fees for existing services;
RTOP will seek further incremental growth from existing customers through
conversion of legacy BCM licences to our new operational resilience
subscription service and the upselling of additional products and services.
• £0.4 million new and renewed contracts secured calendar year to date:
◦ £0.2m contract renewal and extension with a major co-operative banking
group
◦ additional £0.2m renewals of existing recurring operational resilience
contracts
• The 2024 sales pipeline for new bookings of software and related services from
existing and new customers currently stands at £1.3 million.
• £0.7 million of additional funding received under the Shareholder Loan
Agreement between 1 January 2024 to 28 March 2024, taking the total funds
received under the Shareholder Loan Agreement to £1.7 million.
Ian Halliday-Pegg, CEO commented:
"The team has delivered significant operational enhancements in line with
preparing for growth and operating as a listed company, and achieved growth in
billed recurring revenues, all whilst maintaining strong customer retention
and beginning to execute on the Company's strategic growth initiatives. This
has been no mean feat and demonstrates the value and uniqueness of our
solution as a specialised and comprehensive operational resilience offering
designed to integrate with organisations' existing security and risk systems,
and its relevance to the growing market for operational resilience, driven by
the upcoming European and UK deadlines for operational resilience regulation
in financial services. With increased investment in the rest of 2024, we
look forward to capitalising on the following winds and accelerating our
growth to meet our vision."
For the purposes of UK MAR, the person responsible for arranging release of
this announcement on behalf of RTOP is Ian Halliday-Pegg, Chief Executive
Officer of RTOP.
Enquiries:
RegTech Open Project plc
Albert Ganyushin, Chairman investors@regtechopenproject.co.uk
Ian Halliday-Pegg, CEO
About Regtech Open Project plc
Regtech Open Project plc is a technology business specialised in Regulatory
Technology (RegTech) that has developed the Orbit Open Platform, an
award-winning proprietary software platform focused on Operational Resilience
(OR), which helps its customers navigate an increasingly complex and demanding
regulatory landscape, maintain a secure and stable operating environment,
whilst improving compliance with applicable regulations and standards, and
reducing the risk of business disruptions.
RTOPs shares are listed on the London Stock Exchange's main market under the
ticker "RTOP". For more information, please visit www.regtechopenproject.co.uk
(http://www.regtechopenproject.co.uk)
Chief Executive's review
Overview
The business has made steady progress since the listing, undertaking
operational enhancements for growth and to operate as a plc, and delivering
modest growth in recurring revenues year on year with strong customer
retention. The market continues to demonstrate buoyancy and our pipeline
growth indicates the relevance and unique value of our solutions as a
specialised and comprehensive operational resilience offering designed to
integrate with organisations' existing security and risk systems. Our existing
partnerships are delivering further pipeline opportunities and our newly
forming partnerships are underpinning the future strategy. The company seeks
the means to invest now in significant growth through its four key
initiatives, detailed in this announcement, which are all showing progress
with the resources and funds currently available. With all the right pieces
coming together and ready to be accelerated, we look forward to a
transformational year.
Strategic and operational progress
RTOP's journey since becoming a plc has been one of transitioning to a
scale-up business; building all the foundations to drive new levels of growth
and scale. Along with the listing came a refresh of the company's mission,
vision and values to provide a "true-north", lay the path, and set the tone.
We updated the company branding and launched websites for the plc and for the
Orbit Open Platform - based on revised key marketing messages. Over the first
few months, the team has worked hard to prepare the business for scale up:
• Introducing solution-focused sales processes and systems to improve efficiency
and sales productivity.
• Rolling out a customer success program to maximise our customers' value from
our solutions, and drive opportunities for additional revenues as our
customers evolve from their traditional continuity plans to being able to also
respond, adapt and recover.
• Enhancing a value-based product roadmap to support our growth initiative.
• Creating new marketing collateral to reflect our brand and enhanced messaging
around our specialisation and unique combination of specialist knowledge,
comprehensive solutions and integration for operational resilience.
Partnerships have proven fruitful, with the big four consultancies in Italy
continuing to collaborate on customer solutions and new opportunities, and our
strategic partnership with Everbridge, a leading supplier of risk intelligence
and emergency mass notification solutions, also driving several new tenders in
the pipeline and providing upsell opportunities within our customer base as
our customers move along their resilience journey with us. We are developing
partnerships in cyber-security, where we are working with selected vendors to
integrate their products into the Orbit platform to complete our solution-set
and also aiming to provide our technology to them and collaborate on new
products to enhance their own portfolio of solutions. Finally, in Insurtech,
we have engaged potential partners and pilot customers and are on target to
sign initial agreements with them and to conduct pilots this year.
In addition, RTOP maintained its knowledge and thought leadership through
actively contributing to the ABILAB - Banking Research and Innovation Centre
founded and operated by the Association of Italian Banking ("ABI") on the
development of an industry-wide framework for operational resilience,
incorporating the DORA framework.
To drive revenues and accelerate growth and profitability over the next 5
years, RTOP has embarked on the following four key strategic initiatives aimed
at capitalising on our current position in the short and medium term, and, in
parallel, building an innovative, highly scalable, high-margin business model
to drive maximum future-value for our shareholders.
1. Capture significant new sales opportunities driven by DORA operational
resilience regulation. With the January 2025 compliance deadline, there is
significant priority and momentum in financial services and among ICT
suppliers to invest in meeting their DORA obligations. Post-deadline, their
priorities will be to demonstrate compliance and drive efficiencies in
operational resilience activities. We estimate the addressable European market
to be c.£3.5bn, with analyst predicted growth at 15% CAGR over the next 5
years. This market is directly in the sweet spot for RTOP, with the Orbit Open
Platform being a highly comprehensive, specialised operational resilience
solution, and represents an opportunity to grow RTOP's subscription based
operational resilience business 10x over 5 years by completing its software
solution to be best in class for operational resilience and generating
significant new demand through its current big-four relationships, new
value-added resellers, direct sales and digital marketing.
2. Launch an additional scalable business line in Insurtech aimed at
corporate customers. Representing a step-change in scale and profitability,
this additional business line will offer a platform, route to market and
revenue streams that are highly scalable, with low-touch and high
profitability. Based on internal estimates, the market opportunity is circa
£5bn in Europe with 1% penetration representing £50m of available annual
revenues. The solution aims to use RTOP's technology and specialist knowledge
to put operational resilience assessments at the heart of the relationship
between corporate customers and insurance providers, enabling the provision of
tailored insurance solutions appropriate for the risk exposure and companies'
ability to respond and recover from disruptive events. RTOP is in discussion
with several insurance Managing General Agents (MGAs) and expects to launch
the Insurtech business line by signing agreements to develop and pilot the
first corporate customer solutions in the coming months.
3. Convert legacy product clients to subscription-based products. RTOP has a
number of customers currently using Business Continuity Management ('BCM')
products on a licence and maintenance basis, and we are actively working to
convert these clients to our subscription-based operational resilience
platform in 2024 ahead of January 2025 renewals. This aims to generate a net
uplift in existing recurring revenues of c.£0.4 million and create the
opportunity to upsell additional products using this platform with a potential
further net uplift in recurring revenue of £0.7 million over the next two
renewal cycles.
4. Monetise non-core assets. The Company has a portfolio of GRC products
and customers that are related to, but not specifically core to, the
operational resilience focus of RTOP. Consequently, the Company is exploring
options to release the value embedded in these assets either via a licencing
or reselling partnership to generate material net recurring revenues or a
potential divestiture to generate material net proceeds to the Company. RTOP
is in active discussions with institutions and potential partners as we
evaluate value maximisation options for its non-core GRC product suite.
Current trading and outlook
Current Trading:
RTOP has made an encouraging start to 2024, with £0.4 million booked to date,
representing a material part of the annual management plan. The majority of
the booked amount is subscription renewals of operational resilience software,
which has grown 10% over the equivalent renewals in 2023, and together with
customer retention in excess of 90%, demonstrates RTOP's ability to retain and
grow its customers in its core market.
In addition, RTOP has further increased its bookings to date with a material
restructuring of a customer contract delivering an additional £0.1 million in
bookings to date, with the opportunity to increase this by an additional
c.£0.2 million in the second half of the year.
Outlook:
Revenues from our existing customers are set to remain strong, with loyal
customers seeing value from our solutions and increasing their spend year on
year to providing a growing run-rate of revenues with a low cost of sale,
relative to new business. The net revenue retention is targeted at >120% in
2024, driven by the incremental increase in renewal fees, and the roll-out of
a customer upsell program, which is expected to deliver additional customer
revenues throughout the year, and generate a further increase in 2025 as
customers add products during their annual renewal.
For new business, we are steadily building an increasing opportunity pipeline,
with a good mix of recurring revenues, new customers and sectors outside of
our traditional finance market, indicating the buoyancy of the market, and the
applicability of our solutions. The 2024 sales pipeline for new bookings of
software and related services from existing and new customers is currently
£1.3 million, with £0.85 million in our traditional Banking, Financial
Services and Insurance sectors, and £0.45 million in our newer Manufacturing
and Technology sectors. This pipeline includes several tenders with leading
blue-chip organisations. The bookings outlook would indicate the ability to
perform against management plan this year.
Finance review
The consolidated statement of comprehensive income for the period shows
trading from the newly incorporated Italian branch covering the period from 14
August 2023 to 31 December 2023.
Unaudited period to 31 December 2023
£ 000
Revenue 370
Gross loss (64)
Operating expenses (831)
Adjusted EBITDA (895)
Exceptional items (2,246)
EBITDA (3,141)
Depreciation and amortisation (636)
Finance cost (4,781)
Finance income 120
Loss before tax (8,439)
Taxation 69
Loss after tax (8,370)
Revenue
Revenues for the period of £0.4 million includes £0.2 million of
subscription and maintenance revenues which is recurring in nature.
Earnings before interest, tax, depreciation and amortisation (EBITDA)
An EBITDA loss in the period of £3.1 million includes £2.2 million
exceptional items which primarily relates to listing expenditure. Excluding
exceptional items, the Company generated an adjusted EBITDA loss of £0.9m in
the period.
Exceptional items
Exceptional items of £2.2 million include £1.0 million of fees paid to
advisors in relation to the listing of the Company on the London Stock
Exchange which took place on 25 August 2023 plus £1.2 million non-cash
share-based payment charges relating to the issuance of warrants. Further
details are included in notes 4 and 13.
Depreciation and amortisation
Depreciation and amortisation charges for the period of £0.6 million includes
£0.36 million amortisation of capitalised development costs, £0.27 million
amortisation of acquired intangible assets and £0.003 million depreciation of
right of use assets.
Finance costs
Finance costs of £4.8 million is primarily made up of warrants issued as
finance fees (£4.76 million) but does include interest payable on the
shareholder loan of £0.02 million. Please see note 5 for further details.
Finance income
Finance income of £0.1 million includes interest receivables for outstanding
amounts owed by the shareholder loan which accrues compounding interest at a
rate of 15% per annum.
Loss before tax
Loss before tax of £8.4 million includes an adjusted EBITDA loss of £0.9
million less exceptional items of £2.2 million, depreciation and amortisation
of £0.6 million, finance costs of £4.8 million less finance income of £0.1
million.
Principal risks and uncertainties
The Company works to minimise its evolving exposure to financial, operational
and other risks set out in the Prospectus published on 22 August 2023;
however, in pursuit of achieving its strategy there will always be an element
of risk that needs to be considered.
Statement of Directors' responsibilities
The Directors confirm that to the best of our knowledge that:
• The condensed interim set of financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the United
Kingdom;
• The interim report includes a fair review of information required by DTR
4.2.7R (indication of important events during the period reported and a
description of principal risks and uncertainties for the remaining six months
of the year); and
• The interim report includes a fair review of the information required by DTR
4.2.8R (disclosure of related party transactions and any change therein).
Ian Halliday-Pegg
Chief Executive Officer
28 March 2024
Unaudited condensed consolidated statement of comprehensive income
for the period to 31 December 2023
Unaudited
period to 31 Dec 2023
£
Note
Continuing operations
Revenue 369,853
Cost of sales (434,190)
Gross (loss)/profit (64,337)
Operating expenses (830,988)
Exceptional items 4 (2,246,074)
Earnings before interest, taxation, depreciation and amortisation (3,141,399)
Depreciation and amortisation (636,326)
Finance costs 5 (4,780,625)
Finance income 119,701
(Loss) before taxation (8,438,649)
Income tax 68,982
(Loss) for the period from continuing operations (8,369,667)
Total profit / (loss) for the period
Other comprehensive income (8,984)
Total comprehensive income for the period (8,378,651)
Basic and diluted earnings per share - pence 6 (29.57)
Unaudited condensed consolidated statement of financial position
as at 31 December 2023
Note
Unaudited
31 Dec 2023
£
Non-current assets
Intangible assets 7 18,069,206
Property, plant and equipment 1,513
Right of use asset 12,870
Deferred tax asset 1,061,400
Total non-current assets 19,144,989
Current assets
Trade and other receivables 8 520,365
Cash and cash equivalents 11,952
Total current assets 532,317
Total assets 19,677,306
Current liabilities
Borrowings 9 6,921
Trade and other payables 10 7,048,133
Lease liabilities 7,551
Total current liabilities 7,062,605
Non-current liabilities
Borrowings 9 954,703
Deferred tax liability 1,732,159
Lease liabilities 3,844
Other non-current liabilities 11 325,005
Total non-current liabilities 3,015,711
Total liabilities 10,078,316
NET ASSETS 9,598,990
Equity attributable to owners of the parent
Share capital 12 12,000,000
Share based payment reserve 13 5,999,520
Other reserves (21,879)
Foreign exchange reserve (8,984)
Retained earnings (8,369,667)
TOTAL EQUITY 9,598,990
Unaudited condensed consolidated statement of changes in equity
for the period to 31 December 2023
Share Capital SBP Reserve Other Reserve Foreign Exchange Reserve Retained Earnings Total
£ £ £ £ £ £
At incorporation 50,000 - - - - 50,000
(Loss) for the period - - - - (8,369,667) (8,369,667)
Other comprehensive loss - - - (8,984) - (8,984)
Total comprehensive loss for the period - - - (8,984) (8,369,667) (8,378,651)
Transaction with owners
Acquisition of RegTech Italy - branch 11,950,000 - (21,879) - - 11,928,121
Share based payments - 5,999,520 - - - 5,999,520
Share issue costs - - - - - -
Total transactions with owners 11,950,000 5,999,520 (21,879) - - 17,927,641
Balance at 31 December 2023 - (unaudited) 12,000,000 5,999,520 (21,879) (8,984) (8,369,667) 9,598,990
Unaudited condensed consolidated cash flow statement
for the period to 31 December 2023
Note Unaudited
Period to 31 Dec 2023
£
Cash flow from operating activities
(Loss) for the financial period (8,369,667)
Adjustments for:
Amortisation of intangible assets 633,526
Depreciation 2,800
Share based payments 1,241,280
Finance cost - Warrants issued 4,758,240
Finance cost - Finance leases 143
Finance cost - Other 22,242
Finance income (119,701)
Income tax (68,982)
Cash flow from operating activities before changes in working capital (1,900,119)
(Increase) / decrease in trade and other receivables (83,310)
Increase / (decrease) in trade and other payables 1,063,701
Cash (used)/generated from operating activities (919,728)
Net foreign exchange movements (22,049)
Net cash (used)/generated from operating activities (941,777)
Cash flow from investing activities
Purchase of intangible fixed assets 7 (89,190)
Net cash outflow from investing activities (89,190)
Cash flows from financing activities
Proceeds from issue of share capital 8 50,000
Other loan repayments (822)
Shareholder loan - principal amounts received 8 996,566
Repayment of lease liabilities (2,825)
Net cash inflow from financing activities 1,042,919
Net increase in cash and cash equivalents 11,952
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at the end of the period 11,952
1. GENERAL INFORMATION
RegTech Open Project plc ("RegTech" or "the Company") is a public company
incorporated in the United Kingdom on 10 March 2023 and listed on the London
Stock Exchange ("LSE") on 25 August 2023. The registered address of the
Company is 9th Floor, 107 Cheapside, London EC2V 6DN.
The principal activity of the Company is the automation, management, and
optimisation of regulatory compliance operations utilising the company's Orbit
Open Platform, which helps customers navigate an increasingly complex
regulatory landscape, maintain a secure and stable operating environment,
whilst improving compliance with applicable regulations and standards,
reducing the risk of business disruptions.
2. BASIS OF PREPARATION
This unaudited condensed consolidated interim financial information for the
period from incorporation on 10 March 2023 and ended 31 December 2023 has been
prepared in accordance with IFRS as adopted by the United Kingdom, including
IAS 34 'Interim Financial Reporting'.
There are no new standards, interpretations and amendments which are not yet
effective in these financial statements expected to have a material effect on
the Company's future financial statements.
The financial statements do not contain all of the information that is
required to be disclosed in a full set of IFRS financial statements. The
financial statements for the period ended 31 December 2023 is unreviewed and
unaudited and does not constitute the Company's statutory financial statements
for this period.
Given this is the first period being reported on, there is no comparative
financial statements.
The interim financial statements have been prepared under the historical cost
convention. The financial statements and the notes to the financial statements
are presented in pounds sterling, the functional and presentation currency of
the Company, except where otherwise indicated.
Asset acquisition
The Company was incorporated on 10 March 2023 with 50,000 £1.00 ordinary
shares. Subsequently, the Company and RegTech Open Project S.p.A. ("RegTech
Italy") entered into a Contribution Agreement dated 14 August 2023, whereby
RegTech Italy contributed its entire business and assets and transferred all
its liabilities to the Company for a total consideration of 11,950,000 shares.
Following the contribution the Company subdivided is entire issued share
capital of 12,000,000 £1.00 ordinary shares into 60,000,000 ordinary shares
of £0.20 each.
This is not considered to be a business combination within the scope of IFRS3
as the transaction was not an acquisition of another company, but rather a
transfer of assets and liabilities into the Company. This is a key judgement,
and given there was no entity acquired by the Company, but rather a transfer
of all assets and liabilities, the transaction has been treated as an asset
acquisition with no change in the book values of assets and liabilities and no
fair value accounting applied.
Share based payments
The Company has made awards of warrants on its unissued share capital to
certain parties in return for services provided to the Company as well as
finance fees in relation to a loan funding facility provided to the Company
and with loan conversions ahead of admission. The valuation of these warrants
involved making a number of critical estimates relating to price volatility,
future dividend yields, expected life of the options and interest rates. These
assumptions have been integrated into the Black Scholes Option Pricing model
to derive a value for any share-based payments. These assumptions are
described in more detail in note 13.
Going concern
The directors have considered the principal risks and uncertainties facing the
business, along with the Group's objectives, policies and processes for
managing its exposure to financial risk. In making this assessment the
directors have prepared cash flows for the foreseeable future, being a period
of at least 12 months from the expected date of approval of the financial
statements.
Since completion of the Direct listing a total of £5.0 million funds have
been drawn under the English law governed fixed term unsecured working capital
loan agreement, cast as a deed, between the Company and RegTech Italy (the
"Shareholder Loan Agreement") and £1.7 million of funds have been received by
the Company (off which £0.7 million has been received post 31 December 2023),
the outstanding balance due is accruing 15% compounding interest ("Late
Drawdown Fee").
The Directors have reviewed the cashflow on a prudent basis and acknowledge
that funding from the shareholder loan is required to meet its liabilities
over the next 12 months. The Directors continue to work on mitigating the
impact relating to delays in receipt of the outstanding principal amount drawn
under the Shareholder Loan Agreement and remains confident this will not
affect the ultimate growth of the business.
Despite the receipt of £0.7 million of funding from the shareholder loan in
2024, the Directors acknowledge the continued delays experienced in the
receipt of expected funds from the shareholder loan and therefore have
prudently identified uncertainty in the cashflow model. This uncertainty
arises with respect to both the future timing and quantum of funding from the
Shareholder Loan Agreement. In this regard, if these future funds are not
secured the Directors envisage it is possible that the Company would have a
shortfall in cash and require alternative funding during the forecast period.
On this basis, the Directors believe there are material uncertainties which
may cast significant doubt upon the entity's ability to continue as a going
concern.
The Directors do remain confident in the business model, which includes the
original funding, and believe the Company could be managed in a way to allow
it to meet its ongoing commitments and obligations through mitigating actions
including cost saving measures and securing alternative sources of funding the
Directors continue to investigate should it be required.
As such the Directors consider it appropriate to prepare these interim
financial statements on a going concern basis, taking into account the
material uncertainties noted above, and have not included the adjustments that
would result if the Company were to be unable to continue as a going concern.
3. SEGMENT REPORTING
The following information is given about the Company's reportable segments:
The Chief Operating Decision Maker is the Chief Executive Officer. The Board
reviews the Group's internal reporting in order to assess performance of the
Group. Management has determined the operating segment based on the reports
reviewed by the Board.
The Board considers that during the period ended 31 December 2023 the Company
operated in the single business segment of automation, management, and
optimisation of regulatory compliance operations.
4. EXCEPTIONAL ITEMS
Period to 31 Dec 2023
£
Share based payment charge 1,241,280
Legal fees 500,000
Other professional fees 266,201
Accounting fees 238,593
2,246,074
The above one-off expenditure relates to cost incurred as part of the listing
of the Company on the London Stock Exchange which took place on 25 August
2023.
5. FINANCE COSTS
Period to 31 Dec 2023
£
Interest on financial liabilities 22,242
Warrants issued as finance fees 4,758,240
Finance charge on lease liabilities 143
4,780,625
6. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is calculated by
dividing the profit or loss for the period by the weighted average number of
ordinary shares in issue during the period.
Period to 31 Dec 2023 (unaudited)
Loss for the period from continuing operations - £ (8,369,667)
Weighted number of ordinary shares in issue 28,308,277
Basic and diluted earnings per share from continuing operations - pence (29.57)
There is no difference between the diluted earnings per share and the basic
earnings per share as there were no securities on issue at 31 December 2023
that would have a dilutive effect on earnings per share.
7. INTANGIBLE ASSETS
Goodwill Development costs Total
£
£
£
Cost
At incorporation - - -
Additions on acquisition 14,298,981 2,508,699 16,807,680
Goodwill assigned to development costs (7,170,000) 7,170,000 -
Deferred tax liability adjustment acquired identified intangible assets 1,792,500 - 1,792,500
Additions - 89,190 89,190
Foreign exchange differences - 13,362 13,362
At 31 December 2023 (unaudited) 8,921,481 9,781,251 18,702,732
Amortisation
At incorporation - - -
Charge for the period - (633,526) (633,526)
At 31 December 2023 (unaudited) - (633,526) (633,526)
Net book value
31 December 2023 (unaudited) 8,921,481 9,147,725 18,069,206
Additions on acquisition incorporate the acquired assets and liabilities of
RegTech Open Project S.P.A which transferred in on the 14 August 2023. The
Company has 12 months from the date of acquisition to finalise the accounting
treatment in relation to the acquisition and therefore the amounts and
classifications included in the schedule above are incomplete and subject to
change.
8. TRADE AND OTHER RECEIVABLES
31 Dec 2023 (unaudited)
£
Trade receivables 139,465
Accrued income 124,223
Prepayments 27,652
Taxes recoverable 179,270
Related parties 48,653
Other receivables 1,102
520,365
9. BORROWINGS
31 Dec 2023 (unaudited)
£
Current
Other borrowings 6,921
6,921
Non-current
Shareholder loan facility 946,294
Other borrowings 8,409
954,703
During the period the Company entered into a Shareholder Loan Agreement with
RegTech Italy which was conditional upon admission. RegTech Italy would
provide working capital facility of up to £8,000,000 drawable at the
Company's request comprising:
- Up to £2,000,000 in cash to be drawn by 1 September 2023 - at 10%
interest per annum;
- Up to £500,000 in cash to be drawn by 30 September 2023 - at 10%
interest per annum;
- During the period 25 August 2023 to 31 March 2024, up to £2,000,000
which may, at the election of the Company, be set-off om a £-for-£ basis
against certain payables of the Company (where such payable shall be
transferred to RegTech Italy to be settled - at 5% interest per annum; and
- Whereby the Company, in the option of the Board, has not raised
sufficient unrestricted cash through exercise of warrants or issue of
alternative debt / equity or hybrid financing to enable the Company to meet
its working capital requirements, during the period 1 October 2023 to 31
December 2024 the Company can draw up to £3,500,000 (capped at £500,000 per
month until fully drawn) - at 10% interest per annum.
The due date for repayment of amounts drawn under the Shareholder Loan
Agreement is 31 December 2026, with accrued and unpaid interest outstanding on
the principal shall be settled in instalments on 1 January 2025, 30 June 2025,
1 January 2026, 30 June 2026 and 31 December 2026, with any amounts due past
31 December 2026, attracting interest at 15% per annum.
At 31 December 2023 the shareholder loan liability included the following:
31 Dec 2023 (unaudited)
£
Principal amount received 1,046,566
Interest payable on loan amounts received 19,429
Interest receivable on loan amounts not received (119,701)
946,294
Other borrowings relate to a legacy bank loan which accrues interest at a rate
of 0.90% per annum.
10. TRADE AND OTHER PAYABLES
31 Dec 2023 (unaudited)
£
Trade creditors 3,842,283
Other taxation and social security 406,126
Accruals 691,177
Deferred income 67,158
Related party payable 1,901,578
Other payables 139,811
7,048,133
11. OTHER NON-CURRENT LIABILITIES
31 Dec 2023 (unaudited)
£
Related party payable 97,975
Post employment benefits 227,030
325,005
12. SHARE CAPITAL
Number Share
of shares capital
£
Shares of £1.00 issued on incorporation 50,000 50,000
Shares issued to RegTech Italy of £1.00 each (1) 11,950,000 11,950,000
Subdivision of shares on a 5:1 basis 48,000,000
60,000,000 12,000,000
(1) The issue of shares with a nominal value of £11,950,000 in exchange for
the business assets and liabilities of RegTech Italy in accordance with the
accounting principles as set out in note 2.
(2) During the period, the Company completed a subdivision of shares on a 5:1
basis, whereby the nominal value of the shares became £0.20 per ordinary
shares.
13. SHARE BASED PAYMENT RESERVE
31 Dec 2023 (unaudited)
£
Finance facility fee warrants issued (1) 1,861,920
Loan conversion fee warrants issued (2) 2,896,320
Advisor warrants issued (3) 1,241,280
5,999,520
( )
(1) On 21 August 2023, 2,250,000 warrants were issued to RegTech Italy as a
commitment fee in connection with the Shareholder Loan Facility.
(2) On 21 August 2023, 3,750,000 warrants were issued to The Avant Garde Group
S.p.A ("TAG"), being the parent company of RegTech Italy in relation to the
conversion of historic TAG shareholder loans to RegTech Italy / the Company.
(3) On 21 August 2023, 1,500,000 warrants were issued to Westcott Hill Capital
Limited in relation to pre-Direct Listing business advisory services.
All of the 7,500,000 warrants issued on 21 August 2023 have a term of 3 years
and an exercise price of £0.20.
Share based payments valuation
The following table summarise the valuation techniques and inputs used to
calculate the values of share based payments in the period:
Warrants
Grant date Number Share price Exercise price Volatility RF Rate Technique
£ £ % %
21 Aug 2023 7,500,000 1.00 0.20 36.00 4.90 Black Scholes
14. ACQUISITION OF REGTECH ITALY BRANCH
During the period, the Company entered into a Contribution Agreement with
RegTech Open Project S.p.A. ("RegTech Italy"), whereby RegTech Italy
contributed its entire business and assets and transferred all of its
liabilities to the Company for a total consideration of 11,950,000 shares. The
fair value of the assets and liabilities transferred were as follows:
£
Intangible assets 2,508,699
Property, plant and equipment 1,887
Right of use assets 15,593
Deferred tax asset 1,057,877
Trade and other receivables 1,151,323
Other reserves 18,134
Cash and cash equivalents -
Borrowings (16,152)
Lease liability (14,077)
Post employee benefit liability (222,464)
Trade and other payables (6,841,202)
Deferred tax liability (8,599)
Total identifiable net assets acquired (2,348,981)
Goodwill 14,298,981
Consideration
Shares issued 11,950,000
Total consideration 11,950,000
15. RELATED PARTY TRANSACTIONS
Alessandro Zamboni, who is a Non-Executive Director of the Company is also a
Director and sole- shareholder of The Avantgarde Group S.p.A. ("TAG") which
owns 100% stake in RegTech Open Project S.p.A. with the latter being the
principal shareholder of the Company. Consequently, both entities are regarded
as related parties by virtue of Alessandro Zamboni's ability to exert
significant influence over Avantgarde Group S.p.A and RegTech Opening Project
S.p.A.
The following balances are outstanding at 31 December 2023:
Avantgarde Group S.p.A. RechTech Open Project S.p.A. Total
Trade and other receivables 48,653 48,653
Borrowings - (note 9) (946,294) (946,294)
Trade and other payables (1,901,578) (1,901,578)
Other non-current liabilities (97,975) (97,975)
(995,616) (1,901,578) (2,897,194)
In addition to the amounts detailed above the following warrants were issued
during the period to related parties.
On 21 August 2023, 2,250,000 warrants were issued to RegTech Italy as a
commitment fee in connection with the Shareholder Loan Facility.
On 21 August 2023, 3,750,000 warrants were issued to The Avant Garde Group
S.p.A ("TAG"), being the parent company of RegTech Italy in relation to the
conversion of historic TAG shareholder loans to RegTech Italy / the Company.
On 21 August 2023, 1,500,000 warrants were issued to Westcott Hill Capital
Limited (a company controlled by Albert Ganyushin) in relation to pre-Direct
Listing business advisory services.
16. EVENTS SUBSEQUENT TO PERIOD END
£0.7 million of additional funding has been received under the Shareholder
Loan Agreement between 1 January 2024 to 28 March 2024.
17. CAUTIONERY STATEMENT
These unaudited interim results for the period ending 31 December 2023
("Interim Results") have been prepared in accordance with the requirements of
the Companies Act 2006 (as amended) and the liabilities of the Directors in
connection with these Interim Results shall be subject to the limitations and
restrictions provided by such law.
These Interim Results are prepared for and addressed only to the Shareholders
as a whole and to no other person. The Company, its Directors, employees,
agents, or advisers do not accept or assume responsibility to any other person
to whom these Interim Results are shown or into whose hands it may come, and
any such responsibility or liability is expressly disclaimed.
These Interim Results contain forward looking statements, which are
unavoidably subject to risk and uncertainty because they relate to events and
depend upon circumstances that will occur in the future. It is believed that
the expectations set out in these forward-looking statements are reasonable,
but they may be affected by a wide range of variables which could cause future
outcomes to differ from those foreseen. All statements in these Interim
Results are based upon information known to the Company at the date of this
report. Except as required by law, the Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
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