REG - Skillcast Group PLC - Final Results
26/04/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230426:nRSZ4449Xa&default-theme=true
RNS Number : 4449X Skillcast Group PLC 26 April 2023
The information contained within this announcement is deemed by the Company to
constitute inside information pursuant to Article 7 of EU Regulation 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 as amended.
26 April 2023
Skillcast Group PLC
("Skillcast", the "Group" or the "Company")
Results for the twelve months ended 31 December 2022
Skillcast (AIM: SKL), the provider of content and technology for digital
compliance transformation, is pleased to announce its audited results for the
twelve months ended 31 December 2022.
Highlights
2022 2021 Change (2022 v 2021 )
Revenue £9.8m 8.4m +17%
Gross margin (%) 70.1% 70.5% -0.4pps
Annualised recurring revenue (ARR)* £6.8m £5.8m +16%
Adjusted (LBITDA)/EBITDA* -£0.3m +£1.1m n/a
Basic (loss)/EPS (pence) -0.460p +0.467p n/a
Total dividend per share (pence) 0.447p 0.447p 0%
Cash in bank £7.7m £7.9m -2%
Free cash flow £0.3m +£1.1m -76%
· Total revenues up 17% at £9.8 million (2021: £8.4 million)
o Revenue increase was driven by strong growth in recurring subscription
revenues, up 28% at £6.7 million (2021: £5.2 million)
o Annualised recurring revenue (ARR)* up 16% to £6.8 million (December
2021: £5.8 million) predominantly from new client acquisitions
o Recurring subscriptions contributed to 68% of total revenues (2021: 62%)
o Professional services revenues steady at £3.1 million (2021: £3.2
million)
· Gross margin remained strong at 70.1% (2021: 70.5%)
· Adjusted LBITDA of £0.3 million (2021: Adjusted EBITDA £1.1
million)
o Investment in product development, commercial and organisational structure
to support ambitious growth plans led to a small loss in profit as intended at
IPO
o All research and development is expensed
o New Chief Financial Officer and Chief People Officer appointed
o Headcount increased by 26% in the year to 111 (2021: 88)
· Strong net cash position at 31 December 2022: £7.7 million (31
December 2021 net cash: £7.9 million), representing c. 8.6 pence per ordinary
share in the Company
o Improved working capital helped to offset the planned accelerated
investment
o Free cash flow of £0.3 million (2021: £1.1 million) despite EBITDA loss
· Basic LPS -0.460 pence per share (2021: EPS +0.467 pence)
· Total dividend of 0.447 pence per share (2021: 0.447 pence)
o Final dividend proposed: 0.279 pence
o Interim dividend paid: 0.168 pence
· Operational highlights:
o Total client numbers grew to over 1,000
o Significant progress in headcount growth to support growth strategy
o Maintained excellent customer service records (Feefo Platinum Service
Award 4.9/5.0) while achieving growth targets
o Expanded marketing activity with face-to-face events and launched
Skillcast Connect in November 2022
o Successfully migrated all client hosting to the cloud (completed March
2023) as intended and outlined at IPO
o ESG progress: achieved carbon neutral status
Current trading and outlook
We have entered the new financial year with a strong sales and product
pipeline. We are well prepared to capitalise on the demand for digital
compliance transformation and drive sustainable growth of our subscriber
base.
We are starting to see the fruits of our post-IPO investments. We are
attracting new customers with higher annual contract values, and our ARR at
the end of Q1 2023 was 22% up year on year at £7.2 million (March 2022 ARR:
£5.9 million).
We expect further improvements this year, led by the launch of our
multi-lingual Global Risk and Compliance libraries in March and other content
and SaaS product launches later this year. We have migrated all our clients to
our new cloud-hosting platform, giving us a more scalable infrastructure for
further growth.
Whilst not immune to the recent banking and wider economic concerns, we remain
well diversified with over 1,000 clients and 45% of revenues coming from
non-financial services customers.
Trading since the period end has continued to increase on the prior year,
driven by growing subscription revenues, and remains consistent with achieving
market expectations.
Vivek Dodd, Chief Executive Officer of Skillcast, said:
"Skillcast enables companies to digitise and consolidate their compliance
processes, thereby reducing costs, improving their employee experience and
helping build more ethical, inclusive and resilient workplaces. With companies
facing inflationary pressures as well as regulatory demands, the need for this
compliance transformation is greater than ever.
"We are pleased with the 28% growth in our subscription revenue in 2022,
which raised the total revenue growth to 17% and meant that subscription
revenue as a proportion of total revenue increased to 68% (2022: 62%).
"Since our IPO in December 2021, we have made substantial improvements to
our content and technology products and have maintained our 4.9/5.0 customer
service rating. We have successfully attracted and retained top talent in key
roles.
"Trading in the first half of the year has started well , and the pipeline
of new prospective customers is strong. Despite the macroeconomic
uncertainties in our markets in the UK and the EU, we remain on track to meet
market expectations by offering cost-saving, risk-reducing compliance
solutions to our customers."
*Further details on the calculation of adjusted EBITDA and ARR are set out in
the Financial Review below
Enquiries:
Skillcast Group plc +44 (0)20 7929 5000
Richard Amos, Chairman
Vivek Dodd, Chief Executive Officer
Richard Steele, Chief Financial Officer
Allenby Capital Limited (Nominated Adviser & Broker) +44 (0)20 3328 5656
James Reeve, Piers Shimwell (Corporate Finance)
Jos Pinnington, Tony Quirke (Sales and broking)
Chairman's Statement
Introduction
I am pleased to introduce this Annual Report to shareholders, which reviews
the first full financial year since our admission to trading on AIM. I am
delighted to report that we have achieved considerable success over that year,
with progress on all the strategic, financial and operational challenges we
set ourselves.
Results and Dividend
We achieved a strong set of financial results for the year ended 31 December
2022, with all key financial metrics either ahead of or in line with our
expectations at our IPO in December 2021. Revenue of £9.8 million was some
17% up on the prior year overall (2021: £8.4 million), and within that, the
strategically important subscription-as-a-service (SaaS) revenue was up 28%.
As anticipated, profitability has been impacted by the investment program we
committed to at the time of the fund-raise to provide the workforce capacity
and technology to drive sustainable growth. As such, adjusted EBITDA has
reduced, as expected, to a loss of £0.3 million in the year (2021: adjusted
EBITDA £1.1 million). Importantly, through proactive working capital
management, the cash balance at the year-end decreased by only £0.2 million
to £7.7 million (31 December 2021: £7.9 million).
The Board's stated policy is to maintain the full-year dividend at least at
the recent historical level for the foreseeable future. We see that as an
important financial discipline for a business with repeatable revenues that
provide strong cash generation. Accordingly, at the AGM on 20 June, the Board
will propose a final dividend per share of 0.279 pence. Combined with an
interim dividend per share of 0.168 pence that was paid in November, this will
take the full-year dividend to £400,000 (2021: £400,000) with the full-year
dividend per share to 0.447 pence (2021: 0.447 pence).
Strategy
Skillcast's strategy remains as set out when we came to the AIM market in
2021. Our purpose is to enable companies to build ethical and resilient
workplaces, and our vision is to be the leading provider of digital training
and technology for staff compliance. We provide an integrated platform with
engaging, customisable e-learning content, policy attestation hubs, registers
for recording activities like CPD undertaken or gifts and hospitality received
and the tools to monitor and administer all of the above.
Companies face an ever-increasing burden of compliance and, at the same time,
are facing a real need to find efficiencies in the current cost-pressured
environment. We believe these conditions provide a strong driver for growth in
the digital compliance transformation market, which offers companies a
genuine solution to these challenges. With Skillcast's experience in
developing content and technology, we are uniquely placed to offer companies
an easy-to-adopt, low-cost, high-value solution to the considerable challenges
that businesses face.
We remain focused primarily on growing recurring subscription-based revenues
by supporting existing clients with a range of products, and by acquiring
similar new customers. We mainly target new clients in regulated industries
where the burden of compliance is at its highest, although our services are
equally applicable to all companies that have a need for efficient workplace
compliance solutions. And whilst we can support companies of all sizes, our
'sweet spot' is medium-sized enterprises whose compliance requirements are
increasingly complex but not large enough to warrant full bespoke solutions.
People and Organisation
The last twelve months have seen significant growth in headcount as we
expanded the Skillcast team to drive the sustainable growth we delivered - our
headcount increased from 88 to 111. I want to take this opportunity to welcome
all of our new joiners and thank them and our existing staff for their hard
work and success over the last year.
That increase in staff numbers has coincided with a very tight labour market
and, of course, challenges and pressures all employees feel given the current
economic climate. I want to pay tribute to Vivek and the executive team for
how they handled the challenges that this presented and for the caring and
compassionate solutions they have put in place to support the staff over the
last year.
Shareholder Engagement
The one dark shadow over the year has been the share-price performance since
flotation, which has been disappointing, particularly given the positive
progress made on strategic, operational and financial targets. We recognise
that the drivers of the reduction are much more related to market sentiment
for SaaS-based technology businesses than for Skillcast specifically and are
grateful for the support we have received from shareholders in this regard. We
are following their advice to focus on driving the business and not reacting
to the share price.
However, we recognise our responsibility to actively manage shareholder
engagement activities to ensure that we communicate effectively with as wide a
range of investors as possible. We have already instigated a plan to present
the company more widely at investor events and plan a more active
communication campaign over the next year. We welcome the opportunity to speak
with existing and prospective investors and look forward to welcoming
shareholders to our AGM on 20 June.
Current Trading and Outlook
We have entered the new financial year with a strong sales and product
pipeline. We are well prepared to capitalise on the demand for digital
compliance transformation and drive sustainable growth of our subscriber
base.
We are starting to see the fruits of our post-IPO investments. We are
attracting new customers with higher annual contract values, and our ARR at
the end of Q1 2023 was 22% up year on year at £7.2 million (March 2022 ARR:
£5.9 million).
We expect further improvements this year, led by the launch of our
multi-lingual Global Risk and Compliance libraries in March and other content
and SaaS product launches later this year. We have migrated all our clients to
our new cloud-hosting platform, giving us a more scalable infrastructure for
further growth.
Whilst not immune to the recent banking and wider economic concerns, we remain
well diversified with over 1000 clients and 45% of revenues coming from
non-financial services customers.
Trading since the period end has continued to increase on the prior year,
driven by growing subscription revenues, and remains consistent with achieving
market expectations.
Richard Amos
Non-Executive Chairman
25 April 2023
CEO's Review
I am pleased to present Skillcast's Annual Report for 2022, our first full
year since the IPO in December 2021. It was a transformational year in which
we recruited talent in key roles and shaped our strategy and organisational
structure to position us for the next phase of revenue growth.
We strengthened our leadership team by appointing our full-time Chief
Financial Officer, Richard Steele, and our Chief People Officer, Sharon
Mulligan. We also used funds raised at the IPO to accelerate hiring talent in
other key growth roles and for the move to cloud computing on Microsoft Azure.
These initiatives led our overheads to grow faster than our revenues in 2022.
We expect the gap between growth rates of revenue and overheads to narrow in
2023.
Purpose and vision
We run Skillcast with the purpose of enabling our customers to build ethical
and resilient workplaces. Our vision is to become the leading provider of
digital training and technology for staff compliance. Our strategic objectives
reflect this vision. We are developing significant additional revenue streams
with new products that widen our market in the UK and improve our product fit
with the needs of companies in the EU. We are driving our brand awareness with
our SkillcastConnect community and enhancing our RegTech tools with market
research and insights.
We have implemented an organisational structure required to deliver our growth
goals with clear roles and responsibilities. Our growth strategy for 2023
prioritises developing our existing talent, bringing in expertise in key areas
and driving organic performance by focusing on customer success and
experience.
Business model
Skillcast provides technology and content for companies to digitise their
staff compliance training, record-keeping and monitoring to reduce costs and
improve employee compliance experience. Further, by integrating these
processes on a single platform, Skillcast helps customers make further
efficiency gains and reduce the risk of compliance gaps.
The Skillcast off-the-shelf ("OTS") course libraries include Global Compliance
and Global Risk libraries, available in multiple languages for multinational
companies and Essential Compliance, FCA and Insurance Compliance libraries for
companies in the UK.
The Skillcast technology includes a Learning Management System ("LMS"), a
Policy Hub for authoring policies and obtaining employee attestations,
Anonymous Surveys for obtaining honest and unreserved employee feedback, Staff
Declarations for collecting disclosures and self-assessments from employees,
Compliance Registers for recording activities such as gifts, hospitality,
personal account dealing, whistleblowing, Training 360 for recording in-person
training, mentoring, and consultations, Events Management for managing live
training events, and SMCR 360 to help financial firms manage all aspects of
Senior Managers and Certification Regime ("SM&CR") compliance. These
technology tools are provided on a single integrated platform that helps
companies to simplify their process, provide a consistent user experience and
reduce the risk of compliance gaps.
The course libraries and the technology are provided on annual subscriptions
to simplify the procurement process and enable customers to provide training
and compliance tools to their staff with minimal effort and on short notice.
The OTS courses and certain technology elements can be customised to fit each
company's unique requirements.
Skillcast enables customers to manage their staff compliance burden
efficiently by assigning them a designated Customer Success Manager ("CSM").
In 2022, for the fifth year in a row, Skillcast received a Feefo Platinum
Trusted Service Award based on verified ratings and reviews by current
customers.
High-quality revenues
Staff compliance is a non-discretionary cost for companies we serve, and 68%
of our revenues came from content and technology subscriptions (2021: 62%),
with the rest from professional services.
Subscriptions provide us with high-quality annual recurring revenues (ARR),
which grew organically at 16% to £6.7 million in December 2022 (December
2021: £5.8 million).
Revenue from professional services, mainly from bespoke e-learning development
for customers and customisation of OTS courses, was steady at £3.1 million
(2021: £3.2 million).
Our total revenue increased by 17% to £9.8 million (2021: £8.4 million), and
an adjusted EBITDA loss of £0.3 million (2021: £1.1 million). The Adjusted
EBITDA loss was expected as we accelerated investment in talent and
technology.
We typically contract with clients annually and invoice for the subscriptions
upfront. This gives us high revenue visibility over the coming twelve months,
and healthy cash flows from operations. Our free cash flow was +£0.3 million
(2020: £1.1 million).
Growth initiatives
Our focus in 2023, as in previous years, is on growing the size of our ARR
book. We believe Skillcast has a tremendous growth opportunity by helping
companies digitise their staff compliance to reduce costs, improve employee
experience and reduce the risk of breaches in the face of ever-growing
regulations.
Our business model of recurring annual subscriptions provides a stable base we
can build upon with product upsells and new customer acquisitions. Our
investments over the past year enabled us to start 2023 with a flurry of new
product launches.
On 1 February 2023, we launched our FastTrack product, which, when added to
our OTS courses, enables experienced employees to demonstrate their compliance
understanding with a pre-assessment and opt for a shorter version of the
course. This improves employee acceptance of compliance training and saves
staff time while ensuring full compliance.
On 1 March 2023, we launched our Global Compliance and Global Risk courses,
which open up the market for multinational companies, particularly in Europe,
that need their courses to be based on global best practices and be available
in multiple languages.
In the coming months, we will launch other content and technology products
that help with upsells and new customer acquisitions.
We will also launch a new self-service plan in 2023 to supply compliance
training to small UK businesses. We already serve this market segment, but we
believe that we can substantially increase our penetration of this segment
with the new service plan that is more affordable, easy to manage and
customised for industry sectors.
Migration of our application to Microsoft Azure has enhanced our service's
speed, reliability and security, helping us maintain our reputation as
trustworthy custodians of our customers' data. It also provides the
scalability we need to support future growth in the customer base.
We have created Microsoft Azure AD gallery apps to help customers implement
single sign-on and user provisioning. We have also added integrations with
other applications, including Slack, HiBob, Workday, PeopleHR, BambooHR,
Degreed, Skillsoft, and Harvard ManageMentor.
ESG
Our business and products exist to support the ESG goals of our corporate
customers. We help them build inclusivity, integrity and compliance in the
workplace, and by digitising many activities that previously required travel,
we help them reduce energy consumption and carbon emissions. In doing so, we
are also conscious of our own environmental and social performance.
We are proud to have achieved Carbon Neutral status in 2022 by measuring and
offsetting our emissions and are committed to reducing our carbon emissions
further. We have operated as a Living Wage employer since 2019. We are
investing in developing skills and decision-making in our diverse workplace.
We believe that our employees' innovation, customer focus, teamwork and
aspiration are the key to achieving our corporate vision.
Vivek Dodd
Chief Executive Officer
25 April 2023
Financial Review
Revenues for the year ended 31 December 2022 increased by 17% to £9.8 million
(2021: £8.4 million), driven by new subscription customers, with ARR**
climbing 16% on the year to £6.7 million (2021: £5.8 million). As a
consequence of our planned investment programme, adjusted LBITDA* was a loss
of £0.3 million (2021: EBITDA +£1.1 million). Improved working capital
helped maintain net cash at year-end of £7.7 million, 2% below last year
(2021: £7.9 million), and generate positive free cash flow of £0.3 million
(2021: £1.1 million).
Key Performance Indicators
Key performance indicators (KPIs) are tracked through monthly reviews against
targets approved by the Board.
2022 2021 % change
£'000 £'000
Revenue 9,830 8,408 +17%
Software-as-a-service revenue (SaaS revenue) 6,690 5,227 +28%
Gross Margin 70.1% 70.5% -0.4 pts
**Adjusted (LBITDA)/EBITDA -316 1,055 n/a
*Annual recurring (SaaS) revenue (ARR) as at 31.12 6,751 5,818 +16%
Churn (as a percentage of ARR) 12% 8% +4pts
Deferred revenue from subscriptions 3,213 2,695 +19%
Cash at 31 December 7,704 7,856 -2%
Free cash flow 271 1,117 -76%
Number of employees at 31 December 111 88 +26%
*and** defined later in the financial report in Alternative Performance
Measures section
Revenue
Total revenues of £9.8 million were 17% up on the comparable period last year
(2022: £8.4 million), driven by software-as-a-service ("SaaS") subscription
revenues, predominantly from new clients. Subscription revenues typically
accrue from twelve-month contracts, invoiced up front, for our compliance
e-learning libraries and compliance technology. During 2022, subscription
revenue growth helped grow the proportion of revenues from subscriptions to
68% (2021: 62%) of total revenues. 91% of subscription revenues were derived
from our core e-learning products, with the remaining 9% of subscription
revenues delivered from our suite of "Regtech" products (2021: 7%).
Subscription ("SaaS") revenues grew 28% to £6.7 million (2021: £5.2
million). The growth in subscription revenues was driven by a combination of
new clients and product upsells/more users.
*Annual recurring revenue (ARR), our key performance indicator to measure
subscription sales progress, grew by 16% to £6.8 million over the past 12
months (2022: £5.8 million). New sales lifted ARR by 25% from December 21,
offset by a net retention rate of 90%, which included 12% churn. 2022 churn
was elevated due to the loss of three EU-based clients. Underlying churn,
excluding these clients, remained below 10%, in line with prior years. The
Group launched two global libraries that improve the product fit with our
remaining EU clients and reduce their churn risk.
Revenue from professional services was £3.1 million, which was 1% below the
same period last year (2021: £3.2m), in line with our strategy to maintain
these lower margin revenues at consistent absolute levels.
Total client numbers grew to over 1000 in 2022 with 45% of revenues coming
from sectors other than financial services.
Gross profit
Gross Margin fell 0.4 percentage points to 70.1% (2021: 70.5%). Transitional
costs impacted the fall while clients were migrated from server-hosted sites
to more resilient cloud-hosted sites.
Investing for growth
Total overheads before exceptional IPO-related costs in the prior year of
£0.9 million grew by £2.4 million to £7.4 million (2021: £5.0 million) as
the Group invested in driving future growth as intended. Most of this
investment was in people as the Group accelerated hiring to improve future
growth. On 31 December 2022, the total headcount had increased to 111 (31
December 2021: 88). Total average headcount increased in 2022 by 27% to 100
(2021: 78). The largest area of growth was in the sales and marketing function
with an average of 12 more heads during the period.
**Adjusted EBITDA/LBITDA
As anticipated, and due to the increased investment, the Group delivered an
adjusted loss of earnings before interest, tax, depreciation and amortisation
(LBITDA) of £0.3 million in 2022 (2021: +£1.1 million). This profit
performance reflects the intended investment programme, supported by the
fundraising in December 2021.
Tax
The Group reported a loss before tax of £0.6 million in the year and
consequently was not liable for any corporation tax in its UK or Malta
jurisdictions.
The Group had unutilised tax losses carried forward of approximately £1.3
million as of 31 December 2022 (2021: £0.7 million) due predominantly to
research and development credits. These are expected to increase in 2023
through trading losses and further research and development claims. Given the
varying degrees of uncertainty as to the timescale of the utilisation of these
losses, the Group has not recognised the potential deferred tax assets
associated with these losses.
In Malta, a withholding tax rebate of £136,983, due to Inmarkets Group Ltd
regarding dividends declared by Inmarkets International Ltd for 2021, is
reflected as a tax credit in 2022. The rebate is based upon dividends declared
by Inmarkets International Ltd and paid to Inmarkets Group Ltd during 2022.
Its settlement depends upon all necessary tax returns filed and accepted by
the relevant authorities.
No rebate was received in 2022 by Inmarkets Group Ltd (2021: £355,178) in
relation to dividends declared by Inmarkets International Ltd. The balance due
to the Inmarkets Group Ltd for all Maltese tax rebates as at 31 December 2022
was £854,903.
Earnings per share (EPS)
Following the share issue in December 2021 at the time of the IPO, no ordinary
shares were issued in 2022, and the basic loss per share was -0.460 pence on
89.5m shares (2021 EPS: +0.467 pence).
Dividends
With a business backed by recurring revenues that provide strong cash
generation, the Board is committed to paying dividends. The Board is
recommending a final dividend of 0.279 pence per share which, together with
the 0.168 pence interim dividend paid in October 2022, gives a total dividend
of 0.447 pence. The final dividend will be paid on 21 July 2023 to
shareholders on the register on 30 June 2023.
The Board's policy is to at least maintain the total aggregate annual dividend
of £400,000, consistent with previous years, for the foreseeable future.
Balance sheet and cash flow
Net assets at 31 December 2022 were £6.6 million (31 December 2021: £7.2
million). The £0.6 million reduction in the year was due to the £0.4 million
reduction in comprehensive income in the year from planned investments and
£0.4 million of dividend payments, partly offset by £0.2 million increase in
the share option reserve.
Non-current assets of £0.9 million at 31 December 2022 represented no
material change on the prior year. The Group does not capitalise any
intellectual property additions to its products' content or technology, opting
to expense them as they are incurred. The Group expenses all product and
technology development. Non-current assets reflect computer hardware and
software and office furniture and fittings, and the right of use value of its
office leases in London and Malta in accordance with IFRS 16. During the year,
the Group extended the lease on its Malta office to September 2028.
Current assets, excluding cash, were £3.3 million at 31 December 2022 (31
December 2021: £3.8 million). This predominantly includes trade receivables
which, despite the 17% growth in revenue during the year, fell 17% to £2.1
million at 31 December 2022 (31 December 2021: £2.6 million) due to improved
credit control. Debtor days at 31 December 2022 were 48 (31 December 2021: 66)
as a result of a significant reduction in overdue debt. Debtors more than 60
days overdue represented 20% of trade receivables at 31 December 2022 (31
December 2021: 41%). A further £0.9m of trade receivables is due from the
Maltese tax authorities relating to withholding tax rebates on dividends
declared from Inmarkets International Ltd and payable to Inmarkets Group Ltd.
Total liabilities at 31 December 2022 of £5.3 million showed no net movement
during the year, mainly comprising trade payables, deferred revenue and the
liability on the London and Malta office leases. Deferred revenue reflects the
unrecognised revenue of signed contracts. The majority of this balance relates
to subscription revenues which, at 31 December 2022, were £3.2 million, 19%
higher than at the same time in the previous year (31 December 2021: £2.7
million).
The Group has no bank debt and at 31 December 2022, held cash of £7.7 million
(31 December 2021: £7.9 million). Free cash flow during the year remained
positive at £0.3m (2021: £1.1m) despite the Group generating a loss, after
the planned accelerated investment, primarily due to reduced trade
receivables.
Alternative Performance Measures
The Group elects to report certain financial measures not defined or
recognised under IFRS, including adjusted EBITDA and EPS and Annual Recurring
Revenue (ARR) defined below.
**Adjusted EBITDA/LBITDA
The Group elected to adjust its EBITDA from continuing operations for
non-recurring costs in connection with its IPO in December 2021. It also
elected to adjust EBITDA by reversing the IFRS treatment of depreciation of
property leases and the share-based payment charges included in adjustments in
the 2021 report. The Group now accepts these are recurring items, and no
longer elects to adjust. There were no adjusting items in the twelve months
ended 31 December 2022.
2022 2021 2021
£'000 £'000 £'000
Audited Re-stated Audited
LBITDA/EBITDA from continuing operations (316) 360 360
IPO costs 0 876 876
Reversal of IFRS treatment of depreciation of property lease (198)
Share-based payment 17
Adjusted LBITDA/EBITDA (316) 1,237 1,056
*Annual Recurring Revenue (ARR)
ARR is also used to assess the performance and the trend of subscription
revenue. ARR is calculated by multiplying the Monthly Recurring Revenue
("MRR") by twelve. MRR is defined as the subscription revenue recognised in a
month, excluding any retrospective upward adjustments arising at the end of
the contract where there have been more subscribers than a client originally
contracted for, less any contract losses (Churn) or downward adjustments
arising on contract renewal. The Directors consider that the ARR, derived from
software-as-a-service (SaaS) sales, is a key measure of the performance of the
business. The ARR increased 16% in the year to £6.8 million at 31 December
2022.
Richard Steele
Chief Financial Officer
25 April 2023
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2022
Note 2022 2021
£ £
Revenue 4 9,830,431 8,408,056
Cost of sales (2,942,092) (2,476,708)
Gross profit 6,888,339 5,931,348
Administrative expenses (7,442,068) (5,853,792)
Operating profit (553,729) 77,556
EBITDA 3 (316,314) 360,345
Adjustment items 3 - 695,472
Adjusted EBITDA 3 (316,314) 1,055,817
Other Income 3,013 1,650
Finance income 15,996 393
Finance expense (21,307) (18,953)
Profit before tax 5 (556,027) 60,646
Income tax rebate 7 144,237 316,984
Profit after tax and total comprehensive income (411,790) 377,630
Earnings per share:
Basic 17 -0.460p 0.467p
Diluted 17 N/A 0.465p
EPS Basic Adjusted 17 -0.460p 1.328p
Consolidated statement of financial position
As at 31 December
Note 2022 2021
£ £
Assets
Non-current assets
Property, plant and equipment 10 254,288 276,697
Right-of-use assets 11 616,024 582,517
Deferred tax assets 15 11,999 4,745
882,311 863,959
Current assets
Trade and other receivables 8 3,330,574 3,798,823
Cash and cash equivalents 9 7,704,003 7,856,126
11,034,577 11,654,949
TOTAL ASSETS 11,916,888 12,518,908
Issued capital and reserves attributable to owners
Share capital 16 89,459 89,459
Share premium reserve
Share Premium 3,490,541 3,490,541
Share Option Reserve 20 223,331 17,000
Retained earnings 2,812,695 3,624,369
Total equity 6,616,026 7,221,369
Liabilities
Current liabilities
Trade and other payables 12 1,199,370 1,440,550
Contract liability 13 3,437,764 3,037,184
Current lease liabilities 188,586 182,366
Income tax payable 14 16,320 176,134
4,842,040 4,836,234
Non-current liabilities
Long-term lease liabilities 458,822 461,305
458,822 461,305
Total liabilities 5,300,862 5,297,539
TOTAL EQUITY AND LIABILITIES 11,916,888 12,518,908
Consolidated statement of changes in equity
For period ended 31 December 2022
Share capital Share Premium Paid Share Option Reserve Retained earnings Total equity
01 January 2021 2,000 - - 3,874,738 3,876,738
Comprehensive Income for the period
Profit - - - 377,630 377,630
Total comprehensive Income for the period - - - 377,630 377,630
Total contributions by and distributions to owners
Capitalisation of Profit and Loss 78,000 - - (78,000) -
Shares issued on admission to AIM 9,459 3,490,541 - - 3,500,000
Share Option Reserve - - 17,000 - 17,000
Dividends - Prior Year (400,000) (400,000)
Dividends - Current Year - - - (150,000) (150,000)
Total contributions by and distributions to owners 87,459 3,490,541 17,000 (628,000) 2,967,000
31 December 2021 89,459 3,490,541 17,000 3,624,368 7,221,368
01 January 2022 89,459 3,490,541 17,000 3,624,368 7,221,368
Comprehensive Income for the period
Profit - - - (411,790) (411,790)
Total comprehensive Income for the period - - - (411,790) (411,790)
Total contributions by and distributions to owners
Share Option Reserve - - 206,331 - 206,331
Dividends - Prior Year (249,592) (249,592)
Dividends - Current Year - - - (150,292) (150,292)
Total contributions by and distributions to owners - - 206,331 (399,884) (193,553)
31 December 2022 89,459 3,490,541 223,331 2,812,694 6,616,025
Consolidated statement of cash flows
For the year ended 31 December
2022 2021
£ £
Cash flows from operating activities
Profit before tax (556,027) 60,646
Adjustments for:
Depreciation of property, plant and equipment 88,405 84,668
Amortisation of right-of-use assets 149,010 198,121
Finance income (15,996) (393)
Share based payment 206,331 17,000
Finance expense 21,307 18,953
(106,970) 377,345
Decrease in trade and other receivables 468,248 (324,474)
Increase in trade and other payables, including contract liabilities 159,399 1,456,609
Cash generated from operations 520,677 1,509,480
Income taxes paid (22,831) (10,629)
Net cash flows from operating activities 497,846 1,498,851
Investing activities
Purchases of property, plant and equipment (65,995) (242,612)
Interest received 15,996 393
Net cash used in investing activities (49,999) (240,569)
Financing activities
Principal paid on lease liabilities (178,779) (133,007)
Dividends paid (399,884) (550,000)
Share Issued 3,500,000
-
Interest paid on lease liabilities (21,307) (18,953)
Net cash from/(used) in financing activities (599,970) 2,798,040
Net increase in cash and cash equivalents (152,123) 4,056,322
Cash and cash equivalents at beginning of period 7,856,126 3,799,804
Cash and cash equivalents at end of period 7,704,003 7,856,126
Notes to the consolidated financial statements
1 General
Information
Skillcast Group PLC ('Company') is registered in the United Kingdom with
registration number 12305914 and is limited by shares. Its registered office
is at 80 Leadenhall Street, London, England, EC3A 3DH. The Company is the
ultimate parent of Inmarkets Ltd, Inmarkets Group Ltd and Inmarkets
International
Ltd.
This report and financial statements reflect the consolidated activities and
transactions of the Company and other group companies ('Group').
Up to the 28 July 2021 the Company was a private limited company. On the 28
July 2021 the Company re-registered as a public company as Skillcast Group
PLC. The Company did this in preparation of admission to the AIM market of the
London Stock Exchange. On 1 December 2021 the Company's ordinary shares were
admitted in trading on
AIM.
The Company is primarily involved in providing management services to other
entities in the group. The Group provides software and content subscriptions
and related professional services to enable companies to transform their staff
compliance. Operating from its two bases, in London and Malta, the Group helps
companies across a broad spectrum of industry sectors in the UK, EU and in the
rest of the world, to train their staff and demonstrate compliance with
various laws, regulations, and standards that are relevant for their
business.
2.1 Basis of preparation and statement of
compliance
The Financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2022 or 2021 but
is derived from the 2022 accounts.
A copy of the statutory accounts for the year to 31 December 2022 is available
on the Company's website and will be delivered to the Registrar of Companies
following the Company's AGM. The auditors have reported on those accounts,
their report was (i) Unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2021
nor 2022.
Whilst the financial statements from which this announcement is derived have
been prepared in accordance with UK-adopted International Accounting Standards
and applicable law, this announcement does not itself contain sufficient
information to comply with the UK-adopted International Accounting
Standards. The Annual Report, containing full financial statements that
comply with UK-adopted International Accounting Standards, will be sent to
shareholders later in May 2023.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future.
Therefore, in the preparation of the 2022 financial statements they continue
to adopt the going concern basisThese financial statements have been prepared
in accordance with UK adopted International Accounting Standards in conformity
with the requirements of the Companies Act 2006. They have been prepared under
the historical cost convention and on a going concern basis.
The financial statements are presented in Pounds Sterling, which is the
Group's presentation currency.
2.2 Changes in Accounting Policies and Disclosures
The Company has adopted all of the new or amended UK adopted International
Accounting Standards and Interpretations that are mandatory for the current
reporting
period.
Any new or amended Accounting Standards or Interpretations that are not yet
mandatory have not been early adopted for the annual reporting period ended 31
December 2022. The Company has not yet assessed the impact of these new or
amended Accounting Standards and Interpretations.
2.3 Summary of significant accounting
policies
Revenue
recognition
Software as a Service (SaaS)
subscriptions
The Group provides subscriptions to its right of access of content and
technology products to clients for subscription periods ranging from six
tothat are typically twelve months.
Revenue is recognised evenly over the contractual period of the subscription
as the client simultaneously receives and consumes the benefits of the Group's
services.
The balance of the revenue which has not been recognised at the reporting date
is deferred as a contract liability in current liabilities, until it is due to
be recognised as
revenue.
Where a contract includes multiple performance obligations, the transaction
price is allocated to each performance obligation based on the stand-alone
selling
prices.
Professional
services
The Group provides customised and standard content to its clients provided
under fixed-price contracts which is generally non-recurring revenue.
Fixed price contracts are recognised on the percentage of completion method
unless the outcome of the contract cannot be reliably determined, in which
case contract revenue is only recognised to the extent of contract costs
incurred that are recoverable. This is because either the Group is creating an
asset with no alternative use to it and the contract contains the right to
payment for work completed to date, or the client is simultaneously receiving
and consuming the benefits of the Group's services as it performs.
Business development costs incurred as part of a bid or tender process are
expensed as incurred. There are no material costs incurred during the period
between the contract being awarded and service delivery
commencing.
For fixed-price contracts, the client pays the fixed amount based on a payment
schedule. If the services rendered by the Group exceed the payment, an amount
recoverable on contract assets is recognised. Conversely, if the payments
exceed the services rendered, a liability is
recognised.
Amounts recoverable on contracts are included in current assets and represent
revenue recognised on
account.
Segmentation
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision-maker (which takes the form of the Board of Directors of
the Group), in order to allocate resources to the segment and to assess its
performance. The Directors of the Group consider the Group is organised as one
business unit and all assets, liabilities, revenues and expenditure are
retained and recorded as such. However, the Group does segment revenue by type
of revenue, namely SaaS subscriptions and Professional Services, and on a
geographic basis.
Foreign
currencies
The financial statements are presented in the Company's functional currency,
Pounds Sterling, being the currency of the primary economic environment in
which the Group operates. Transactions denominated in currencies other than
the functional currency are translated at the rates of exchange ruling on the
date of transaction. Monetary assets and liabilities denominated in currencies
other than the functional currency are re-translated to the functional
currency at the exchange rate ruling at year end. Exchange differences arising
on the settlement and on the re-translation of monetary items are dealt with
in the statement of comprehensive income, except in the case of significant
exchange differences arising on investing or financing activities, which are
classified within investment income, investment losses or finance costs as
appropriate.
Taxes
Current and deferred tax is recognised in profit or loss, except when it
relates to items recognised in other comprehensive income or directly in
equity, in which case the current and deferred tax is also dealt with in other
comprehensive income or in equity, as
appropriate.
Current tax is based on the taxable result for the period. The taxable result
for the period differs from the result as reported in profit or loss because
it excludes items which are non-assessable or disallowed and it further
excludes items that are taxable or deductible in other periods. It is
calculated using tax rates that have been enacted or substantively enacted by
the end of the reporting
period.
Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable
profit.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be
utilised.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax
rates that have been enacted or substantively enacted by the end of the
reporting
period.
Current tax assets and liabilities are offset when the Group has a legally
enforceable right to set off the recognised amounts and intends either to
settle on a net basis, or to realise the asset and settle the liability
simultaneously.
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to set off its current tax assets and liabilities and the
deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable
entities which intend either to settle current tax liabilities and assets on a
net basis, or to realise the assets and settle the liabilities simultaneously,
in each future period in which significant amounts of deferred tax liabilities
or assets are expected to be settled or
recovered.
In Malta, Inmarkets Group Ltd is able to reclaim a proportion of the
corporation tax paid by its subsidiary, Inmarkets International Ltd, as long
as it meets certain criteria laid down by the Maltese tax authorities. The
criteria include that the relevant corporation tax has been paid by Inmarkets
International Ltd and that dividends to Inmarkets Group Ltd have been declared
by Inmarkets International and are payable to non-Maltese tax resident
shareholders. It is Group policy to reclaim Maltese corporation tax to the
fullest extent permissible and to recognise this income in Inmarkets Group Ltd
based upon dividends declared, or that will be declared once tax returns are
completed, for the financial year. The reclaimed corporation tax is presented
as netted off with the income tax expense and in other receivables.
3 EBITDA and adjusted EBITDA
The Group elected to adjust its EBITDA from continuing operations for
non-recurring costs in connection with its IPO in December 2021. It also
elected to adjust EBITDA by reversing the IFRS treatment of depreciation of
property leases and share-based payment charges. The Group now accepts these
are both recurring items and no longer elects to adjust for them.
As adjusted Audited
2022 2021 2021
£ £ £
Operating profit (553,729) 77,556 77,556
Depreciation 88,405 84,668 84,668
Amortisation 149,010 198,121 198,121
EBITDA (316,314) 360,345 360,345
Rent equivalent - (198,005)
Non-recurring expenditure - 876,477 876,477
Share-Based Payments - 17,000
Adjusted EBITDA (316,314) 1,236,822 1,055,817
Due to the nature of the calculation of EBITDA and adjusted EBITDA, the
reported figures may not be comparable to other companies with similar
measures.
4 Revenue
2022 2021
£ £
Major product lines
Software as a Service (SaaS) subscriptions (i) 6,689,710 5,227,229
Professional services (ii) 3,140,721 3,180,827
9,830,431 8,408,056
(i) SaaS subscriptions - The Group provides subscriptions to its content and
technology products to the customer for subscription periods that are
typically twelve months. The revenue is recognised evenly over the period of
subscription. This revenue includes subscriptions to: (a) Skillcast Portal -
the Group's integrated compliance management application that comes with a
broad range of tools, namely SELMS, Policy Hub, Compliance Declarations,
Surveys, Compliance Registers, Training 360, Events Management and SMCR 360;
and (b) the Skillcast OTS course libraries, namely Essentials, FCA Compliance,
Insurance Compliance and Risk.
(ii) Professional services - The Group provides customised and standard
content to its clients under fixed-price contracts. This non-recurring revenue
includes: (a) bespoke e-learning development projects for large corporates;
(b) translations of those bespoke courses; (c) customisation of OTS courses
for subscription clients; and (d) other content and technology consultancy.
2022 2021
£ £
Geographic split
UK 7,627,351 5,716,503
Europe 1,344,694 1,693,379
Rest of world 858,386 998,175
9,830,431 8,408,056
Non-current assets in which they are based are shown below:
Property, plant, and equipment
UK 197,744 205,003
Malta 56,544 71,694
254,287 276,697
Right of use assets
UK 365,968 465,188
Malta 250,056 117,329
616,024 582,517
5 Profit before taxation
The profit before taxation is stated after charging the following amounts:
2022 2021
£ £
Staff cost (CoS) 1,846,407 1,536,011
Subcontracted services (CoS) 797,125 865,251
Staff costs (Admin) 4,835,911 3,173,390
Directors' compensation 848,496 565,345
Professional fees 215,534 228,735
Depreciation and amortisation expense 237,415 282,789
Fees payable to the Company's auditor for the audit of Parent and Subsidiaries 73,870 87,483
Expenses related to the Admission into AIM 0 876,477
Included in the prior year expenses related to the admission into AIM was
payments made to Crowe UK LLP, who are engaged as the Company's auditors, of
£110,000. There were no non-audit fees incurred by Crowe UK LLP in
2022.
6 Staff costs and employee information
2022 2021
£ £
Salaries & wages 6,488,702 4,609,966
Social security costs 718,605 499,630
Pension 102,924 70,043
Share-based payment expenses 206,331 17,000
Other payroll costs 14,252 6,107
7,530,814 5,202,746
The Group companies contribute towards the state pension in accordance with
local legislation. The only obligation of the companies is to make the
required contributions. Costs are expensed in the period in which they are
incurred.
Number of staff
The average number of persons employed by the Group during the year was 100,
and at December 2022 the number of persons employed was 111, analysed by
category as follows:
At 31 December At 31 December Average Average
2022 2021 2022 2021
Directors 7 7 7 5
Administration 2 1 2 1
Client Service 23 19 21 18
Operations/Production 24 21 23 19
Sales & Marketing 33 21 27 19
Finance 4 4 4 3
Technology 18 15 17 13
111 88 100 78
Key management personnel
The remuneration of key management personnel (considered to be the Directors
and Senior Management) is £1,267,456 (2021: £988,699) and is set out below
in aggregate for each of the categories specified in IAS24: Related Party
Disclosures. Compensation has been disclosed in this note, while further
information can be found in the remuneration report of the annual report and
accounts.
2022 2021
Directors Senior Management Total Directors Senior Management Total
£ £ £ £ £ £
Wages and Salaries 820,346 93,757 914,103 493,345 59,432 552,777
Social Security 114,772 2,384 117,156 63,280 2,173 65,453
Pension 11,597 - 11,597 6,600 - 6,600
Share-based payment expenses 20,743 9,174 29,917 915 634 1,549
Consultancy fees 55,190 139,493 194,683 224,130 138,190 362,320
1,022,648 244,808 1,267,456 788,270 200,429 988,699
Chris Backhouse resigned as a Director on 11 May 2022 and Richard Steele
joined as a Director on 11 May 2022. Chris Backhouse is a director in
Enterprise FD Ltd. The Company made payments to Enterprise FD Ltd for
financial director and related services of £55,190 in the year ended 31
December 2022 (2021: £152,130). Morten Damsleth, whose remuneration is
included in Senior Management above, is the owner of Monad IKE. The Company
made payments to Monad IKE for operations director and related services of
£139,493 (2021: £138,190). Vivek Dodd, Director, ceased being a consultant
and became employed as of 1 October 2021. Prior to him becoming employed the
Company paid £72,000 to him as a consultant in 2021.
The Company made contributions to defined contribution personal pension
schemes for four Directors in the period (2021: three).
7 Income tax expense
2022 2021
£ £
Current tax on profits for the year - 169,798
Deferred tax expense (7,254) 367
Withholding taxes credit on intercompany dividends (136,983) (487,149)
(144,237) (316,984)
A reconciliation of the current income tax expense applicable to the profit
before taxation at the statutory rate to the current income tax expensed at
the effective tax rate of the Company is as follows:
2022 2021
£ £
Profit(loss) before taxation (556,027) 60,646
Tax calculated at applicable UK statutory tax rate of 19% (105,645) 11,523
Tax effects of:
-Expenses not deductible for tax purposes 52,481 195,150
-Taxable losses carried forward 491,791 234,361
-Withholding tax credit on intercompany dividends (136,983) (487,149)
-Research and Development Credits (520,000) (112,691)
-Differing tax rates due to trade in different jurisdictions 9,002 (125,230)
-Other adjustments 65,117 (32,948)
Current income tax (144,237) (316,984)
The Company provides for income taxes on the basis of its income for financial
reporting purposes, adjusted for items that are not assessable or deductible
for income tax purposes in accordance with the regulation of domestic tax
authorities.
The effective rate of tax for the year ended 31 December 2022 was -26% (2021:
-525%). This effective tax rate is a combination of the following items:
* the tax rates and tax regimes in the UK and Malta in which the businesses
of the Company operate;
* the diverse tax treatments of deferred consideration amounts applied in
each jurisdiction;
* the tax loss carry forward regulations in different jurisdictions.
The tax rates applicable in the jurisdictions are:
* UK: The applicable statutory tax rate for 2021/20 is 19%
* Malta: Income taxes are due at 35% of taxable income.
In 2022 a withholding tax rebate of £136,983 (2021: £487,149) is netted
against the income tax expense. The rebate relates to withholding taxes on
dividends declared by Inmarkets International Limited to the Inmarkets Group
Limited.
As of the end of the period the Post 1 April 2017 loss carry forward was
£1,218,613, and the Pre 1 April 2017 loss carry forward was £69,877 for the
Company.
8 Current assets - trade and other receivables
2022 2021
£ £
Trade receivables 2,120,467 2,569,083
Less: Allowance for expected credit losses (92,514) (125,286)
2,027,953 2,443,797
Prepayments and contract assets 387,669 415,073
Maltese withholding tax 854,903 825,213
Other receivables 60,049 114,740
1,302,621 1,355,026
As of 31 December 2022, trade receivables totalled £2,120,467 (2021:
£2,569,083) were past due but not impaired. These primarily relate to
customers for whom there is considered a low risk of default. An allowance
of £92,514 (2021: £125,286) have been set up to offset credit risks.
During the year no withholding tax rebates were received by the Company
(2021: £355,178). Of the £854,903 owing at 31 December 2022 £226,846 has
been filed and expected to be paid by 31 December 2023. The claim for the
remaining balance is in the process of being filed.
9 Current assets - cash and cash equivalents
2022 2021
£ £
Cash at bank 7,704,003 7,853,451
Cash at hand - 2,675
7,704,003 7,856,126
2022 2021
£ £
Geographic split
United Kingdom 4,935,131 5,359,938
Malta 2,768,872 2,496,188
7,704,003 7,856,126
2022 2021
£ £
Cash Held by Currency (in Pound Sterling)
Pound Sterling 7,592,698 7,492,134
Euro 57,925 350,138
US Dollar 53,380 13,854
7,704,003 7,856,126
10 Non-current assets - property, plant, and equipment
Reconciliations of the written down values at the beginning and end of the
current and previous financial year are set out below:
Computer Software & Hardware Furniture and Fixtures Office Equipment Leasehold Improvements Total
Balance at 1 January 2021 70,386 45,069 3,298 - 118,752
Additions 66,747 49,713 1,705 124,447 242,612
Disposals - - - - -
Depreciation expense (49,613) (11,602) (2,712) (20,741) (84,668)
Balance at 31 December 2021 87,520 83,180 2,291 103,706 276,696
Balance at 1 January 2022 87,520 83,180 2,291 103,706 276,696
Additions 53,452 12,064 479 - 65,995
Disposals - - - - -
Depreciation expense (53,644) (12,600) (1,420) (20,741) (88,404)
Balance at 31 December 2022 87,328 82,645 1,350 82,965 254,287
11 Non-current assets - Right-of-use assets
Reconciliations of the written down values at the beginning and end of the
current and previous financial periods are set out below:
Leasehold property Car leases Total
Balance at 1 January 2021 247,003 16,350 263,353
Additions 517,284 - 517,284
Disposals - - -
Amortisation expense (189,174) (8,946) (198,121)
Balance at 31 December 2021 575,113 7,404 582,517
Balance at 1 January 2022 575,113 7,404 582,517
Additions 182,516 - 182,516
Disposals - - -
Amortisation expense (146,978) (2,031) (149,010)
Balance at 31 December 2022 610,651 5,373 616,024
The Group leases its offices, typically for a period of several years, with an
option to extend (see note 21). On renewal, the terms of the lease are
renegotiated. Prior to 2019, the Group recognised expenditure related to
office rents in relation to the period to which it related. From 2019 it
recognised right-of-use assets in accordance with IFRS 16. On 23rd May 2021,
the Company's UK Subsidiary moved to a new office located at the 3rd Floor,
Leadenhall Street, London, UK, the present value of this lease was calculated
at £517,284. The new lease will expire on the 23rd May 2026. On 20th
September 2022, the Company's Malta Subsidiary renegotiated its lease with its
landlord, essentially modifying the old lease. The present value of this
lease modification was calculated at £406,715. The modified lease's Initial
Term will expire on 30th September 2025, with an Extended Term then expiring
on 30th September 2028.
12 Current liabilities - trade and other payables
2022 2021
£ £
Trade payables 186,783 180,452
Accruals 550,987 444,141
Amount due to shareholders 450 450
Sales and payroll taxes 433,466 758,094
Wages & Pension payable 27,684 57,413
1,199,370 1,440,550
13 Current liabilities - Contract liability
2022 2021
£ £
Deferred revenue - Subscriptions 3,212,733 2,695,496
Deferred revenue - Professional Services 225,031 341,688
Deferred revenue 3,437,764 3,037,184
Contract liabilities represent subscription revenue that has not been
recognised at the reporting date, as performance obligations remain.
Subscription revenue is recognised over the subscription period, which is
generally 12 months. Contract liabilities from Professional Service
contracts are recognised on a percentage of completion at the end of the
reporting period as per IFRS15.
14 Current liabilities - Income tax
2022 2021
£ £
Corporation tax payable 16,320 176,134
15 Non-current liabilities - Deferred tax
The deferred tax (liability)/asset for the year is analysed as follows. 2022 2021
£ £
At beginning of the period 4,745 5,112
Credited to statement of comprehensive income 7,254 (367)
At end of the period 11,999 4,745
Deferred tax asset
Temporary differences - on non-current assets due to accelerated tax 11,999
depreciation
Deferred tax liability - on non-current assets due to accelerated tax 4,745
depreciation
16 Equity - issued capital
2022 2021
£ £
Number 89,459,460 89,459,460
Par value per share 0.10p 0.10p
Total 89,459 89,459
All the shares in the Company are fully paid up. On 28 July 2021 the Company
re-registered as a public company. Prior to re-registration, the company's
shares were reclassified as Ordinary Shares, and the company capitalised
£78,000 of retained profit in order to meet the minimum capital value for
these shares required of a public company. The shares were also consolidated
into 1 share for every 10 in issue. On 1 December 2021 9,459,460 additional
shares were issued upon the Company's admission to the Alternative Investment
Market.
Ordinary shares entitle the holder to participate in dividends and the
proceeds on the winding up of the Company in proportion to the number of, and
amounts paid, on the shares held. On a show of hands, every member present at
a meeting in person or by proxy shall have one vote and upon a poll, each
share shall have one vote.
17 Earnings per share
Earnings per share (EPS) is calculated on the basis of profit attributable to
equity shareholders divided by the weighted average number of shares in issue
for the year.
Diluted earnings per share have been calculated on the same basis as above,
except that the weighted average number of ordinary shares that would be
issued on the conversion of the dilutive potential ordinary shares as
calculated using the treasury stock method (arising from the Company's share
option scheme and warrants) into ordinary shares has been added to the
denominator.
2022 2021
£ £
Profit before tax -556,027 60,646
Tax 144,237 316,984
Profit after tax -411,790 377,630
Non-recurring expenditure 0 695,472
Adjusted earnings -411,790 1,073,102
Weighted average number of ordinary shares
Basic 89,459,460 80,788,288
Effect of dilutive potential ordinary shares 3,843,507 402,500
Diluted average number of shares 93,302,967 81,190,788
Earnings per share:
Basic -0.460p 0.467p
Diluted N/A 0.465p
Adjusted earnings - Basic -0.460p 1.328p
Adjusted earnings - Diluted N/A 1.322p
The Group elected to adjust its EBITDA from continuing operations for
non-recurring costs in connection with its IPO in December 2021. It also
elected to adjust EBITDA by reversing the IFRS treatment of depreciation of
property leases and share-based payment charges. The Group now accepts these
are both recurring items and no longer elects to adjust for them.
Basic per share of -0.460p (2021: 0.467p) has been impacted by non-core
operating expenses. Tax on adjusted earnings is the same figure as that
shown on the consolidated statement of comprehensive income, given that the
majority of the adjusting items in the earnings per share calculation above
are also adjusted for when calculating the Company's tax expense.
18 Dividends
2022 2021
Pence per £ Pence per £
share share
Dividend declared - Final 2021 0.279p 249,592
Dividend declared - Interim 2022 0.168p 150,292
Dividend declared - Final 2020 0.500p 400,000
Dividend declared - Interim 2021 0.188p 150,000
Dividend declared per share 0.688p 0.500p
Dividend declared per share - diluted 0.688p 0.500p
During the period under review, the Group generated a loss before tax of
-£554,812 (2021: £60,646). A final dividend of £249,592 (0.279p) was
declared and paid with regards to the year ended 2021 and £150,292 (0.168p)
interim dividend was declared and paid with regards to the year ended 2022.
The Group's policy is to at least maintain dividend payments.
The Board became aware of a breach of procedure concerning compliance with the
Companies Act 2006 in relation to the payment of the interim dividend of
£150,000 for 2021 financial year of the Company that was paid in October
2021. This dividend was paid to Shareholders when the Company had sufficient
reserves. However, the Company's relevant accounts for the purposes of the
Companies Act 2006, namely those filed for the year ended 31 December 2020,
did not show sufficient distributable reserves and no interim accounts had
been filed at Companies House to confirm the adequacy of reserves at the time
of the declaration and as required by the Act.
To satisfy the steps required to rectify this breach of procedure, a
resolution was passed at the Company's General Meeting on 22 June 2022. The
Company has put in place the necessary controls and processes to ensure that a
similar issue will not recur.
The Board is proposing a final dividend of 0.279p per share. In combination
with the interim dividend, if confirmed by the shareholders at the AGM, this
will represent a total dividend for the year of £399,884 (2021: £399,592) or
0.447p per share based upon the number of shares currently in issue. If
further approved by shareholders at the AGM on 20 June 2023, the final
dividend will be paid on 21 July 2023 to shareholders on the register at the
close of business on 30 June 2023.
19 Share options and warrants
Share options
The share option scheme, adopted by the Company after admission to AIM on 1
December 2021, was established to reward and incentivise the executive
management team and staff for delivering share price growth. The option
schemes are equity settled.
The share scheme is administered by the Remuneration Committee.
360,000 options were granted during 2022 (2021: 4,483,000) with a weighted
average fair value of 28 pence (2021: 37 pence). 410,000 options lapsed
during 2022 (2021: n/a) with a weighted average fair value of 37 pence (2021:
n/a) These fair values were based on the Company's share price at the date
of grant. Out of the 4,163,000 outstanding options (2021: 4,483,000),
1,018,250 options were exercisable (2021: 0).
A charge of £206,331 (2021: £17,000) has been recognised in the consolidated
statement of comprehensive income for the year relating to these options.
Options are exercisable in accordance with the contracted vesting schedules;
if an employee leaves the employment of the Company prior to the options
vesting, then unless otherwise agreed, the share options will lapse.
Details of the share options outstanding at the year-end are as follows:
Number WAEP* Number WAEP*
2022 2022 2021 2021
Outstanding at 1 January as per 2021 Reporting 4,830,000 37p - 0p
Adjustment to 2021 Grants -110,000
Granted during the year 360,000 24p 4,830,000 37p
Exercised during year - 0p - 0p
Lapsed during year 410,000 37p - 0p
Outstanding at 31 December 4,670,000 37p 4,830,000 37p
Thereof exercisable at 31 December 1,018,250 37p - 0p
* Weighted average exercise price
The weighted average remaining contractual life of the options outstanding at
the statement of financial position date is 8.9 years.
20 Share options and warrants
Share options - continued
Details of the share options outstanding at the year-end are as follows:
Number WAEP* Number WAEP*
2022 2022 2021 2021
Outstanding at 1 January as per 2021 Reporting 4,830,000 37p - 0p
Adjustment to 2021 Grants -110,000
Granted during the year 360,000 24p 4,830,000 37p
Exercised during year - 0p - 0p
Lapsed during year 410,000 37p - 0p
Outstanding at 31 December 4,670,000 37p 4,830,000 37p
Thereof exercisable at 31 December 1,018,250 37p - 0p
* Weighted average exercise price
Share options granted are valued under the Black-Scholes model. All options
granted vest equally over 4 years. A dividend yield was assumed based on the
Group's stated policy of paying £400,000 per annum. A 50% expected volatility
has been assumed. Options in the prior year were granted with an excerise
price of 37 pence at the time of the IPO equal to the IPO price of 37pence.
Options granted in the year have an exercise price of 24 pence, being the
share price at the date of grant.
21 Financing cash flows
A reconciliation of the financing cash flow is set out below:
2022 2021
£ £
Lease liability
At 1 January 643,671 259,394
Additions 182,516 517,284
Interest expense 21,307 18,953
Lease payments -200,086 -151,960
Disposal -
At 31 December 647,409 643,671
Dividend liability
At 1 January - -
Dividends declared 399,884 550,000
Dividend payments -399,884 -550,000
At 31 December 0 0
Changes to Equity
Capital Raised (Admission into AIM) 0 3,500,000
Share Option Reserve* 206,331 17,000
At 31 December 206,331 3,517,000
Net financing payments -393,639 2,815,040
Financing per statement of cash flows -599,970 2,798,040
*The difference between the Net financing payments and Financing per statement
of cash flows is due to the non-cash movement of share option reserves.
A final dividend of £249,592 was declared and paid in 2022 with regards to
the year ended 31 December 2021 and £150,292 interim dividend was also
declared and paid for the year ended 31 December 2022.
22 Events after the reporting period
Apart from the final dividend declared as disclosed in note 19, no other
matter or circumstance has arisen since 31 December 2022 that has
significantly affected, or may significantly affect the Group's operations,
the results of those operations, or the Group's state of affairs in future
financial years.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR NKPBBOBKDDQBRecent news on Skillcast
See all newsREG - Skillcast Group PLC - Final Results
AnnouncementREG - Skillcast Group PLC - Notice of Results and Investor Presentation
AnnouncementREG - Skillcast Group PLC - Grant of share options
AnnouncementREG - Skillcast Group PLC - Full Year Trading Update
AnnouncementRCS - Skillcast Group PLC - Launch of CoreCompliance
Announcement