REG - Sorted Group Hldgs. - Annual Financial Report
27/06/2025 07:00
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RNS Number : 6560O Sorted Group Holdings PLC 27 June 2025
27 June 2025
Sorted Group Holdings plc
("Sorted", the "Company" or the "Group")
Audited Results for the year ended 31 December 2024
and
Related Party Transaction
Sorted (AIM: SORT), a leading provider of delivery experience and
post-purchase technology, announces its audited results for the year ended 31
December 2024 ("FY 2024").
Financial Performance
· Revenues in FY 2024 were £5,636,903 compared to £6,673,922 in
the 15-month period ended 31 December 2023 ("2023") representing approximately
a 15.54% decrease in revenues
· Administrative costs for FY 2024 were £4,990,127 (2023:
£12,251,877)
· Operating loss before exceptional administrative expenses,
amortisation and depreciation for FY 2024 was £1,110,004 (2023: £7,952,584)
· Loss per share from continuing operations decreased from 2.3649p
in 2023 to 0.5215p in FY 2024
Financial Position at FY 2024
· Net assets were £1,415,326 (2023: liability of £573,523)
· Net current assets were £830,432 (2023: liability of
£5,368,065)
· Cash and cash equivalents of £2,655,840 (2023: £408,479)
· Borrowings were £4,463,947 (2023: £2,805,000)
Related Party Transaction
The Group entered into an arrangement with Shard Credit Partners Venture Debt
I Sarl ("Shard Venture Debt") in August 2022 to obtain funding of £3.0
million from Shard Venture Debt, which may increase by a further £5.0 million
subject to the satisfaction of certain condition precedents (the "Shard
Facility"). The Shard Facility is secured with a fixed charge over fixed
property and intellectual property as well secured with a variable charge over
all the property and undertakings of the Group. The Shard Facility has a fixed
interest rate of 10.75%.
The Group has agreed with Shard Venture Debt that starting from 30 June 2025,
in any particular quarter, if the Company chooses to not pay any accrued
interest in cash at the end of that quarter, the Company will be required to
pay that quarter's interest at an increased accrued interest rate of 18%,
payable at the end of the Shard Facility's maturity date (22 August 2027) (the
"Shard Facility Variation")
Shard Venture Debt is directly connected and controlled by Shard Credit
Partners Venture Debt Fund I LP ("Shard Credit Partners"). Shard Credit
Partners is a substantial shareholder (as defined in the AIM Rules for
Companies). The Shard Facility Variation is therefore classified as
transaction with a related party for the purposes of the AIM Rules for
Companies. The directors of the Company having consulted with the Company's
nominated adviser, Allenby Capital Limited, consider that the Shard Facility
Variation is fair and reasonable insofar as the Company's shareholders are
concerned.
Posting of Annual Report and Accounts
The Group also announces that it has today posted to its shareholders the
annual report and accounts for FY 2024.
A copy of this announcement and the Company's report & accounts will
shortly be available on the Company's website.
For further information please contact:
Sorted Group Holdings
plc
Tel: +44 (0)3300 555 284
Simon Wilkinson, Chairman
Mahmoud Warriah, Chief Financial Officer
Allenby Capital Limited (Nominated
Adviser)
Tel: +44 (0)20 3328 5656
David Hart
Vivek Bhardwaj
Turner Pope Investments (TPI) Ltd
(Broker)
Tel: +44 (0)20 3657 0050
James Pope
Andy Thacker
About Sorted
Sorted's Delivery Experience supports retailers in providing exceptional
delivery experiences and analysing post-purchase performance. It enables
customers to track deliveries of parcels with ease.
Founded more than a decade ago, Sorted is trusted by leading retailers - such
as Asda, ASOS and M&S - to make customer purchase experiences a
differentiator.
www.sorted.com (http://www.sorted.com)
@SortedOfficial (https://twitter.com/SortedOfficial)
Media contact - Shaun Weston - shaun.weston@sorted.com
CHAIRMAN'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
Dear Shareholders,
I am pleased to present the Chairman's statement for Sorted Group Holdings PLC
(the "Company") (formerly Location Sciences Group PLC) and its subsidiaries
(the "Group" or "Sorted") 2024 report and accounts.
On 30 January 2024 we announced and published an AIM admission document which
detailed, inter alia, the proposed acquisition of Sorted Holdings Limited
("SHL") and its subsidiary undertakings, Sorted Group Limited ("SGL") and
Clicksit App Limited ("CAL"), a proposed subscription of 2,285,712 new
ordinary shares at 87.50 pence per new ordinary share to raise approximately
£2.0 million, a proposed 625 to 1 share consolidation, a proposed change of
name and AIM ticker symbol to Sorted Group Holdings PLC and SORT respectively,
director appointments, a notice of general meeting, and the restoration of
trading of the Company's existing ordinary shares on AIM. Terms were agreed
for the acquisition of the entire issued and to be issued share capital of SHL
for an aggregate nominal consideration of approximately £66.73 to be paid in
cash at completion (the "Proposed Acquisition").
This constituted a reverse acquisition of the Company by SHL for accounting
purposes (the "Reverse Acquisition"). The impact of the Reverse Acquisition
on the financial statements previously reported for the period ended 31
December 2023 is discussed within the Independent Director's Financial Review.
Please refer also to notes 2.3 and 26 of the financial statements for further
details.
The Proposed Acquisition was outlined as attractive for a number of reasons.
These included:
· Significant opportunity to leverage SHL's technology and
substantial capital investment (exceeding £70 million);
· Attractive software-as-a-service ("SaaS") business model in the
ecommerce sector with scalable, predictable revenue performance;
· Diverse customer base of household retail brands and strong
industry partnerships;
· Global ecommerce market forecast to grow significantly;
· Entry into a highly fragmented market; and
· Obtaining a UK-based business with over 60 employees.
On 16 February 2024, all resolutions were duly passed at a general meeting of
the Company. The proposals set out in the AIM admission document completed on
19 February 2024 with the enlarged group successfully admitting to AIM on the
same day ("Admission"). As part of this, Carmen Carey was appointed as Chief
Executive Officer, Mahmoud Warriah as Chief Financial Officer and Petar
Cvetkovic as Non-Executive Director. To reflect the Company's new name, the
website changed to www.sorted.com on Admission.
The financial year ended 31 December 2024 ("FY24") presented a number of
challenges with reported revenues of £5,636,903 (15-month period ended 31
December 2023: £6,673,922). While this represents a decline in comparison to
the 15-month period ended 31 December 2023, this represents a modest increase
to the unaudited pro-rated period of 12 months to 31 December 2023 of
£5,339,138. In any event, the business performed well in stabilising the
customer base and delivered a significant year-on-year reduction in costs,
transforming the Group's underlying cost structure.
The successful fundraises in 2021 and 2024 provided the Company with
liquidity, and, together with undrawn loan facilities (details of which are
set out in note 27) position us to pursue our strategic acquisition objectives
despite a complex market environment.
Looking forward, we remain cautiously optimistic. The acquisition of SHL has
provided us with a valuable platform for potential growth opportunities. Armed
with this knowledge, we are actively exploring avenues for sustainable
expansion and enhancement of our overall offerings.
Notable highlights for FY24 include:
· On 30 April 2024, the Company announced that SGL had received
approximately £2.0 million in research and development ("R&D") tax
credits from His Majesty's Revenue & Customs ("HMRC") (together the
"R&D Tax Credit"). The R&D Tax Credit relates to SGL's claim made to
HMRC in respect of the financial year ended 30 September 2022. The R&D Tax
Credit has been directly applied towards reducing the Group's pay as you earn
("PAYE") and value added tax ("VAT") liabilities.
· On 28 May 2024, it was announced that Carmen Carey stepped down
as Chief Executive Officer ("CEO") and Executive Director of the Group with
immediate effect and continued to support Sorted during a three month notice
period, leaving 27 August 2024.
· On 30 September 2024 the Group announced that it had received
approximately £1.1 million in cash as a result of a successful R&D Tax
Credit Claim. The R&D Tax Credit Claim relates to SGL's claim made to HMRC
in respect of the 15 month period ended 31 December 2023.
· On 4 October 2024, the Company announced the disposal to ZigZag
Global Limited of the business and intellectual property (including the
software, systems and content assets) used to operate and deliver the Group's
"Returns" business used by small to medium fashion apparel retailers,
charities and educational institutions (the "Disposal").
· The consideration received by Sorted for the Disposal was
£775,000 in cash. The cash was used to settle in part CAL's liabilities of
about £1.4m including accumulated losses and transaction costs. The gross
assets the subject of the Disposal as at 31 December 2023 were approximately
£247,000 and generated a profit before tax in the 15 months ended 31 December
2023 of approximately £64,000.
· On 21 November 2024, the Company announced the appointment of
Rawlinson & Hunter Audit LLP as its new external auditor for the financial
year ended 31 December 2024. Rawlinson & Hunter Audit LLP was the auditors
for SHL and its group for the financial year ended 31 December 2023.
· On 6 December 2024, the Company announced the implementation of
new share incentive awards ("New Awards") under the existing Sorted Group
Holdings Plc Share Option Plan to retain and incentivise key management
personnel. The New Awards were made to one Director of the Company and certain
persons discharging managing responsibility ("PDMR").
During FY24, we also undertook significant restructuring efforts to align the
business with its strategic goals and to ensure its long-term sustainability,
which are outlined as follows:
· Employee Headcount Reduction: The headcount was reduced from 90
to 55, eliminating an expensive corporate layer that was no longer required
for the business. This enabled the board of directors of Sorted (the "Board"
or the "Directors") to promote the next level of high-end talent to form the
new senior management team.
· Cost Reduction: We have reduced back-office costs related to
legal, HR, and finance functions, enabling management to reallocate resources
towards front-office functions, specifically software engineering and sales.
This is anticipated to lead to a total people cost reduction of approximately
£1.2 million on an annualised basis.
· Property Costs: We have reorganised our offices, closed the
London office and resized the Manchester office to be more fit for purpose.
This is expected to deliver an annualised six-figure saving.
· Operational Efficiencies: We are introducing efficiencies to
run the Sorted platform more cost-effectively. Our second largest cost,
outside of personnel, is our IT infrastructure, which we will focus on
reducing in the second half of the financial year ending 31 December 2025
("FY25").
FY24 has been transformative for our Group as we have embarked on a strategic
initiative to foster a "start-up" mentality within our organisation. The key
objectives have been to streamline our operations, reduce unnecessary
corporate and executive costs, and return to our nimble roots in Manchester.
Outlook and Future Strategy
As we look forward to the remainder of FY25, we are optimistic about the
future. Our strategic focus on agility, efficiency, and customer satisfaction
will continue to guide us. We are confident that the steps we have taken will
not only strengthen our market position but also lay a solid foundation for
sustained growth and success. The addition of SHL has provided us with a
valuable platform for potential growth opportunities. Armed with this
knowledge, we are actively exploring avenues for sustainable expansion and
enhancement of our offerings.
The successful fundraises that took place in 2021 and 2024 provided us with
sufficient resources and, together with the £1m Bidco 3 Limited Loan
Facility, enable us to pursue our strategic acquisition objective against the
backdrop of the complex business landscape.
Focus and Vision
The Sorted 2.0 transformation plan remains a central strategic priority for
the Group, with assessments and development plans continuing through FY25 and
extending well into the next financial years up and to the financial year
ending 31 December 2028. In parallel, Sorted is actively evaluating how
emerging AI technologies can be harnessed to accelerate the evolution of its
Delivery Experience Platform. If these technologies reach the necessary level
of maturity, they have the potential to be truly transformative for the Group
- enabling greater scalability and innovation across the product suite.
Meanwhile, Sorted continues to drive commercial growth in FY25 using its
current technology platform, with momentum already visible in the market. The
business remains confident in securing new sales, particularly for its Ship
and Track products.
In conclusion, while FY24 presented its challenges, we are strategically
positioned for the future. With a solid financial foundation, streamlined
operations, and a focus on delivering a new strategic path going forward, we
are confident in our ability to create long-term value for our shareholders.
We thank our shareholders and stakeholders for our continued trust and
support.
Yours sincerely,
Simon Wilkinson
Executive Chairman, Sorted Group Holdings PLC
INDEPENDENT DIRECTOR'S FINANCIAL REVIEW
FOR THE YEAR ENDED 31 DECEMBER 2024
Dear Shareholders,
As one of the two Independent Directors of Sorted Group Holdings PLC, I am
pleased to present my report alongside the Chairman's Report for the FY24
report and accounts. As a member of the Board, my role is to provide an
unbiased perspective and to act in the best interests of the Company and its
shareholders.
Throughout FY24, I actively participated in the strategic review process and
monitored the Company's performance, governance, and risk management. I have
assessed the decisions made and actions taken by the Board, ensuring that they
align with the company's values and objectives.
Financial Performance
The financial performance should be considered in light of the Reverse
Acquisition, set out in detail in notes 2.3 and 26. In summary, the
comparative amounts were restated such that the figures for the 15 months
ended 31 December 2023, as well as the Consolidated Statement of Financial
Position as on 31 December 2023, represent those of SHL, being the accounting
parent, and its subsidiaries (before the Reverse Acquisition). In addition,
the financial reporting for the 15 month period ended 31 December 2023 of SHL
and its subsidiaries has been restated following the conversion from UK GAAP
to International Financial Reporting Standards (refer note 28). The results
for the year ended 31 December 2024, as well as the Consolidated Statement of
Financial Position as on 31 December 2024 is for SHL and its subsidiaries but
also includes the balances of Sorted Group Holdings Plc and subsidiaries as on
31 December 2024 and the results of the same from the Reverse Acquisition date
of 16 February 2024. The Company Statement of Financial Position and Company
only disclosures refer to Sorted Group Holdings Plc, being the parent entity
as defined by the UK Companies Act.
The financial performance of Sorted Group Holdings PLC in FY24 reflected the
challenges faced by the Company and the broader market environment. I have
scrutinised the financial statements and worked closely with the team to
understand the underlying causes and evaluate the appropriateness of the
strategic initiatives undertaken. I have enclosed below a summary of the
Group's financial performance and statement of financial position at the end
of the year:
All figures in £GBP Year to 31 December 2024 Six months to 30 June 2024 12 months to 31 December 2023* Comparison to prior period
(unless otherwise stated)
Revenue 5,636,903 3,188,490 5,339,138 6%
Administrative costs 4,990,127 3,654,220 9,801,502 (49%)
Loss before tax 4,858,609 3,434,205 9,614,482 (49%)
Loss per share 52.15p 51.2p 189.19p (72%)
Net assets 1,415,326 1,614,157 (573,523) Positive increase
Net current assets/(liabilities) 830,432 (370,891) (5,368,065) Positive increase
Cash at bank 2,655,840 2,340,065 408,479 550%
Group borrowings 4,463,947 4,425,366 7,159,395 (38%)
* The financial performance items have been pro-rated to 12 months to enhance
comparability and is unaudited.
The Board made further reductions in overheads during FY24 and the impact of
these can be seen in the decreased administration costs in FY24 of £4,990,127
compared to the previously reported 15 month period ended 31 December 2023 of
£12,251,877, representing a 59% period on period reduction (note that this is
comparing 12 months in FY24 to the previously reported 15 month period). The
loss before tax includes the costs of the acquisition of SHL in FY24.
Strategic Review and Actions Taken
During FY22, the Board embarked on a comprehensive strategic review to
pinpoint the most viable pathways for sustainable growth and the creation of
shareholder value. This exercise led to the identification of SHL as a prime
target and the most viable option to provide long-term sustainable growth and
create shareholder value. The acquisition of SHL completed on 19 February
2024.
Corporate Governance
We are committed to upholding the highest standards of corporate governance.
Throughout the year, we monitored the Company's compliance with applicable
laws, regulations, and best practices. We reviewed the effectiveness of
internal controls, risk management systems, and ethical practices. We are
pleased to report that Sorted Group Holdings PLC has maintained a robust
governance framework, with appropriate checks and balances in place to
safeguard shareholder interests.
Stakeholder Relations
As an Independent Director, I place great importance on the Company's
relationships with its key stakeholders. I have closely monitored the
engagement efforts undertaken by the team to foster a positive team culture,
ensure fair treatment, and provide opportunities for professional growth.
Furthermore, I have assessed the Company's relationships with clients,
suppliers, and other stakeholders, ensuring that open lines of communication
are maintained and that their expectations are being met.
Looking Ahead
As an Independent Director, I remain committed to our fiduciary duties and to
serving the best interests of Sorted Group Holdings PLC and its shareholders.
I will continue to provide oversight, guidance, and independent perspectives
to the Board as the company navigates the evolving landscape. I will monitor
progress against strategic objectives, evaluate risk management practices, and
advocate for responsible and sustainable business practices.
Whilst the Group plans to appoint a new CEO, in the intervening period, Simon
Wilkinson, the Group's Chairman, has taken on the role of Executive Chairman.
In addition to Simon Wilkinson's software and general management expertise,
Sorted will also draw on the significant experience of its other existing
board members to oversee the operations of the business, including the
distribution and logistics expertise of Petar Cvetkovic, a Non-Executive
Director.
In order to recognise Simon Wilkinson's increased involvement in the
operations of the business, Sorted has entered a consultancy arrangement with
him whereby the Group will pay Mr Wilkinson a daily consultancy rate of
£1,750.00 (the "Consultancy Arrangement"). It is anticipated that Mr
Wilkinson will work a maximum of three days per week pursuant to the
Consultancy Arrangement.
In conclusion, I express our appreciation for the trust placed in us by the
shareholders of Sorted Group Holdings PLC. I believe that the Company's
strategic initiatives, including the disposal of the Returns business and the
ongoing commitment to find a new strategic direction for the Group, will
position it for long-term success. I remain vigilant in our oversight role and
am dedicated to the Company's continued growth and value creation.
Respectfully submitted,
Dr Nigel Burton
Independent Non-Executive Director, Sorted Group Holdings PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The Directors present their strategic report for the year ended 31 December
2024 ("FY24"). The comparative reporting period is for the 15-month period
ended 31 December 2023 ("FY23").
Fair review of the business
The fair review of the business is set out in the Executive Chairman's and
Independent Director's reviews, which describe in detail the financial results
and future plans for Sorted Group Holdings PLC. The Board monitors progress
on the overall Group strategy and the individual strategic elements by
reference to KPls. The primary measures are revenue, costs, EBITDA before
exceptional items and working capital levels.
Principal risks and uncertainties
The principal risks to the Group are as follows:
Description Sorted Group Holdings PLC continues to be in a cash consumption phase.
Impact Going concern has been carefully considered and details are provided in the
Corporate Governance Report below and in note 2.2 of the Group's financial
statements.
Mitigation As at 31 December 2024, the Group had just over £2.65 million in net cash
resources and an unused £3 million loan facility. As noted in note 27,
subsequent to the year end this loan facility has been reduced to £1
million. In addition, the Group's main lender, Shard, agreed to the deferral
of interest on amounts owed to them until 2027 payable on the Shard loan of
Facility. The Directors consider that the Group has sufficient funds to meet
its requirements for the foreseeable future.
Description Competition risk.
Impact New entrants into the market and taking market share.
Mitigation The Group is continually investing in its platform to become market leader.
Key to this is executing the Group's vision to be the only Delivery Experience
Platform able to serve the entirety of the market from SMB through to large
enterprise and across all three pillars of the retail post-purchase journey;
Carrier Selection, Order Tracking and Returns Management.
Description Online security risk.
Impact As a SaaS platform the Group has risk relating to online security
vulnerabilities.
Mitigation The Group has rigorous processes and procedures in place, including
collaborating with third-party security specialist firms to validate the
robustness of its security measures, to mitigate this risk which is
continually reviewed and enhanced to meet the emerging threats and business
needs.
Description Credit risk.
Impact Possibility that a counterparty will default on its contractual obligations
resulting in a loss to the Group.
Mitigation The Group has adopted a policy of only dealing with credit worthy
counterparties as a means of mitigating the risk of financial loss from
defaults.
Description Changes in regulation negatively impact the Group's market.
Impact The Group may find the demand for its products is reduced and/ or the Group
may be forced to change or stop selling one or more of its products.
Mitigation The Board takes account of commentators and industrial bodies as to the
direction of policy change.
The Board meets regularly to review specific and general risks that face the
Group. The Board strives to position the Group in a way that any risks can be
minimised and met, should the need arise.
The Group is managing these risks by reducing the overheads of the Group and
continuing to analyse new opportunities as they arise. The Board are committed
to delivering shareholder value in the long-term.
Strategic risks
Following the strategic review, a significant milestone in the Company's
strategy was achieved with the purchase of Sorted Holdings Limited on 19
February 2024, aligning with the strategic goals set out in the FY23 financial
accounts.
However, a strategic risk lies in the effective execution of these
initiatives. Ensuring successful implementation, alignment across the
organisation, and timely delivery of desired outcomes require careful
planning, resource allocation, and effective management of change. Any delays,
misalignment, or inadequate execution could impede the Company's ability to
achieve its strategic objectives and may result in lost opportunities, lower
competitiveness, and suboptimal financial performance.
It is important for Sorted Group Holdings PLC to establish clear goals,
allocate appropriate resources, and monitor the progress of these strategic
initiatives. The Company should implement robust project management practices,
establish effective communication channels, and regularly evaluate and adjust
the execution plan as needed. Additionally, strong leadership and stakeholder
engagement are crucial to drive alignment and foster a culture of
accountability throughout the organisation.
By proactively addressing this strategic risk and implementing effective
execution strategies, Sorted Group Holdings PLC can enhance its chances of
successfully realising the desired outcomes of the strategic initiatives and
drive long-term value for shareholders.
This report, in conjunction with the Chairman's statement and Independent
Director's report, form the Strategic Report for the purposes of s414A of the
Companies Act 2006.
Section 172 statement
The Directors believe that they have effectively implemented their duties
under section 172 of the Companies Act 2006 through adherence to the Quoted
Companies Alliance Corporate Governance Code, as disclosed on pages 10 to 13
and as published on our website:
https://sorted.com/investors/corporate-governance/. The Chairman's Report
details the Group's future plans to achieve its long-term strategy.
The Group is committed to maintaining an excellent reputation and strive for
high standards, while maintaining an awareness of the environmental impact of
the work that it does and strives to reduce its carbon footprint.
The Directors recognise the importance of the wider stakeholders in delivering
their strategy and achieving sustainability within the business; in ensuring
that all our stakeholders are considered as part of every decision process we
believe we act fairly between all members of the Company.
CORPORATE GOVERNANCE
FOR THE YEAR ENDED 31 DECEMBER 2024
The Board recognises the importance of good corporate governance in order to
protect and build upon the substantial investments made by our diverse
shareholder base. We have chosen to apply the Quoted Companies Alliance
Corporate Governance Code (the "QCA Code"), which was developed by the Quoted
Companies Alliance ("QCA") in consultation with a number of significant
institutional small company investors, as an alternative corporate governance
code applicable to AIM companies. The underlying principle of the QCA Code is
that "the purpose of good corporate governance is to ensure that the company
is managed in an efficient, effective and entrepreneurial manner for the
benefit of all shareholders over the longer term". The Board anticipates that
whilst the Company will continue to comply with the QCA Code, given the
Group's size and plans for the future, it will also endeavour to have regard
to the provisions of the UK Corporate Governance Code as best practice
guidance to the extent appropriate for a company of its size and nature.
An explanation of how these principles have been applied during FY24 is set
out in the Company's website. Details of the Directors' Remuneration, Audit
Committee and internal control sections are set out in this report.
Certain information required under the QCA Code is included within the
Strategic report and the Directors Remuneration Report.
Name Date Appointed Date Resigned Role Committees
Petar Cvetkovic 30/01/2024 - Non-Executive Director Remuneration, Nomination, Audit
Nigel Burton 25/05/2021 - Non-Executive Director Remuneration, Nomination, Audit
The Board is responsible to the shareholders for the proper management of the
Group through setting the overall strategy of the business and to review the
people, performance, policies and budgets of the Group. The Board typically
meets quarterly and also meets for any other extraordinary matters as they may
arise. Detailed information on matters to be discussed during the meetings are
circulated in advance of the meeting to ensure non-executive directors can
contribute in an educated manner.
Independence
The Independent Directors at the reporting date are Dr Nigel Burton and Petar
Cvetkovic. Petar was appointed in this role on 30 January 2024. The
Independent Directors are responsible for monitoring the Board and ensuring no
individual or group takes control of the Board's decision making and that all
key stakeholders are fully briefed on matters and their responsibilities
Board Balance
A minimum of 50% of the Board will always consist of non-executive directors.
During FY24 all non-executive directors were independent of the management
team and are not involved in any other business or relationship, either as an
executive or non-executive, which may impair their independent nature and
judgement.
As announced on 28 May 2024, the Group intends to appoint a new chief
executive officer when it becomes appropriate for the business to do so. In
the interim, Simon Wilkinson will continue to operate as the Group's executive
chairman.
Nomination Committee
The Group's nomination committee is responsible for reviewing and making
proposals to the Board on the appointment of Directors and meets as necessary.
During FY24, the Group's nomination committee consisted of Petar Cvetkovic and
Dr. Nigel Burton.
Performance Evaluation and Re-election
The Board has continued to evaluate its effectiveness and performance during
FY24, taking into account the Financial Reporting Council's Guidance on Board
Effectiveness. Director appraisals will be performed to ensure that their
performance is, and continues to be, effective, that where appropriate they
maintain their independence and that they are demonstrating continued
commitment to the role. The Directors will be evaluated internally based on
their responsibilities to the Board. At the AGM 50% of continuing Directors
stand for re-election on an annual basis.
The Directors carry out continued professional development throughout the year
where appropriate and each Director keeps up to date with market changes
through the use of market articles and industry contacts.
Remuneration Committee
The Group's Remuneration Committee is responsible for the specific
remuneration and incentive packages for each of the Company's executive
directors, senior executives and managers. During FY24, the Group's
Remuneration Committee consisted of Nigel Burton and Petar Cvetkovic. Further
details of the Committee's remit are contained in the Directors' Remuneration
Report on pages 14 to 16.
Relations with Shareholders
The Group encourages two-way communication with both its institutional and
private investors and responds promptly to all queries received. The
Non-Executive Directors communicate regularly with the Group's institutional
shareholders and ensure that their views are communicated fully to the Board.
The Board recognises the Group's AGM as an important opportunity to meet with
the Group's private shareholders. The Directors are available to listen to the
views of shareholders informally immediately following the AGM.
Annual General Meeting
The Annual General Meeting of the Group provides shareholders with the
opportunity to be updated on the Group's progress and to ask questions of the
Board.
Financial Reporting and Internal Control
The Company has established policies covering the key areas of internal
financial control and the appropriate procedures, controls, authority levels
and reporting requirements which must be applied throughout the Group.
The key procedures that have been established in respect of internal financial
control are:
· An annual budget set by the Board
· Monthly management accounts with comparisons to budget
· Monthly forecast updates with comparisons to budget
· Monthly cashflow forecasts with comparisons to budget
· Weekly meetings of the Executive Directors and Senior Management
to review priorities and issues
· Restriction of user access to systems, including but not limited
to Financial, HR and Technology.
The above controls have been established to support the growth of the business
and to protect against future risks.
Corporate Culture
It is the Board's view that the Group's corporate culture is consistent with
its objectives, strategy and business model. The Board is aware that the
culture set by the Board will greatly impact all aspects of the Group and the
way that employees behave. The Board invites employees to provide feedback on
their peers and management.
Consolidated Accounts
The before mentioned Financial Reporting and Internal Controls apply to all
subsidiaries. The accounts of all subsidiaries are combined with those of the
Company to form consolidated accounts each month. Following Admission, the
Chief Financial Officer is responsible for producing the consolidated
accounts, including the elimination of intercompany transactions and balances.
Audit Committee
The Group's Audit Committee is responsible for ensuring the financial
performance of the Group is properly monitored and reported on, the
effectiveness of accounting systems and financial reporting procedures. During
FY24, the Group's Audit Committee consisted of Petar Cvetkovic and Nigel
Burton, who acted as Non-Executive Chairman of the committee.
The Committee considers all proposals for non-audit services and ensures that
these do not impact on the objectivity and independence of the auditor. The
Audit Committee reviews, with the external auditor, the safeguards and
procedures developed by the auditor to counter threats or perceived threats to
their objectivity and independence. Non-audit services performed by the
external auditor are assessed for threats to objectivity and independence on a
case-by-case basis.
Board and Committee Attendance
Name Main Board Audit Committee Remuneration Committee Nomination Committee
Simon Wilkinson 10/10 1/1* 1/1* 1/1*
Nigel Burton 10/10 1/1 1/1 1/1
Mahmoud Warriah 10/10 1/1* 1/1* 1/1*
Petar Cvetkovic 10/10 1/1 1/1 1/1
* Simon Wilkinson and Mahmoud Warriah attended these meetings as observers
only.
Going concern
The Directors have taken a view of the Group as a whole.
The Group ended FY24 with cash resources of £2,655,840 and debt of
£4,463,947
The acquisition of SHL resulted in the exit from the Verify business to focus
on the SHL business to deliver shareholder value in the long term.
However, despite the actions of the Board, the Group continued to operate with
a trading loss during FY24. The new funds raised during 2021 were utilised to
acquire the SHL business on 19 February 2024. The Board will continue to
monitor cash resources and progress the ongoing business review.
Based on the current status, after making enquiries and considering the
existing cash resources of the business and the further cost reductions made
during 2024, plus the Sorted Holdings Limited acquisition, the £2m fundraise
and the loan facilities with Bidco 3 Limited, further details of which are set
out in note 27, the Board has a reasonable expectation that the Group will be
able to execute its plans in the medium term such that the Group will have
adequate resources to continue in operational existence for the foreseeable
future. This provides the Board with assurance on the Group's ability to
continue as a going concern and therefore adopt the going concern basis of
accounting in preparing the annual financial statements.
DIRECTORS' REMUNERATION
FOR THE YEAR ENDED 31 DECEMBER 2024
As a Company admitted to trading on AIM, Sorted Group Holdings PLC is not
required to present a directors' remuneration report, however, a number of
voluntary disclosures have been made. The Company has complied with the
disclosure requirements set out in the AIM Rules.
Remuneration Committee
During FY24, the Remuneration Committee, comprising Dr Nigel Burton and Petar
Cvetkovic, determines the Group's policy for executive remuneration and the
individual remuneration packages for executive directors. In setting the
Group's remuneration policy, the committee considers a number of factors
including:
· salaries and benefits available to executive directors of
comparable companies; and
· the need to both attract and retain executives of appropriate
calibre.
Remuneration of executive directors
Consistent with this policy, benefit packages awarded to executive directors
comprise a mix of basic salary and performance-related remuneration that is
designed as an incentive. The remuneration packages can comprise the following
elements:
· base salary: the Remuneration Committee sets the base salaries to
reflect responsibilities and the skills, knowledge and experience of the
individual;
· bonus scheme: the executive directors are eligible to receive a
bonus dependent on both individual and Group performance as determined by the
Remuneration Committee;
· equity: share options; and
· various other add on benefits such as private medical insurance.
The executive directors are engaged under separate contracts which require a
notice period of three or six months given at any time by the individual.
Year to 31 December 2024
Director Salary and Fees Pension Consultancy Fee Total
£ £ £ £
M Warriah 176,839 8,036 - 184,875
S Wilkinson 50,269 - 180,505 230,773
C Carmen 135,072 576 - 135,748
362,179 8,612 180,505 551,296
Year ended 31 December 2023
The Company did not have any executive directors for the year ended 31
December 2023.
Remuneration of non-executive directors
The fees and equity awarded to non-executive directors are determined by the
Board. The non-executive directors do not receive any other forms of benefit
such as private medical insurance.
Year ended 31 December 2024
Director Salary and Fees Total
£ £
N Burton (Non-executive) 50,269 50,269
P Cvetkovic (Non-executive) 61,439 61,439
111,708 111,708
Year ended 31 December 2023
Director Salary and Fees Total
£ £
S Wilkinson (Non-executive) 83,437 83,437
N Burton (Non-executive) 76,406 76,406
159,843 159,843
Included within 2023 directors' remuneration for S Wilkinson and N Burton is
remuneration of £83,837 and £76,406 respectively that was settled by issue
of ordinary shares.
Note that the information for the year ended 31 December 2023 is for the
Company, i.e., Sorted Group Holdings Plc. The financial statements present
Sorted Holdings Limited as comparatives (see notes 2.3 and 26).
Director Warrants
Non-transferable warrants to subscribe for, in aggregate, 192,000 Ordinary
Shares were issued to the Executive Directors and the Non-Executive Directors,
exercisable at 125p for five years from 25 May 2021, provided that the
Ordinary Shares have traded at a Volume Weighted Average Price (VWAP) at or
above 187.5p for 20 consecutive Business Days, or on a change of control of
the Company.
Name Number of Ordinary Shares subject to Director Warrants
Simon Wilkinson 48,000
Dr Nigel Burton 48,000
Broker Warrants
Transferable warrants to subscribe for, in aggregate, 66,000 Ordinary Shares
were issued to the Executive Directors and the Non-Executive Directors,
exercisable at 125p for five years from 25 May 2021.
Name Number of Ordinary Shares subject to Broker Warrants
Dr Nigel Burton 40,000
Mark Slade** 16,000
David Rae* 10,000
*Director between 12 February 2018 to 22 June 2022.
**Director between 24 July 2017 to 22 June 2022
Promoter Warrants
Promoter warrants were issued to certain investors in the fundraising
completed on 25 May 2021 in consideration of those persons assembling and
co-ordinating the Concert Party's investment in the Company. As part of this
issuance, non-transferable warrants to subscribe for, in aggregate, 800,000
Ordinary Shares were issued to Simon Wilkinson, exercisable at 125p for five
years from 25 May 2021.
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The Directors are pleased to present the annual report and audited financial
statements of Sorted Group Holdings PLC for the year ended 31 December 2024.
Dividends
The Directors do not recommend the payment of a dividend.
Board of Directors
Simon Wilkinson, Executive Chairman
Simon joined Sorted Group Holdings PLC as Non-Executive Chairman in May 2021
and executive chairman on 24 May 2024. Simon is a highly experienced software
executive and entrepreneur, having been involved with a number of public and
private companies over his career. He was most recently CEO then Chairman of
Mobica, a world-leading, award-winning software services company offering
bespoke development, QA and consultancy. He was previously Chief Executive
Officer of Myriad Group AG, which was listed in Zurich, and founder and Chief
Executive Officer of Magic4 Ltd, a mobile messaging software market leader,
backed by 3i, Philips Ventures and Motorola Ventures.
Nigel Burton, Non-Executive Director
Nigel was appointed as a Non-Executive Director in May 2021. Nigel spent 14
years as an investment banker at leading city institutions including UBS
Warburg and Deutsche Bank, including as the Managing Director responsible for
the energy and utilities industries. Following this he spent 15 years as Chief
Financial Officer or Chief Executive Officer of a number of private and public
companies. He is currently a Non-Executive Director of BlackRock Throgmorton
Investment Trust pie, eEnergy Group pie, and Metir plc.
Mahmoud Warriah, Chief Financial Officer
From startups to blue chips, Mahmoud has a strong track record of successfully
delivering commercial, transitional and business transformational change. He
is a qualified chartered accountant with extensive experience across multiple
sectors and draws upon his computer science degree to resolve complex
operational challenges. Mahmoud has been Sorted's acting interim Chief
Financial Officer since 3 October 2022 and was appointed Chief Financial
Officer on 29 January 2024.
Petar Cvetkovic, Non-Executive Director
Petar is the Founder and current Chairman of Welford Investments Limited,
which specialises in equity holdings in growth companies, ownership of
freehold commercial properties and advisory work. Over the course of his
37-year career, he has led some of the UK's best-known logistic firms, working
in parcels, contract and shared-user distribution as well as supply chain and
international logistics. Petar was formerly the Chief Executive Officer of DX
(Group) Plc and Target Express.
Research and development
Following the Board's strategic review, Sorted Group Holdings PLC continues to
invest into research and development relating to its platform.
Financial Risk Management
The Group's financial instruments comprise cash and cash equivalents, trade
receivables and payables and borrowings. The main risks arising from the
Group's financial instruments are interest rate risk, credit risk, liquidity
risk and foreign currency risk.
Interest rate and credit risk - the principal assets of the Group are its cash
deposits. These are short-term liquid assets and as a result the exposure to
interest rate income risk is not considered significant. The principal focus
of the Directors has been to minimise any credit risk in relation to its cash
deposits even at the expense of interest income received. Borrowings include
financial instruments on fixed interest rate terms and a revolving credit
facility at a variable rate. As a result, the exposure to interest rate
expense risk is low and no active management of interest rate risk is
undertaken by the Board.
Foreign currency risk - the main functional currency is sterling. Throughout
2024, the Company's transactions have primarily been denominated in sterling
and the Group has had low exposure to foreign currency risk.
Liquidity risk - the Board's policy is to ensure that sufficient cash and cash
equivalents are held on a short-term basis at all times in order to meet the
Group's operational needs. The Group does actively raise funds through
market placings and other loan facilities.
The Group has been operating at a trading loss due to its stage of development
and seeks to ensure that its investments will deliver long term value to
shareholders. Liquidity risk is actively managed through regular review of
cash requirements of the business in conjunction with the strategic and
operational plans for the Group.
Substantial shareholdings
As at 28 May 2025 the Directors had been notified of the following holdings
representing 3% or more of the issued share capital of the Company:
Number of ordinary shares Percentage of issued share capital
Shard Credit Partners Venture Debt Fund I LP 2,752,140 36.02%
Turner Pope Investments (TPI) Ltd 615,800 8.06%
Richard Hughes 320,000 4.19%
Mahmud Kamani 320,000 4.19%
SDI (Retail Co 8) Ltd (Frasers Group) 285,714 3.74%
Directors
The Directors, who held office during the FY24, were as follows:
S Wilkinson
N Burton
M Warriah (appointed 29 January 2024)
P Cvetkovic (appointed 29 January 2024)
C Carey (appointed 29 January 2024, resigned 24 May 2024)
The Company maintains director and officers' liability insurance.
Statement of Directors' responsibilities
The Directors acknowledge their responsibilities for preparing the Annual
Report and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with International Financial Reporting
Standards (IFRSs) as endorsed by the UK Endorsement Board. Under company law
the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss of the Group and Company for that
period. In preparing these financial statements, the Directors are required
to:
· select suitable accounting policies and apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable International Financial Reporting
Standards (IFRSs) as endorsed by the UK Endorsement Board have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company will continue
in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and the Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and the Company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Group and the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Directors' interests in shares
During FY24, the Directors held the following interests in Sorted Group
Holdings PLC:
At 31 December 2024 At 31 December 2023
Ordinary Shares of 62.5p each Options over Ordinary Shares of 62.5p each Warrants over Ordinary Shares of 62.5p each Ordinary Shares of 0.1p each Options over Ordinary Shares of 0.1p each Warrants over Ordinary Shares of 0.1p each
S Wilkinson 228,571 - 848,000 100,000,000 - 530,000,000
N Burton 204,571 - 88,000 85,000,000 - 55,000,000
M Warriah 114,285 115,000 - - - -
P Cvetkovic 40,000 - - 40,000 - -
The market price of the Company's shares at the end of FY24 was 53.51p.
Disclosure of information to auditor
Each of the persons who are Directors at the time when this directors' report
is approved has confirmed that:
· so far as that Director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
· that Director has taken all the steps that ought to have been
taken as a Director in order to be aware of any relevant audit information and
to establish that the auditor is aware of that information.
Annual General Meeting
Notice of the forthcoming Annual General Meeting of the Company together with
resolutions relating to the Company's ordinary business will be given to the
members separately.
Reappointment of auditors
The auditors, Rawlinson Hunter Audit LLP, will be proposed for reappointment
in accordance with section 485 of the Companies Act 2006.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SORTED GROUP HOLDINGS PLC
OPINION
We have audited the financial statements of Sorted Group Holdings PLC (the
"Company") and its subsidiaries (the "Group") for the year ended 31 December
2024 which comprise the Consolidated Income Statement, the Consolidated and
Company Statements of Financial Position, the Consolidated and Company
Statements of Cash Flows, the Consolidated and Company Statements of Changes
in Equity and the related notes.
The financial reporting framework that has been applied in their preparation
is applicable law and UK-adopted international accounting standards and, as
regards the Company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion:
· the financial statements give a true and fair view of the state
of the Group's and of the Company's affairs as at 31 December 2024 and of the
Group's loss for the year then ended;
· the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· the Company financial statements have been properly prepared in
accordance with UK-adopted international accounting standards; and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report.
We are independent of the Group and the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
The Directors have prepared the Group's and the Company's financial statements
on the going concern basis as they have concluded that there are no material
uncertainties that could have cast significant doubt over the Group's and the
Company's ability to continue as a going concern for at least one year from
the date of the approval of the Group's and the Company's financial statements
("the going concern period").
Our responsibility is to conclude on the appropriateness of the Directors'
conclusions and, had there been a material uncertainty related to going
concern, to make reference to that in this auditor's report.
Our evaluation of the Directors' assessment of the Group's and the Company's
ability to continue to adopt the going concern basis of accounting included:
· obtaining the Directors' going concern assessment and the
forecasts they have prepared for each of the two years to 31 December 2026
which predict available cash, after draw down on loan facilities, of
£381,000, and challenging the rationale for assumptions used in the
preparation of these forecasts;
· considering the impact of the various geopolitical events and the
wider economic issues arising from these on the Directors' assessment to
continue to adopt the going concern basis of accounting;
· the availability of future funding, including the £3m undrawn
Bidco 2024 Loan Facility which is available until 31 January 2026 and which,
from 1 February 2026, is replaced by a new £1m facility with Bidco 3 Limited
which is available until 31 January 2027;
· considering the inherent risks to the Group and the Company's
business model and how these risks might affect the Group's and the Company's
financial resources or ability to continue operations over the going concern
period. We evaluated these risks and concluded that they were not significant
enough to require us to perform additional procedures;
· verifying the agreement by the Group's main lender, Shard Credit
Partners Venture Debt I Sarl ("Shard"), to defer interest due to them, until
August 2027;
· verifying the agreement by Shard to allow the £564,826 held in
Escrow, to be used by the Group to enable the Group to meet its liabilities as
they fall due; and
· considering the reasonableness of the inclusion in the Directors'
forecasts of the research and development ("R&D") tax credit claims from
HMRC of £278,657 and £402,290 in respect of 2024 and 2025, expected to be
received in 2025 and 2026, respectively.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group's and the Company's
ability to continue as a going concern for a period of at least twelve months
from when the Group financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
However, because not all future events or conditions can be predicted, this
conclusion is not a guarantee as to the Group's and the Company's ability to
continue as a going concern.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Risk 1: Accounting for the reverse acquisition
Reverse takeovers do not occur frequently and involve a number of technical
accounting considerations. As a result, there is a risk that the reverse
acquisition by Sorted Holdings Limited (the accounting parent and legal
subsidiary) of Sorted Group Holdings PLC (the accounting subsidiary and legal
parent) did not apply the legal and accounting requirements under Companies
Act 2006 and International Financial Reporting Standards ("IFRS") respectively
when preparing the consolidated financial statements.
How we address the Key Audit Matter
We reviewed and considered the accounting papers prepared by management
reflecting the requirements of the Companies Act 2006 and IFRS, and their
application to the nature and circumstances of the transaction.
Our own review of the requirements of the Companies Act 2006 and the
accounting rules outlined in IFRS concurred that management's accounting
papers and conclusions on the application of the rules was in accordance with
our understanding of the requirements.
We reviewed the basis, parameters and consolidation calculations prepared by
management and agreed the numbers recognised to the underlying records.
Key observations communicated to the Audit Committee
Management had appropriately applied the legal and accounting requirements of
the reverse takeover in their calculations of the reverse acquisition
consolidation.
Risk 2: Revenue recognition
There is a risk that the transition from recognising revenue under Financial
Reporting Standard 102 ("FRS 102") as previously reported by subsidiaries to
IFRS 15 Revenue from Contracts with Customers, for the main trading subsidiary
Sorted Group Limited, would result in a material change in when revenue was
recognised.
In addition, there are risks over revenue completeness and existence.
How we address the Key Audit Matter
We reviewed the accounting papers prepared by management which compared the
recognition requirements of IFRS 15 with FRS 102 in respect of the various
revenue streams which assessed that there was no impact.
A sample of revenue was tested in accordance with the recognition requirements
of IFRS 15 which indicated that management had correctly applied the rules and
there was no revenue recognition impact resulting from the transition.
Completeness and existence of revenue was tested by agreeing the revenue
recognised to the expected amount for a sample of revenue contracts. No
material unexplained differences were identified.
Key observations communicated to the Audit Committee
The transition from FRS 102 to IFRS 15 has not resulted in a revenue
recognition impact for the Group and revenue is considered to be materially
complete and correctly stated.
Risk 3: Accounting treatment of rental leases on transition from FRS 102 to
IFRS
The risk arises that the leases held by the Sorted Group Limited subsidiary
were not correctly recognised and disclosed in the financial statements on the
transition from FRS 102 to IFRS 16 Leases.
How we address the Key Audit Matter
Management's calculations of the right of use assets and liabilities arising
following the adoption of IFRS and the appropriateness of the term and
discount rate used in the calculation were reviewed. Other parameters were
agreed to the underlying lease agreements.
The prior period adjustments reflected in the financial statements to
recognise the right of use assets and liabilities were agreed to the lease
adjustment calculations.
Key observations communicated to the Audit Committee
Capitalisation of leases has been appropriately applied in the transition from
FRS 102 to IFRS 16 including recognition of right of use assets and
liabilities.
Risk 4: Disposal of the intellectual property and returns business of Clicksit
App Limited under IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations
There was a risk that the discontinued trading activity of the Clicksit App
Limited subsidiary, which ceased trading activity during the year, and the
profit on disposal of that operation was not correctly reflected in the Income
Statement and notes to the financial statements.
How we address the Key Audit Matter
We reviewed and agreed management's calculations of the profit on discontinued
operations and the results of the business unit which was disposed of in the
year.
Our review of the disclosure and recognition requirements under IFRS confirmed
that management had correctly applied them in the financial statements.
Key observations communicated to the Audit Committee
The disposal of the business unit and its results to the date of disposal have
been presented and reported in the financial statements in accordance with
IFRS 5 requirements.
Risk 4: Valuation of system development costs in intangible assets
The risk exists that the system development costs in intangible assets
relating to the Sorted Group Limited subsidiary are impaired.
How we address the Key Audit Matter
The impairment review prepared by management was reviewed for the
appropriateness of the valuation basis and parameters used in the calculation
supporting the value.
Key observations communicated to the Audit Committee
No impairment of the valuation of the system development costs in intangible
assets needed to be reflected in the financial statements relating to the
subsidiary undertaking.
Risk 5: Redemption premium of 436% on the convertible loan in borrowings is
payable
There is a risk that the holders of the convertible loans could enforce the
436% redemption premium in the convertible loan agreement.
How we address the Key Audit Matter
We reviewed the circumstances in the convertible loan agreements under which
the redemption premium of 436% becomes enforceable.
From correspondence between management and their legal advisors we concluded
that at the year end the Group had the necessary consents and approvals in
place such that these circumstances were not applicable and hence the
redemption premium was not enforceable by the holders.
Key observations communicated to the Audit Committee
The Group has the necessary consents and approvals in place to ensure that the
Redemption Premium is not payable.
Risk 6: Going concern
There exists a risk that the going concern basis is not appropriate in the
preparation of these financial statements.
How we address the Key Audit Matter
Refer the "Conclusions Relating to Going Concern" section of this Report.
Key observations communicated to the Audit Committee
Due to operations of the Group being cash negative, the Group is reliant upon
the £3m undrawn Bidco 2024 Loan Facility which is available until 31 January
2026 and which, from 1 February 2026, will be replaced by a new £1m facility
with Bidco 3 Limited which is available until 31 January 2027, as well as the
agreement by its main lender to defer interest payments due to them until
August 2027, access to £564,826 held in an Escrow account and R&D tax
credits anticipated to be received from HMRC in 2025 and 2026, of £278,657
and £402,290, respectively.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality in planning and performing the audit, in
evaluating the effect of identified misstatements on the audit and in forming
our audit opinion.
Materiality
Materiality is defined as the magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements. Materiality
provides a basis for determining the nature and extent of our audit
procedures.
We determined materiality for the Group £190,000 based on 5% of net loss
before tax. We believe that net loss before tax provides us with a basis for
determining materiality which is the most relevant measure to the stakeholders
of the Group.
We determined materiality for the Company £40,000 based on 3% of net assets.
We believe that net assets provide the most appropriate measure to the
stakeholders of the nature of the Company as an investment holding entity.
We calculated materiality during the planning stage of the audit based on the
management accounts provided to us. The materiality was subsequently
reviewed based on the final financial statements. Final materiality for the
Group was £240,000.
Performance materiality
Performance materiality is the application of materiality at the individual
account or balance level. It is set at an amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the
Group's overall control environment, our judgment was that performance
materiality was 75% of our planning materiality, namely £142,500. This is at
the top end of the range of 50% and 75% typically used. In arriving at the top
range of 75%, we considered the nature of the transactions in the Income
Statement and the balances in the Consolidated Statement of Financial Position
and the relative value of transactions recorded in the other primary
statements.
Reporting threshold
Our reporting threshold is defined as an amount below which identified
misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all
uncorrected audit differences in excess of £10,000, which is set at
approximately 5% of planning materiality, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including Group-wide controls, and assessing the risks of
material misstatement at the Group level.
We performed an audit of the complete financial information of 5 full scope
components.
The Group comprises the Company, 4 consolidated subsidiaries and 2 immaterial
dormant entities which are not consolidated. Monitoring and control over the
operations of these subsidiaries is centralised in Manchester and London.
The full scope components accounted for 100% of the numbers reported in the
Consolidated Income Statement and Consolidated Statement of Financial
Position.
Whilst materiality for the Group financial statements as a whole was set out
as detailed in this report, each component of the Group was audited to an
equal or lower level of materiality.
Audits of the components were performed at a materiality level calculated by
reference to a proportion of Group materiality appropriate to the relative
scale of the business concerned.
OTHER INFORMATION
The Directors are responsible for the other information. The other information
comprises the information included in the Annual Report and Consolidated
Financial Statements, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the Strategic Report and the Directors'
Report for the financial year for which the financial statements are prepared
is consistent with the financial statements;
· the Strategic Report and the Directors' Report have been prepared
in accordance with applicable legal requirements; and
· the part of the Report of the Remuneration Committee required to
be audited by us has been properly prepared in accordance with the Companies
Act 2006.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the Group and the Company
and its environment obtained in the course of the audit, we have not
identified material misstatements in the Strategic Report or the Directors'
Report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our
opinion:
· adequate accounting records have not been kept by the Company, or
returns adequate for our audit have not been received from branches not
visited by us; or
· the Company financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the accounting
records and returns; or
· certain disclosures of Directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors' responsibilities statement, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group's and the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the Group and the industry, we identified that
the principal risks of non-compliance with laws and regulations related to
breaches of UK regulations. We considered the extent to which non-compliance
might have a material effect on the financial statements. We also considered
those laws and regulations that have a direct impact on the preparation of the
financial statements such as the Companies Act 2006. We evaluated management's
incentives and opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls), and determined that
the principal risks were related to posting inappropriate journal entries to
inflate revenue of the Group and the Company, and management bias in
accounting estimates and judgmental areas of the financial statements, such as
intangible asset valuations and accruals. Audit procedures performed by us
included:
· discussing with the Directors and management involved in the risk
and compliance functions including consideration of known or suspected
instances of non-compliance with laws and regulation and fraud;
· reviewing correspondence between the Group and legal advisors,
and discussions with management responsible for compliance with laws and
regulations;
· reviewing Board minutes as well as relevant meeting minutes;
· challenging assumptions made by management in arriving at
accounting estimates and judgements;
· identifying and testing journal entries, in particular, any
journal entries posted with unusual account combinations, such as a credit to
revenue and a debit to the statement of financial position (other than to
expected accounts), which may be indicative of the overstatement or
manipulation of revenue; and
· designing audit procedures to incorporate unpredictability around
the nature, timing or extent of our testing.
Because of the inherent limitations of an audit and the audit procedures
described above, there is an unavoidable risk that we will not have detected
all irregularities, including some leading to material misstatements in the
financial statements, even though we have properly planned and performed our
audit in accordance with auditing standards. For example, the further removed
non-compliance with laws and regulations (irregularities) is from the events
and transactions reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would identify
it. In addition, as with any audit, there remains a higher risk of
non-detection of irregularities occurring due to fraud rather than error, as
fraud involves intentional concealment, collusion, forgery, intentional
omissions, misrepresentations, or the override of internal controls. We are
not responsible for preventing non-compliance and cannot be expected to detect
non-compliance with all laws and regulations.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
OTHER MATTERS
The comparative Company financial statements were audited by Hazlewoods LLP
and the comparative Group financial statements of Sorted Holdings Limited
which undertook the reverse acquisition and provided the comparative Group
results were audited by Rawlinson & Hunter Audit LLP, under Financial
Reporting Standard 102.
USE OF OUR REPORT
This report is made solely to the Company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have
formed.
William Watson (Senior Statutory Auditor)
For and on behalf of
RAWLINSON & HUNTER AUDIT LLP
Statutory Auditor
Chartered Accountants
Eighth Floor
6 New Street Square
New Fetter Lane
London
EC4A 3AQ
Date: 26 June 2025
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
Year ended 31 December 2024 15 month period ended 31 December 2023
Note £ £
Revenue 4 5,636,903 6,673,922
Cost of sales (1,756,780) (2,420,820)
Gross profit 3,880,123 4,253,102
Administrative expenses (4,990,127) (12,251,877)
Other operating income - 46,191
Operating loss before exceptional administrative expenses, amortisation and (1,110,004) (7,952,584)
depreciation
Amortisation and depreciation (3,003,219) (3,483,793)
Goodwill impairment 14 (199,910) -
Operating loss (4,313,133) (11,436,377)
Finance expense 10 (765,017) (587,526)
Finance income 9 219,541 5,800
Loss before taxation 5 (4,858,609) (12,018,103)
Income tax 11 1,107,777 2,000,000
Total comprehensive loss from continuing operations (3,750,832) (10,018,103)
Profit on discontinued operation, net of tax 12 387,473 63,733
Total comprehensive loss for the year / period (3,363,359) (9,954,370)
Earnings and loss per share
Loss per share from continuing operations - basic and diluted 13 (0.5215) (2.3649)
Earnings per share from discontinued operations - basic and diluted 13 0.0539 0.0150
Total loss per share from operations - basic and diluted 13 (0.4676) (2.3499)
The Company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own statement of
comprehensive income in these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
31 December 2024 31 December 2023 1 October 2022
Note £ £ £
Assets
Non-current assets
Intangible assets 14 4,952,128 7,454,644 7,392,649
Right-of-use assets 15 102,098 114,647 254,473
Property, plant and equipment 15 42,056 34,511 73,790
5,096,282 7,603,802 7,720,912
Current assets
Trade and other receivables 17 951,969 2,827,793 1,359,300
Cash and cash equivalents 2,655,840 408,479 7,059,643
3,607,809 3,236,272 8,418,943
Current liabilities
Trade and other payables 18 (2,723,264) (4,131,186) (3,430,015)
Lease liability 20 (54,113) (118,756) (259,067)
Borrowings 19 - (4,354,395) (500,000)
(2,777,377) (8,604,337) (4,189,082)
Net current assets / (liabilities) 830,432 (5,368,065) 4,229,861
Total assets less current liabilities 5,926,714 2,235,737 11,950,773
Non-Current liabilities
Lease liability 20 (47,441) (4,260) (4,926)
Borrowings 19 (4,463,947) (2,805,000) (2,805,000)
(4,511,388) (2,809,260) (2,809,926)
Net Assets / (Liabilities) 1,415,326 (573,523) 9,140,847
Equity
Called up share capital 22 18,467,735 16,340,507 16,340,507
Share premium reserve 22 20,939,009 20,088,118 20,088,118
Other reserves 22 40,655,530 38,281,441 38,041,441
Retained earnings 22 (78,646,948) (75,283,589) (65,329,219)
Equity attributable to owners of the Company 1,415,326 (573,523) 9,140,847
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
2024 2023
Note £ £
Assets
Non-current assets
Investments 16 67 3,034,374
Current assets
Trade and other receivables 17 12,167 -
Cash and cash equivalents 1,500,154 -
1,512,321 -
Current liabilities
Trade and other payables 18 (114,850) (452,094)
Net current assets / (liabilities) 1,397,471 (452,094)
Total assets less current liabilities 1,397,538 2,582,280
Net Assets 1,397,538 2,582,280
Equity
Called up share capital 22 18,467,735 16,340,507
Share premium 22 20,939,009 20,088,118
Other reserves 22 12,182,753 12,740,875
Retained earnings 22 (50,191,959) (46,587,220)
Equity attributable to owners of the Company 1,397,538 2,582,280
The Company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own statement of
comprehensive income in these financial statements. The loss after tax for the
parent Company for the year was £3,604,739 (2023: £434,891).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
Share capital Share premium Other reserves Retained earnings Total equity
£ £ £ £ £
At 1 January 2024 (previous GAAP) 16,340,507 20,088,118 38,281,441 (75,275,221) (565,155)
IFRS transition (note 28) - - - (8,368) (8,368)
At 1 January 2024 (IFRS) 16,340,507 20,088,118 38,281,441 (75,283,589) (573,523)
Loss for the year - - - (3,363,359) (3,363,359)
Total comprehensive loss for the year - - - (3,363,359) (3,363,359)
Transactions with owners
Shard loan interest reserve - - (100,772) - (100,772)
Subscription (2,285,712 1,428,570 571,428 - - 1,999,998
shares at 62.5p nominal
and 25p premium)
Fee shares issue (137,142 85,714 34,286 - - 120,000
shares at 62.5p nominal
and 25p premium)
Convertible shares and 214,285 85,714 - - 299,999
interest (342,856 shares at 62.5p nominal and 25p premium)
Loan interest to be converted to equity - - 558,122 - 558,122
Equity issued in lieu of accrued interest (637,855 shares at 62.5p nominal and 398,659 159,463 (558,122) - -
25p premium)
Reverse acquisition (Note 26) - - 2,474,861 - 2,474,861
Total transactions with owners 2,127,228 850,891 2,374,089 - 5,352,208
At 31 December 2024 18,467,735 20,939,009 40,655,530 (78,646,948) 1,415,326
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2023
Share capital Share premium Other reserves Retained earnings Total equity
£ £ £ £ £
At 1 October 2022 16,340,507 20,088,118 38,041,441 (65,319,699) 9,150,367
IFRS transition (note 28) - - - (9,520) (9,520)
At 1 October 2022 (IFRS) 16,340,507 20,088,118 38,041,441 (65,329,219) 9,140,847
Loss for the period - - - (9,954,370) (9,954,370)
Total comprehensive loss for the period - - - (9,954,370) (9,954,370)
Transactions with owners
Shard loan interest reserve - - 240,000 - 240,000
Total transactions with owners - - 240,000 - 240,000
At 31 December 2023 16,340,507 20,088,118 38,281,441 (75,283,589) (573,523)
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
Share capital Share premium Other reserves Retained earnings Total equity
£ £ £ £ £
At 1 January 2024 16,340,507 20,088,118 12,740,875 (46,587,220) 2,582,280
Loss for the year - - - (3,604,739) (3,604,739)
Total comprehensive loss for the year - - - (3,604,739) (3,604,739)
Transactions with owners
Subscription (2,285,712 1,428,570 571,428 - - 1,999,998
shares at 62.5p nominal
and 25p premium)
Fee shares issue (137,142 85,714 34,286 - - 120,000
shares at 62.5p nominal
and 25p premium)
Convertible shares and 214,285 85,714 - - 299,999
Interest (342,856 shares at 62.5p nominal and 25p premium)
Equity issued in lieu of accrued interest (637,855 shares at 62.5p nominal and 398,659 159,463 (558,122) - -
25p premium)
Total transactions with owners 2,127,228 850,891 (558,122) - 2,419,997
At 31 December 2024 18,467,735 20,939,009 12,182,753 (50,191,959) 1,397,538
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Share capital Share premium Other reserves Retained earnings Total equity
£ £ £ £ £
At 1 January 2023 16,340,507 20,088,118 12,740,875 (46,152,329) 3,017,171
Loss for the year - - - (434,891) (434,891)
Total comprehensive loss for the year 16,340,507 20,088,118 12,740,875 (434,891) (434,891)
At 31 December 2023 16,340,507 20,088,118 12,740,875 (46,587,220) 2,582,280
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
Year ended 31 December 2024 15 month period ended 31 December 2023
£ £
Cash flows from operating activities
Loss for the financial year/period including discontinued operations (3,363,359) (9,954,370)
Adjustments to cash flows from non-cash items:
Depreciation and amortisation 14/15 3,019,461 3,489,813
Goodwill impairment 14 199,910 -
Finance income 9 (219,541) (6,071)
Finance expense 10 765,017 637,799
Gain on sale of discontinued operation 12 (398,594) -
Profit on lease cancellation (7,868) -
Loss on disposal of assets - 3,527
(4,974) (5,829,302)
Working capital adjustments:
(Increase) / decrease in trade and other receivables (1,178,241) 510,386
(Decrease) / increase in trade and other payables (1,287,923) 417,424
Cash used in operations (2,471,138) (4,901,492)
R&D taxation accrual - increase in receivable - (2,000,000)
R&D credit received 3,054,064 21,129
Net cash generated from / (used in) operating activities 582,926 (6,880,363)
Cash flows from investing activities
Expenditure on intangible assets (870,306) (3,187,692)
Purchase of tangible assets (33,636) (15,930)
Proceeds on disposal of subsidiaries (net of cash disposed) 12 661,002 -
Interest received 19,541 6,071
Net cash acquired in reverse acquisitions 26 2,691,816 -
Net cash generated / (used) in investing activities 2,468,417 (3,197,551)
Year ended 31 December 2024 15 month period ended 31 December 2023
£ £
Cash flows from financing activities
Shard interest reserve - 240,000
Proceeds from issue of shares 1,999,998 -
Proceeds from issue of ordinary shares where cash already received and held as (1,999,998) -
part of reverse acquisition
New loans - 3,854,395
Reduction in borrowings via equity (608,342) -
Repayment of leases - capital (83,911) (313,311)
Interest paid (111,729) (354,334)
Net cash (used in) / generated from financing activities (803,982) 3,426,750
Net increase/(decrease) in cash and cash equivalents 2,247,361 (6,651,164)
Cash and cash equivalents at 1 January 408,479 7,059,643
Cash and cash equivalents at 31 December 2,655,840 408,479
For full details on non-cash financing activities see note 25.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
£ £
Cash flows from operating activities (3,604,739) (434,891)
Loss for the financial year
Adjustments to cash flows from non-cash items:
Impairment of investment 3,034,374 -
(570,365) (434,891)
Working capital adjustments:
(Increase) / decrease in trade and other receivables (12,167) 58,797
Increase in trade and other payables 82,755 376,094
70,588 434,891
Net cash used in operating activities (499,777) -
Cash flows from investing activities
Investment in subsidiary (67) -
Net cash used in investing activities (67) -
Cash flows from financing activities
Proceeds from issue of shares 1,999,998 -
Net cash flows from financing activities 1,999,998 -
Net increase in cash and cash equivalents 1,500,154 -
Cash and cash equivalents at 1 January - -
Cash and cash equivalents at 31 December 1,500,154 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1. General information
Sorted Group Holdings PLC ("the Company") is a public company limited by share
capital, incorporated and domiciled in England and Wales, registered and
principal trading address 5th Floor Room 502d, Chancery Place,50 Brown St,
Manchester, M2 2JG.
The Company's ordinary shares are traded on the Alternative Investment Market
(AIM) of the London Stock Exchange.
Principal activity
The principal activity of the group headed by the Company (the "Group" or
"Sorted") is the provision of a Software as a Service ("SaaS") delivery
platform that powers dynamic checkouts, delivery management and delivery
tracking around the world.
2. Accounting policies
2.1. Statement of compliance
The Group financial statements have been prepared in accordance with
International Financial Reporting Standards and its interpretations as adopted
by the UK ("IFRSs"). Although the consolidated financial statements have
always been prepared in accordance with IFRS, due to the reverse acquisition
(see note 2.3), the comparative information is that of Sorted Holdings Limited
("SHL") and subsidiaries. This group previously applied Financial Reporting
Standard 102 ("FRS 102") as their accounting framework and, consequently, they
applied IFRS 1 First-time adoption of International Financial Reporting
Standards on transitioning to IFRS. Refer to note 28 for the impact of this
application.
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
2.2. Going concern
The Directors have taken a view of the Group as a whole.
The Group ended FY24 with cash resources of £2,655,840 and borrowings of
£4,463,947
However, despite the actions of the Board, the Group continued to operate with
a trading loss during FY24. The new funds raised during 2021 were utilised to
acquire the SHL business on 19 February 2024. The Board will continue to
monitor cash resources and progress the ongoing business review.
The acquisition of SHL resulted in the exit from the Verify business to focus
on the SHL business to deliver shareholder value in the long term.
Based on the current status, after making enquiries and considering the
existing cash resources of the business and the further cost reductions made
during 2024, plus the Sorted Holdings Limited acquisition, the £2m fundraise
and the loan facilities with Bidco 3 Limited, further details of which are set
out in note 27, the Board has a reasonable expectation that the Group will be
able to execute its plans in the medium term such that the Group will have
adequate resources to continue in operational existence for the foreseeable
future. This provides the Board with assurance on the Group's ability to
continue as a going concern and therefore adopt the going concern basis of
accounting in preparing the annual financial statements.
2.3. Reverse acquisition
The accounting resulting from the reverse acquisition (see note 26) causes the
comparative amounts to be restated such that the figures for the 15 months
ended 31 December 2023, as well as the Statement of Financial Position sheet
as on 31 December 2023, represent those of Sorted Holdings Limited and its
subsidiaries (before the reverse acquisition). The results for the year ended
31 December 2024, as well as the Statement of Financial Position as on 31
December 2024 is for SHL and its subsidiaries but also includes the balances
of Sorted Group Holdings PLC and subsidiaries as on 31 December 2024 and the
results of the same from the reverse acquisition date of 16 February 2024. The
comparative results and balances, although largely extracted from audited
results of Sorted Holdings Limited, have not been audited. Whilst reverse
acquisition accounting is a departure from the standard consolidation practice
under Companies Act 2006 (the "Act") of the legal parent consolidating the
legal subsidiary, its adoption is necessary for the financial statements to
present a true and fair view as required by the Act.
2.4. Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and its subsidiary undertakings drawn up to 31 December 2024 in
accordance with IFRS 10.
A subsidiary is an entity controlled by the Company. Control is achieved where
the company has the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are
included in the income statement from the effective date of acquisition or up
to the effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with those used by the Group.
The purchase method of accounting is used to account for business combinations
that result in the acquisition of subsidiaries by the Group. The cost of a
business combination is measured as the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the business combination.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values
at the acquisition date. Any excess of the cost of the business combination
over the acquirer's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions
between the Company and its subsidiaries, which are related parties, are
eliminated in full.
Intra-group losses are also eliminated but may indicate an impairment that
requires recognition in the consolidated financial statements.
Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group. Non-controlling
interests in the net assets of consolidated subsidiaries are identified
separately from the Group's equity therein. Non-controlling interests consist
of the amount of those interests at the date of the original business
combination and the non-controlling shareholder's share of changes in equity
since the date of the combination. Total comprehensive income is attributed to
non-controlling interests even if this results in the non-controlling
interests having a deficit balance.
2.5. Changes in accounting policy
For the purpose of the preparation of these consolidated financial statements,
the Group has applied all standards and interpretations that are effective for
accounting periods beginning on or after 1 January 2024. None of the standards
that have been applied have had a material effect on the financial statements.
2.6. New standards, interpretations, and amendments not yet effective
No new standards, amendments or interpretations to existing standards that
have been published and that are mandatory for the Group's accounting periods
beginning on or after 1 January 2025, or later periods, have been adopted
early.
None of the standards, interpretations and amendments which are effective for
periods beginning after 1 January 2025, and which have not been adopted early,
are expected to have a material effect on the financial statements, with the
exception of IFRS 18 Presentation and Disclosure in Financial Statements. IFRS
18 is likely to impact the presentation of the statement of comprehensive
income, although the impact has yet to be assessed in detail. The UK
Endorsement Board has not yet endorsed IFRS 18 for use in the UK.
2.7. Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker for the use in
strategic decision making and monitoring of performance. The Group considers
the chief operating decision maker to be the Executive Board.
2.8. Revenue
Revenue represents the invoice value of services and software licences
provided to external customers in the period, stated exclusive of value added
tax.
Consideration received from customers in respect of services is only recorded
as revenue to the extent that the Group has performed its contractual
obligations in respect of that consideration. Management assess the
performance of the Group's contractual obligations against project milestones
and work performed to date.
Revenue from software licences sold in conjunction with services is invoiced
separately from those services and recognised over the period of the licence.
Revenue from software licences for the use of the technology platform is
recognised over the period of the license.
Revenue from software development is recognised to the extent that the Group
has obtained the right to consideration through its performance.
The IFRS 15 practical expedient has been applied whereby the promised amount
of consideration has not been amended for the effects of a significant
financing component as at the contract inception there are no contracts where
the period between transfers of promised goods or services and customer
payment is expected to exceed one year.
2.9. Foreign currency transactions and balances
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ("the functional currency"). The consolidated financial
statements are presented in Pounds Sterling ("£"), which is the Group's
presentational currency.
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies are translated at the rate of exchange ruling at the balance sheet
date.
The results and financial position of all Group entities that have a
functional currency different from the presentational currency of the Group
are translated into sterling follows:
· Assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of the balance sheet.
· Income and expenses for each income statement are translated at
the average exchange rate for the month where these approximate the exchange
rate at the date of the transaction; and
· All resulting exchange differences are recognised within other
comprehensive income and taken to the foreign exchange reserve.
2.10. Research and development
In the research phase of an internal project it is not possible to demonstrate
that the project will generate future economic benefits and hence all
expenditure on research shall be recognised as an expense when it is incurred.
Intangible assets are recognised from the development phase of a project if
and only if certain specific criteria are met in order to demonstrate the
asset will generate probable future economic benefits and that its cost can be
reliably measured. The capitalised development costs are subsequently
amortised on a straight line basis over their estimated useful economic life
of 4 years.
If it is not possible to distinguish between the research phase and the
development phase of an internal project, the expenditure is treated as if it
were all incurred in the research phase only.
2.11. Finance costs
Finance costs are charged to the statement of comprehensive income over the
term of the debt using the effective interest method so that the amount
charged is at a constant rate on the carrying amount. Issue costs are
initially recognised as a reduction in the proceeds of the associated capital
instrument.
2.12. Intangible assets and amortisation
Internally developed software
Intangible assets are predominantly internally generated software development
costs for Sorted's technologies. Development costs are capitalised when
certain criteria are met. The product must be technically feasible, sale is
intended, a market exists, expenditure can be measured reliably, and
sufficient resources are available to complete the project. The extent of
capitalisation is limited to the amount, which taken together with further
related costs, will be recovered from the future economic benefits related to
the asset. When the Board is sufficiently confident that all of the criteria
for capitalisation are met, development costs are amortised over the expected
useful life, currently 4 years, from the date the asset is available for use.
Development costs that have been capitalised, but where amortisation has not
yet commenced are reviewed annually for impairment. If no intangible asset can
be recognised based on the above, then development costs are recognised within
administrative expenses in the Consolidated Income Statement.
Intangible assets acquired separately from a business are recognised at cost
and are subsequently measured at cost less accumulated amortisation and
accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets
less their residual values over their useful lives on the following bases:
System development costs 4 years
Domain name 10 years
Computer software costs 3 years
2.13. Fixed assets
Fixed assets under the cost model are stated at historical cost less
accumulated depreciation and any accumulated impairment losses. Historical
cost includes expenditure that is directly attributable to bringing the asset
to the location and condition necessary for it to be capable of operating in
the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their
residual value over their estimated useful lives, using the straight line
method.
Depreciation is provided on the following basis:
Leasehold improvements 25% or shorter dependent upon the lease term
Right-of-use asset Lease term (see note 2.16)
Computer equipment 33%
The assets' residual values, useful lives and depreciation methods are
reviewed, and adjusted prospectively if appropriate, or if there is an
indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised in the Income Statement.
2.14. Impairment of non-financial assets
At each reporting period end date, the Company reviews the carrying amounts of
its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). Where it is not
possible to estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the cash-generating unit to which
the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
2.15. Investments
Investments are carried at cost, less any impairment in value.
The Company grants options over its equity investments to the employees of its
subsidiaries where material. The carrying value of the investment in this
subsidiary is increased by an amount equal to the value of the share-based
payment charge attributable to the option holder in the subsidiary.
Dividends on equity securities are recognised in income when receivable.
2.16. Leases
On commencement of a contract (or part of a contract) which gives the Group
the right to use an asset for a period of time in exchange for consideration,
the Group recognises a right-of-use asset and a lease liability unless the
lease qualifies as a 'short-term' lease or a 'low-value' lease.
Initial and subsequent measurement of right-of-use assets
A right-of-use asset is recognised at commencement of the lease and initially
measured at the amount of the lease liability, plus any incremental costs of
obtaining the lease and any lease payments made at or before the leased asset
is available for use by the Group.
The right-of-use asset is subsequently measured at cost less accumulated
depreciation and any accumulated impairment losses. The depreciation methods
applied are as follows:
Leased property - on a straight-line basis over the life of the lease
The right-of-use asset is adjusted for any re-measurement of the lease
liability and lease modifications, as set out below.
Initial measurement of the lease liability
The lease liability is initially measured at the present value of the lease
payments during the lease term discounted using the interest rate implicit in
the lease, or the incremental borrowing rate if the interest rate implicit in
the lease cannot be readily determined.
The lease term is the non-cancellable period of the lease plus extension
periods that the Group is reasonably certain to exercise and termination
periods that the Group is reasonably certain not to exercise.
Lease payments include fixed payments, less any lease incentives receivable,
variable lease payments dependant on an index or a rate and any residual value
guarantees. Variable lease payments are initially measured using the index
or rate when the leased asset is available for use.
Termination penalties are included in the lease payments if the lease term has
been adjusted because the Group reasonably expects to exercise an option to
terminate the lease.
The exercise price of an option to purchase the leased asset is included in
the lease liability when the Group is reasonably certain to exercise that
option.
Subsequent measurement of the lease liability
The lease liability is subsequently increased for a constant periodic rate of
interest on the remaining balance of the lease liability and reduced for lease
payments. Interest on the lease liability is recognised in profit or loss,
unless interest is directly attributable to qualifying assets, in which case
it is capitalised in accordance with the Group's policy on borrowing costs.
Variable lease payments are not included in the measurement of the lease
liability as they are not dependent on an index or rate, are recognised in
profit or loss in the period in which the event or condition that triggers
those payments occurs.
Re-measurement of the lease liability
The lease liability is adjusted for changes arising from the original terms
and conditions of the lease that change the lease term, the Group's assessment
of its option to purchase the leased asset, the amount expected to be payable
under a residual value guarantee and/or changes in lease payments due to a
change in an index or rate. The adjustment to the lease liability is
recognised when the change takes effect and is adjusted against the
right-of-use asset, unless the carrying amount of the right-of-use asset is
reduced to nil, when any further adjustment is recognised in profit or loss.
Adjustments to the lease payments arising from a change in the lease term or
the lessee's assessment of its option to purchase the leased asset are
discounted using a revised discount rate. The revised discount rate is
calculated as the interest rate implicit in the lease for the remainder of the
lease term, or if that rate cannot be readily determined, the lessee's
incremental borrowing rate at the date of reassessment.
Changes to the amounts expected to be payable under a residual value guarantee
and changes to lease payments due to a change in an index or rate are
recognised when the change takes effect, and are discounted at the original
discount rate unless the change is due to a change in floating interest rates,
when the discount rate is revised to reflect the changes in interest rate.
Lease modifications
A lease modification is a change that was not part of the original terms and
conditions of the lease and is accounted for as a separate lease if it
increases the scope of the lease by adding the right to use one or more
additional assets with a commensurate adjustment to the payments under the
lease.
For a lease modification not accounted for as a separate lease, the lease
liability is adjusted for the revised lease payments, discounted using a
revised discount rate. The revised discount rate used is the interest rate
implicit in the lease for the remainder of the lease term, or if that rate
cannot be readily determined, the lessee Group's incremental borrowing rate at
the date of the modification.
Where the lease modification decreases the scope of the lease, the carrying
amount of the right-of-use asset is reduced to reflect the partial or full
termination of the lease. Any difference between the adjustment to the lease
liability and the adjustment to the right-of-use asset is recognised in profit
or loss.
For all other lease modifications, the adjustment to the lease liability is
recognised as an adjustment to the right-of-use asset.
2.17. Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions
repayable without penalty on notice of not more than 24 hours. Cash
equivalents are highly liquid investments that mature in no more than three
months from the date of acquisition and that are readily convertible to known
amounts of cash with insignificant risk of change in value.
2.18. Creditors
Short term creditors are measured at the transaction price. Other financial
liabilities, including bank loans, are measured initially at fair value, net
of transaction costs, and are measured subsequently at amortised cost using
the effective interest method.
2.19. Pensions
The Group operates a defined contribution plan for its employees. A defined
contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity. Once the contributions have been paid
the Group has no further payment obligations.
The contributions are recognised as an expense in the Income Statement when
they fall due. Amounts not paid are shown in accruals as a liability in the
Statement of Financial Position. The assets of the plan are held separately
from the company in independently administered funds.
2.20. Taxation
Taxation expense for the period comprises current and deferred tax recognised
in the reporting period. Tax is recognised in the profit and loss account,
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case tax is recognised in
other comprehensive income or directly in equity respectively.
Current or deferred taxation assets and liabilities are not discounted.
Current tax is the amount of income tax payable in respect of the taxable
profit for the period or prior years. Tax is calculated on the basis of tax
rates and laws that have been enacted or substantively enacted by the period
end.
Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Deferred tax arises from timing differences that are differences between
taxable profits and total comprehensive income as stated in the financial
statements. These timing differences arise from the inclusion of income and
expenses in tax assessments in periods different from those in which they are
recognised in financial statements.
Deferred tax is recognised on all timing differences at the reporting date.
Unrelieved tax losses and other deferred tax assets are only recognised when
it is probable that they will be recovered against the reversal of deferred
tax liabilities or other future taxable profits.
Deferred tax is measured using tax rates and laws that have been enacted or
substantively enacted by the period end and that are expected to apply to the
reversal of the timing differences.
2.21. Financial instruments
Financial assets
Financial assets are recognised when the Group becomes party to the
contractual provisions of the instrument.
The Company does not have financial assets other than cash and cash
equivalents and trade and other receivables.
Trade and other receivables
Trade receivables are initially measured at their transaction price. Other
receivables are initially measured at fair value plus transaction costs.
Receivables are held to collect the contractual cash flows which are solely
payments of principal and interest. Therefore, these receivables are
subsequently measured at amortised cost using the effective interest rate
method.
Impairment of financial assets
An impairment loss is recognised for the expected credit losses on financial
assets when there is an increased probability that the counterparty will be
unable to settle an instrument's contractual cash flows on the contractual due
dates, a reduction in the amounts expected to be recovered, or both.
The probability of default and expected amounts recoverable are assessed using
reasonable and supportable past and forward-looking information that is
available without undue cost or effort. The expected credit loss is a
probability-weighted amount determined from a range of outcomes and takes into
account the time value of money.
Trade receivables
For trade receivables, expected credit losses are measured by applying an
expected loss rate to the gross carrying amount. The expected loss rate
comprises the risk of a default occurring and the expected cash flows on
default based on the aging of the receivable. The risk of a default
occurring always takes into consideration all possible default events over the
expected life of those receivables ("the lifetime expected credit losses").
Different provision rates and periods are used based on groupings of historic
credit loss experience by product type, customer type and location.
Financial liabilities and equity
Financial liabilities are recognised when the Group and Company becomes party
to the contractual provisions of the instrument.
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
or Company after deducting all of its liabilities.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less.
Trade and other payables are initially measured at fair value, net of direct
transaction costs and subsequently measured at amortised cost.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the statement of comprehensive income over the period
of borrowings using the effective interest rate method.
Equity
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued are recorded at fair value on initial recognition net of transaction
costs.
Derecognition of financial assets (including write-offs) and financial
liabilities
A financial asset (or part thereof) is derecognised when the contractual
rights to cash flows expire or are settled, or when the contractual rights to
receive the cash flows of the financial asset and substantially all the risks
and rewards of ownership are transferred to another party.
When there is no reasonable expectation of recovering a financial asset it is
derecognised ('written off').
The gain or loss on derecognition of financial assets measured at amortised
cost is recognised in profit or loss.
A financial liability (or part thereof) is derecognised when the obligation
specified in the contract is discharged, cancelled or expires.
Any difference between the carrying amount of a financial liability (or part
thereof) that is derecognised and the consideration paid is recognised in
profit or loss.
Derivative financial instruments
The Company has certain warrant instruments, which is a derivative.
Derivatives are initially recognised at fair value at the date a derivative
contract is entered into and are subsequently re-measured to their fair value
at each balance sheet date. The resulting gain or loss is recognised in profit
or loss.
A derivative with a positive fair value is recognised as a financial asset
whereas a derivative with a negative fair value is recognised as a financial
liability. A derivative is presented as a non-current asset or a non-current
liability if the remaining maturity of the instrument is more than 12 months
and it is not expected to be realised or settled within 12 months. Other
derivatives are presented as current assets or current liabilities.
2.22. Equity
Equity comprises:
· Share capital - the nominal value of ordinary shares is classified as
equity.
· Share premium - represents the excess over nominal value of the fair
value of consideration received for equity shares, net of expenses of the
share issue.
· Other reserves - This comprises the Shard Loan interest, which will
be settled via the issuance of new ordinary shares, a reserve relating to
equity-settled share-based payment arrangements, a merger accounting reserve,
and a reverse acquisition reserve.
· Retained earnings - includes all current and prior period retained
profits/(losses).
3. Judgements in applying accounting policies and key sources of
estimation uncertainty
In the application of the Group's and the Company's accounting policies, the
Directors are required to make judgements, estimates and assumptions about the
carrying amount of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised where the revision affects only that period, or in the
period of the revision and future periods where the revision affects both
current and future periods.
Critical accounting judgements and estimates
Impairment - methodology for determining fair value less costs to sell
In the current period, the recoverable amount for the Shipping CGU was
measured using fair value less costs to sell using a methodology of a multiple
of annual recurring revenue. The multiple of 1.5 was used and selection of
this methodology and multiple is a significant judgement.
A multiple of annual recurring revenue is deemed appropriate for the Shipping
CGU due to the nature of the CGU's services resulting in largely recurring
revenue.
Deferred tax
A deferred tax asset was not recognised for UK tax losses as the Directors do
not expect that the tax losses will be utilised in the foreseeable future.
System development costs capitalised within intangible fixed assets
The Group capitalises intangible fixed assets to the extent that they create
an enduring asset that delivers economic benefits at least as great as the
amount capitalised. System development costs are amortised on a straight line
basis over 4 years and regular reviews are carried out to consider if the
asset is subject to impairment.
In some instances, when determining the amount to be capitalised, the
Directors exercise judgement in determining the amount of time certain
employees have spent on a capital project. The Directors complete a detailed
assessment, understanding each individuals' project / operational priorities
and commitments, reviewed as part of regular and ongoing project meetings,
before deciding whether a project is deemed to be capital in nature. Any time
which is deemed not to have been spent on a capital project is written off to
the Income Statement as incurred.
Key sources of estimation uncertainty
Impairment - determining the recoverable amount
As set out in the critical judgements section above, the Shipping CGU's
recoverable amount was based on a multiple of recurring revenue method. The
multiple recurring revenue method is dependent on an estimation of recurring
revenue, as well as an appropriate multiple. The Group used budgeted forecasts
to estimate the recurring revenue.
4. Segmental analysis
Operating segments are based on internal reports about components of the
Group, which are regularly reviewed and used by the Board for strategic
decision making, to allocate resources across segments and to assess
performance by segment.
The Group only has one operation segment, being 'Shipping and tracking'. As
such, the financial statements represent the segment.
It should be noted that a segmental analysis of the Balance Sheet is not part
of routine management reporting and consequently no segmental analysis of
assets is shown here.
An analysis of the Group's revenue by geographical segment is as
follows:
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
UK Revenue 5,606,981 6,651,422
ROW Revenue 29,922 22,500
5,636,903 6,673,922
All non-current assets of the Group are held in the UK.
During the year there was revenue from individual customers that represented
more than 10% of revenue as follows:
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Customer 1 1,239,998 1,011,750
Customer 2 753,400 726,180
1,993,398 1,737,930
There are no significant financing components, nor variable consideration
elements in customers' contracts.
5. Loss before taxation
The operating loss is stated after charging:
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Depreciation expense 108,957 364,514
Amortisation expense 2,894,262 3,119,279
6. Auditor's remuneration
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Audit of the Company's and subsidiaries' financial statements 157,000 112,600
All other non-audit services comprising permitted tax services 6,250 23,915
163,250 136,515
7. Staff costs
The average number of persons employed by the Group (including directors)
during the year / period, analysed by category was as follows:
Year ended 31 December 2024 15 months ended 31 December 2023
No. No.
Operating and administrative staff 55 90
Non-executive directors 2 2
57 92
The average number of persons employed by the Company (including directors)
during the year / period analysed by category was as follows:
Year ended 31 December 2024 15 months ended 31 December 2023
No. No.
Operating and administrative staff - -
Non-executive directors 2 2
2 2
Staff costs including directors' remuneration were as follows:
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Wages and salaries 4,131,696 8,274,937
Social security costs 471,211 1,033,947
Pension costs, defined contribution scheme 162,166 364,448
4,765,073 9,673,332
The Group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the Group in an independently
administered fund. The pension costs charge represents contributions payable
by the Group to the fund and amounted to £162,166 (2023: £364,448).
Contributions totalling £20,058 (2023: £38,731) were payable to the fund at
the Statement of Financial Position date and are included in creditors.
£797,811 (2023: £1,186,000) of these staff costs were capitalised as part of
the system development costs (refer Note 14).
8. Key management compensation and directors' remuneration
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Salaries and other short-term employee benefits 613,102 632,203
Pension costs 8,612 14,063
621,714 646,266
The Directors are of the opinion that the key management of the Group
comprises the executive and the non-executive directors of the Group. These
persons have authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly.
Directors' remuneration is disclosed in the Directors' Remuneration Report on
pages 14 to 16.
9. Finance income
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Bank interest received 19,541 5,800
Fair value gain on warrants 200,000 -
219,541 5,800
During the current year, the warrants (previously issued as part of the Shard
Loan (see note 19) were waived for no consideration as part of the reverse
acquisition (see note 26). This resulted in a gain on derecognition of the
warrants.
10. Finance expense
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Interest relating to lease liability 22,654 42,803
Loan interest payable 742,363 544,723
765,017 587,526
11. Taxation
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Current tax - -
Adjustment in respect of prior period current tax 1,107,777 2,000,000
Total current tax 1,107,777 2,000,000
Total deferred tax - -
Taxation on loss on ordinary activities 1,107,777 2,000,000
Factors affecting the tax credit for the year/period
The tax on loss before tax for the year/period is higher than the standard
rate of corporation tax in the UK (2023 - higher than the standard rate of
corporation tax in the UK) of 25% (2023 - 19%).
The differences are reconciled below:
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Loss on ordinary activities before tax 4,858,609 12,018,103
Loss on ordinary activities multiplied by standard rate of corporation tax in 1,214,652 2,283,440
the UK of 25% (2023 - 19%)
Effects of:
Effect of expenses not deductible (507,221) (563,862)
Difference between capital allowances and depreciation 3,889 (5,529)
Unrecognised deferred tax assets (711,320) (1,714,049)
Adjustment to corporation tax charge in respect of prior period in relation to 1,107,777 2,000,000
R&D tax credits
Total tax credit for the year / period 1,107,777 2,000,000
Subject to the UK tax authority's agreement, the Group has UK tax losses of
approximately £67.8 million (2023: £53 million) available to carry forward
and offset against future taxable profits. The utilisation of these losses is
subject to agreement by HMRC and is dependent on whether the trade is deemed
sufficiently similar under relevant tax legislation. The Group has a potential
deferred tax asset of £17 million (2023: £10.9 million) which will not be
recognised until it is regarded as more likely than not that there will be
sufficient taxable profits from which the tax losses can be deducted. In
addition, no deferred tax asset is recognised in respect of future tax
deductions on exercise of share options.
12. Discontinued operations
During the financial period, Sorted Group Holdings PLC completed the disposal
of its Returns business. The disposal included the business operations and
associated intellectual property, comprising software, systems, and content
assets specifically utilised for the Group's "Returns" services, catering
primarily to small and medium-sized fashion apparel retailers, charities, and
educational institutions. The total consideration agreed upon for the disposal
was £775,000, payable in cash.
The strategic rationale behind this disposal was to enable Sorted Group
Holdings PLC to sharpen its strategic focus on its core Ship and Track
business, which primarily serves larger enterprise clients. This business
segment offers higher margins and superior customer retention. In contrast,
Clicksit's returns business targeted smaller and medium-sized enterprises, and
the Board concluded that Clicksit's operations would achieve greater
commercial synergies and fit more effectively within a similar business.
The financial performance presented below are for the period ended 30
September 2024 (2024 column) and the 15 months ended 31 December 2023 (2023
column).
2024 2023
£ £
Revenue 605,823 1,232,966
Cost of sales (616,944) (1,168,878)
Profit before income tax (11,121) 64,088
Income tax - (355)
Profit after income tax of discontinued operation (11,121) 63,733
Gain on sale of discontinued operation 398,594 -
Profit from discontinued operation 387,473 63,733
The post-tax gain on disposal of discontinued operations was determined as
follows:
Year ended 31 December 2024
£
Cash consideration received 775,000
Total consideration received 775,000
Cash disposed of -
Costs of selling (113,998)
Net cash inflow on disposal of discontinued operations 661,002
Net assets disposed (other than cash):
Intellectual property (262,408)
(262,408)
Pre-tax gain on disposal of discontinued operation 398,594
Related tax expense -
Gain on disposal of discontinued operation 398,594
13. Earnings or Loss per share
The calculation of earnings or loss per share is based on the reported profit
or loss from operations and the number of shares in issue, being the weighted
average number of ordinary equity shares in issue during the period. IAS 33
requires that, when the number of ordinary shares change without a change in
resources, the number of ordinary shares outstanding for purposes of
calculating earnings per share is adjusted for the proportionate change as if
the event occurred at the beginning of the earliest period presented. The
share consolidation in February 2024 is such a change in the number of
outstanding ordinary shares without changing the resources available to the
Group. Consequently, the number of ordinary shares used to calculate earnings
or loss per share for the 15 months ended 31 December 2023 is based on the
number of ordinary shares outstanding as if the share consolidation occurred
on 1 October 2022.
Year ended 31 December 2024 15 months ended 31 December 2023
£ £
Loss for the financial year/period from continuing activities (3,750,832) (10,018,103)
Profit for the financial year/period from discontinued activities 387,473 63,733
Total loss for the financial year/period (3,363,359) (9,954,370)
Weighted average number of shares
Ordinary shares pre-consolidation n/a 2,647,587,398
Ordinary shares opening number (2024) / post-consolidation (2023) 4,236,140 4,236,140
Share issuance weighted for 317 days outstanding in 2024 2,955,973 n/a
Total weighted average number of shares 7,192,113 4,236,140
Earnings per share
Loss per share from continuing activities - basic and diluted (0.5215) (2.3649)
Earnings per share from discontinued activities - basic and diluted 0.0539 0.0150
Loss per share from activities - basic and diluted (0.4676) (2.3499)
Share consolidation
As set out in note 22, a share consolidation took place on 16 February 2024 at
a ratio of 625:1. To ensure comparability and compliance with the requirements
in IAS 33, the earnings and loss per share for the period ended 31 December
2023 were calculated as if the share consolidation occurred at 1 October 2022.
Dilutive instruments
Instruments that could potentially dilute basic loss per share in the future
but are antidilutive at the balance sheet date and are not included in the
calculation of diluted loss per share.
14. Intangible assets
Group System development costs Domain name Computer software costs Goodwill Total
£ £ £ £ £
Cost
At 1 October 2022 27,256,273 160,000 105,846 9,063,933 36,586,052
Additions 3,174,930 - 12,761 - 3,187,691
At 31 December 2023 30,431,203 160,000 118,607 9,063,933 39,773,743
Additions 870,306 - - - 870,306
Disposals (296,699) - - - (296,699)
At 31 December 2024 31,004,810 160,000 118,607 9,063,933 40,347,350
Amortisation
At 1 October 2022 20,185,482 81,688 62,210 8,864,023 29,193,403
Charges for the period 3,077,244 19,645 28,807 - 3,125,696
At 31 December 2023 23,262,726 101,333 91,017 8,864,023 32,319,099
Charges for the year 2,874,414 16,000 20,090 - 2,910,504
Impairment - - - 199,910 199,910
Disposals (34,291) - - - (34,291)
At 31 December 2024 26,102,849 117,333 111,107 9,063,933 35,395,222
Net book value
At 31 December 2024 4,901,961 42,667 7,500 - 4,952,128
At 31 December 2023 7,168,477 58,667 27,590 199,910 7,454,644
Internal development represents the cost incurred in developing the Group's
proprietary platform. These internal costs have been capitalised in accordance
with the Group's accounting policies where all the conditions for
capitalisation have been met.
Impairment of research and development is considered within the conditions of
capitalisation. Amortisation charges are included in administrative expenses,
disclosed separately on the Consolidated Income Statement.
During the current year, management considered the recoverability of the
intangible assets. Other than the impairment on goodwill (due to the sale of
the Clicksit assets (see note 12)), no other impairment was required.
Due to the discontinued operations classification, amortisation of £16,242
(2023: £6,417) is included in the line 'Profit on discontinued operation, net
of tax' in the Income Statement, rather than in the 'Amortisation and
depreciation' line.
The Company has no intangible assets.
15. Fixed assets
Group Fixtures, fittings and leasehold property Computer equipment Right-of-use Asset Total
£ £ £ £
Cost
At 1 October 2022 567,010 344,335 1,211,541 2,122,886
Additions - 15,930 173,007 188,937
Disposals - (3,924) (1,220,478) (1,224,402)
At 31 December 2023 567,010 356,341 164,070 1,087,421
Disposals - - (153,007) (153,007)
Additions - 33,636 102,138 135,774
At 31 December 2024 567,010 389,977 113,201 1,070,188
Depreciation
At 1 October 2022 567,010 270,545 957,069 1,794,624
Charges for the period - 51,682 312,832 364,514
Disposals - (397) (1,220,478) (1,220,875)
At 31 December 2023 567,010 321,830 49,423 938,263
Disposals - - (121,186) (121,186)
Charges for the year - 26,091 82,866 108,957
At 31 December 2024 567,010 347,921 11,103 926,034
Net book value
At 31 December 2024 - 42,056 102,098 144,154
At 31 December 2023 - 34,511 114,647 149,158
The Company has no fixed assets.
16. Investments
Company
2024 2023
£ £
Investment in subsidiaries 67 2,045,589
Capital contribution arising from IFRS 2 Share-based payments charge - 988,785
67 3,034,374
Subsidiaries
£
Cost or valuation
At 1 January 2023 3,034,374
Revaluation -
At 31 December 2023 3,034,374
Additions 67
At 31 December 2024 3,034,441
Impairment loss
At 1 January 2023, 31 December 2023, and 1 January 2024 -
Impairment loss 3,034,374
At 31 December 2024 3,034,374
Carrying amount
At 31 December 2024 67
At 31 December 2023 3,034,374
The impairment loss relates to the legacy investment in Location Sciences AI
Limited. Given that the Verify services have effectively ceased, management
does not deem any recovery of such an investment. As such, it has been fully
impaired during the year ended 31 December 2024.
Details of the Group subsidiaries held as direct or indirect investments of
the Company as at 31 December 2024 are as follows:
Name of subsidiary Principal activity Registered office Proportion of ownership interest and voting rights held
2024 2023
Sorted Holdings Limited* Holding Company Same registered office address as group 100% 0%
Location Sciences AI Limited Dormant Same registered office address as group 100% 100%
* Sorted Holdings Limited, in turn, holds 100% interest in Sorted EBT Limited
(dormant), Clicksit App Limited (see note 12), Sorted Group Limited (shipping
services), and Sorted LLC (dormant).
17. Trade and other receivables
Group Company
2024 2023 2024 2023
£ £ £ £
Trade receivables 896,071 733,085 - -
Prepayments 49,765 94,708 86 -
Other receivables 6,133 2,000,000 12,081 -
951,969 2,827,793 12,167 -
Trade and other receivables are all current and the net carrying amount of
trade receivables is considered a reasonable approximation of fair value.
All of the Group's trade and other receivables have been assessed for
impairment based upon the expected credit losses model. In order to manage
credit risk, the Directors set limits for customers based on a combination of
payment history and third-party credit references. Credit limits are reviewed
on a regular basis in conjunction with debt ageing and collection history.
Trade receivables are regularly reviewed for bad and doubtful debts. The
Group's policy is to include a provision for impairment based on estimated
credit losses. This includes an assessment where relevant of forward-looking
information on macroeconomic factors that may affect the ability of customers
to settle receivables. Trade receivables are written off where is no
reasonable expectation or recovery, for example where the customer has entered
insolvency proceedings or where a customer has failed to make contractual
payments for an extended period. No material estimated credit losses were
recognised for any periods presented.
The Group's exposure to credit and market risks, including impairments and
allowances for credit losses, relating to trade and other receivables is
disclosed in the financial risk management and impairment note.
18. Trade and other payables
Group Company
2024 2023 2024 2023
£ £ £ £
Trade payables 497,485 1,102,306 2,260 -
Accrued expenses 956,951 1,040,947 55,590 395,094
Deferred income 516,547 261,710 - -
Social security, other taxes, and other payables 752,281 1,726,223 57,000 57,000
2,723,264 4,131,186 114,850 452,094
The Directors consider that the carrying amount of trade and other payables
approximated their fair value. Trade payables are paid between 30 and 60 days
of receipt of the invoice.
The Group's exposure to market and liquidity risks, including maturity
analysis, related to trade and other payables is disclosed in the financial
risk management and impairment note.
19. Borrowings
Group Company
2024 2023 2024 2023
£ £ £ £
NVM Loan 650,137 610,137 - -
Convertible Loans 1,058,897 1,227,767 - -
SGH Loan - 2,516,491 - -
Shard Loan 2,754,913 2,605,000 - -
Warrants - 200,000 - -
4,463,947 7,159,395 - -
At 31 December 2023, the NVM Loan, Convertible Loan, and Sorted Group Holdings
PLC ("SGH") Loan were classified as current liabilities, with the Shard Loan
and Warrants classified as non-current liabilities. At 31 December 2024, all
the borrowings were classified as non-current liabilities (see note 21).
Convertible loan
The convertible bridge loan of £1,058,897 relates to loan agreements between
SHL and former shareholders of SHL. This agreement was entered into on 28 June
2023 for the purpose of providing SHL with working capital. The loan has a
potential redemption premium of 436% and is secured by a first fixed and
floating charge over SHL's business and assets. At the Lenders' option, the
loan can be converted into shares representing nearly 0.6% of the fully
diluted share capital of SHL. The Directors do not believe that there would be
a strong commercial rationale for exercising the conversion rights and gaining
a minor and illiquid interest in an operating subsidiary of the Company.
However, if the CLN holders do choose to exercise their conversion rights, the
number of shares in Sorted to which they would be entitled to depends on the
determination of the conversion price pursuant to the relevant convertible
loan agreements. The conversion price is linked to the last equity raise
carried out by Sorted unless the parties agree an alternative price, the
Directors are of the opinion that it is unlikely that an alternative price
would be agreed,
In this case, if all Remaining CLNs were exercised at the expected conversion
price, they would convert into 918 new shares in Sorted in aggregate, roughly
equivalent to 0.6 per cent. of the entire issued share capital of Sorted.
Refer to the discussions relating to the SHL acquisition for further detail.
Shard Loan
The Group entered into an arrangement with Shard Credit Partners Venture Debt
I Sarl ("Shard") to obtain funding in August 2022. The Shard Loan is secured
(with a fixed charge) over the fixed property (see note 15) and intellectual
property (see note 14) as well secured (with a variable charge) over all the
property and undertaking of the Company.
The loan has a fixed interest rate of 10.75%, reduced by 0.25% each if the
Company has 1) at least one woman on the board of directors; and 2) at least
one female shareholder who is a member of the senior management team.
Change of Terms (See Note 27 Events after the reporting date)
The following changes were agreed regarding the terms of the Shard loan:
1. Interest Rate Adjustment:
The interest rate applicable to the Shard loan will increase from 10.75% to
18% if Sorted opts for the PIK option to differ quarterly interest payment.
2. Interest Payment Deferral:
Quarterly interest payments scheduled from 30 June 2025 through to the loan's
repayment date of 22 August 2027 will be deferred. Interest accrued during
this period will be payable in full alongside the principal amount upon loan
maturity.
NVM Loan
The facility was provided by NVM Private Equity LLP and carries interest at 8%
and is unsecured.
SGH Loan
The loan was provided to the Group in anticipation of the reverse acquisition
(see note 26). The loan facility carried interest at 1.5% per month.
20. Lease liability
Group 2024 2023
£ £
Current 54,113 118,756
Non-current 47,441 4,260
Total lease liabilities 101,554 123,016
The maturity of the gross contractual undiscounted cash flows due on the
Group's lease liabilities is set out below based on the period between 31
December 2024 and the contractual maturity date.
Within 1 year Between 1 to 5 years Over 5 years 2024
£ £ £ £
Current 56,172 - - 56,172
Non-current - 51,691 - 51,691
Total lease liabilities 56,172 51,691 - 107,863
Within 1 year Between 1 to 5 years Over 5 years 2023
£ £ £ £
Current 144,693 - - 144,693
Non-current - 4,800 - 4,800
Total lease liabilities 144,693 4,800 - 149,493
The leases relate to certain office equipment and office space.
21. Financial risk management and impairment of financial assets
Treasury risk management
The Group manages a variety of market risks, including the effect of changes
in foreign exchange rates, liquidity and counterparty risks.
Credit risk
The Group's principal financial assets are bank balances, cash, trade and
other receivables.
The credit risk on liquid funds is limited because the counterparties are UK
banks or "Blue Chip" companies with high credit ratings assigned by
international credit rating agencies.
The credit risk associated with trade receivables is minimal as invoices are
based on contractual agreements with long-standing customers. Credit losses
historically incurred by the Group have consequently been considered by the
Directors to be exceptional in their occurrence. The Group maintains a
provision against receivables, however, this is not necessarily linked to
credit risk and the ageing of receivables is not the most relevant indicator
to determine the potential impairment of a receivable. The nature of the
Group's operations is such that misunderstandings or minor disagreements may
arise during the course of contracts, which may sometimes require an
adjustment to be made to achieve settlement and the Group's provisions are
made on a case by case basis, based on Directors' knowledge of the
circumstances surrounding overdue balances as they arise.
As a result, investment returns and credit risk to the Group in this regard
are not material to the financial statements.
The Group's maximum exposure to credit risk is limited to the carrying amount
of financial assets at the reporting date. No collateral is held in respect of
these amounts which are expected to be received in full. In order to manage
credit risk, credit limits are reviewed on a regular basis in conjunction with
debt ageing and collection history.
The Company has significant credit risks associated with the inter-company
debt due from its subsidiary, which is fully provided for as at the year end.
As with the Group's policy for making provisions against trade receivables,
provisions against inter-company debt is considered based on the Directors'
knowledge of the subsidiary's trading activity and financial position.
Currency risk
The Group's operations are primarily located in the United Kingdom. The
Group's transactions during 2024 were predominantly denominated in sterling,
with consequently little exposure to foreign currency risks. Due to the
limited currency risks to the Group, forward exchange contracts are not
considered necessary and are not used. At the year end, the Group operated
both sterling and dollar bank accounts. Going forward the Directors will
continue to monitor the currency risk.
The translation risk on the Group's foreign exchange payables and receivables
is considered to be immaterial due to their short-term nature.
Liquidity risk
The Group has sufficient capital resources to meet its external current
liabilities as they fall due in 2025 and 2026.
Operational cash flow represents on going trading revenue and costs,
administrative costs and research and development activities. The Group
manages its liquidity requirements by the use of both short-term and long-term
cash flow forecasts. The Group's policy is to ensure facilities are available
as required or to issue equity share capital to ensure cash resources
available are in accordance with long-term cash flow forecasts. The Group
currently has no overdrawn committed facilities as at 31 December 2024.
The Group actively manages its working capital to ensure it has sufficient
funds for operations and planned research and development activities.
The Group's main financial liabilities include trade payables, borrowings and
operational costs. All amounts for trade and other payables are due for
payment in accordance with agreed settlement terms with suppliers or statutory
deadlines. All such payment terms are within six months.
Maturity analysis - Group
The tables below analyse the Group's financial liabilities into relevant
maturity groupings based on their contractual maturities.
At 31 December 2024 Within 1 year Between 1 to 5 years Contractual cash flows Carrying value
£ £ £ £
Trade payables 497,485 - 497,485 497,485
Other payables 58,158 - 58,158 58,158
Accrued expense 956,951 - 956,951 956,951
Lease liabilities 54,113 47,441 101,554 101,554
Borrowings* - 4,463,947 4,463,947 4,463,947
Total liabilities 1,566,707 4,511,388 6,078,095 6,078,095
*The Shard Loan is repayable on 22 August 2027. All the other borrowings are
only repayable once the Shard Loan is repaid.
At 31 December 2023 Within 1 year Between 1 to 5 years Contractual cash flows Carrying value
£ £ £ £
Trade payables 1,102,306 - 1,102,306 1,102,306
Other payables 40,168 - 40,168 40,168
Accrued expense 1,040,947 - 1,040,947 1,040,947
Lease liabilities 118,756 4,260 123,016 123,016
Borrowings 4,354,395 2,805,000 7,159,395 7,159,395
Total liabilities 6,656,572 2,809,260 9,465,832 9,465,832
As liquidity is managed on a Group basis, a maturity analysis for the Company
is not considered to be relevant.
Capital management
The Group's activities are of a type and at a stage of development where the
most suitable capital structure is that of one primarily financed by equity.
The Directors will reassess the future capital structure when projects under
development are sufficiently advanced.
The Group's financial strategy is to utilise its resources and current trading
revenue streams to commercialise its products and grow revenues. The Group
keeps investors informed of its progress with its projects through regular
announcements and raises additional equity finance at appropriate times.
The Group manages capital on the basis of the carrying amount of equity, and
debt with regard to maintaining sufficient liquidity to enable the Group to
continue to trade and invest in commercialisation. As at the year end the
equity to overall financing ratio, excluding IFRS 16 adjustments, is 0.20
(2023: -0.05).
Categories of financial instruments
All of the Group's financial assets are classified as loans and receivables;
see note 17. The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
All of the Group's financial liabilities are classified as liabilities at
amortised cost: see note 18. The Directors consider that the carrying amount
of trade and other payables approximates their fair value. All financial
liabilities are due within one year.
The accounting policies applied are set out in note 2.
22. Share capital
Allotted, called up and fully paid shares
31 December 2024 31 December 2023
No. £ No. £
Ordinary shares of 62.5p each (2023 is 0.01p each) 7,639,705 4,774,815 2,647,587,398 2,647,587
Deferred shares of 0.99p each 1,040,712,398 10,303,054 1,040,712,398 10,303,054
Deferred shares of 0.9p each 376,651,734 3,389,866 376,651,734 3,389,866
1,425,003,837 18,467,735 4,064,951,530 16,340,507
Share consolidation and issue
Following an announcement on 28 June 2023 where the Company entered into an
exclusive non-binding heads of terms for a potential acquisition of the entire
issued share capital of Sorted Holdings Limited (the "Proposed Acquisition"),
an AIM admission document was published on 30 January 2024. This document
detailed the proposed acquisition of SHL, a proposed subscription of 2,285,712
new ordinary shares (after the consolidation) at 87.50 pence per new ordinary
share to raise approximately £2.0 million, a proposed 625 to 1 share
consolidation, a proposed change of name and AIM ticker symbol to Sorted Group
Holdings PLC and SORT respectively, director appointments, a notice of general
meeting, and the restoration of trading of the Company's existing ordinary
shares on AIM. Terms were agreed for the acquisition of the entire issued and
to be issued share capital of SHL for an aggregate nominal consideration of
approximately £66.73 to be paid in cash at completion which was subsequently
paid in full.
Share consolidation and issue (continued)
In addition to the above issue of 2,285,712 new ordinary shares, a further
137,142 new ordinary shares were issued to pay for fees, 342,855 new ordinary
shares were issued relating to convertible shares, and 637,855 new ordinary
shares were issued in lieu of accrued interest. All these share issuances were
also issued at 87.50 pence per new ordinary share.
Share rights
Ordinary shares have attached to them full voting, dividend and capital
distribution (including on winding up) rights; they do not confer any rights
of redemption.
Deferred shares have no voting rights, no rights to receive notice of or
attend any general meeting, no rights to income, and can only receive capital
on a winding up (i) up to the paid-up value of the share, and (ii) only once
at least £100,000,000 has been paid out on each ordinary share.
Warrants in Issue
1) Promoter Warrants - non-transferable warrants to subscribe for up to
1,500,000,000 Ordinary Shares (2,400,000 after the share consolidation),
exercisable at the 125p (0.20p before the share consolidation) for five years
from 25 May 2021, were issued to certain members of the Concert Party in
consideration of those persons assembling and coordinating the Concert Party's
investment in the Company in May 2021 and facilitating the appointment of
Simon Wilkinson as Non-Executive Chairman.
Name Number of Ordinary Shares subject to Promotor Warrants
Richard Hughes 800,000
Mahmud Kamani 800,000
Simon Wilkinson 800,000
2) Cornerstone Investor Warrants - non-transferable warrants to subscribe
for up to 250,000,000 Ordinary Shares (400,000 after the share consolidation),
exercisable at 125p (0.20p before the share consolidation) for five years from
25 May 2021, were issued to the Cornerstone Investors of the May 2021 placing.
Name Number of Ordinary Shares subject to Cornerstone Investment Warrants
Ben Turner 80,000
Donna Turner 120,000
James Pope 80,000
Maxine Pope 120,000
3) Broker Warrants - transferable warrants to subscribe for up to
100,000,000 Ordinary Shares, (160,000 after the share consolidation)
exercisable at the 125p (0.20p before the share consolidation) for five years
from 25 May 2021 were issued as shown below.
Name Number of Ordinary Shares subject to Broker Warrants
Turner Pope 94,000
Dr Nigel Burton 40,000
Mark Slade 16,000
David Rae 10,000
4) Director Warrants - non-transferable warrants to subscribe for, in
aggregate, 120,000,000 Ordinary Shares (192,000 after the share consolidation)
were issued to the Executive Directors and the Non-Executive Directors,
exercisable at 125p (0.20p before the share consolidation) for five years from
25 May 2021, provided that the Ordinary Shares have traded at a Volume
Weighted Average Price (VWAP) at or above 187.5p for 20 consecutive Business
Days, or on a change of control of the Company.
Name Number of Ordinary Shares subject to Director Warrants
Simon Wilkinson 48,000
Dr Nigel Burton 48,000
The expense recognised in respect of all warrants issued as part of the May
2021 fundraise has been recognised directly in the share premium reserve,
based on the fair value of the services received that are considered to
directly relate to the issuing of shares.
Share premium account
Includes any premiums received on issue of share capital. Any transaction
costs associated with the issuing of shares are deducted from share premium.
Retained earnings
This comprises all current and prior periods retained profits and losses of
the group, net of distributions to owners.
Other reserves
This comprises the Shard Loan interest, which will be settled via the issuance
of new ordinary shares, a reserve relating to equity-settled share-based
payment arrangements, a merger accounting reserve, and a reverse acquisition
reserve.
23. Commitments
No capital expenditure was committed to as at 31 December 2024 (2023: £Nil).
24. Related party transactions
At 31 December 2024, Simon Wilkson owed £12,000 (2023: £NIL) to the Group
and Nigel Burton owed £12,000 (2023: £NIL) to the Group. These balances have
been cleared since the year end. All of these individuals are shareholders and
also Directors of the Company.
During the year, the Group engaged People4 LTD for HR consultancy work at a
cost of £24,500 (2023: £NIL), The Hiring Hub Limited at a cost of £25,800
(2023: £NIL) and The Furza Training Group at a cost of £42,608 (2023: £NIL)
for recruitment placement fees. The are all related parties with Simon
Wilkinson.
25. Net debt note
Group 1 January 2024 Cash flows Non-cash Changes 31 December 2024
£ £ £ £
Cash and cash equivalents* 408,479 2,247,361 - 2,655,840
Leases (123,016) 106,030 (84,568) (101,554)
Borrowings (7,159,395) - 2,895,448 (4,263,947)
Net cash / (debt) (6,873,932) 2,353,391 2,810,880 (1,709,661)
* Cash and cash equivalents at the year-end includes cash of £615,828 held in
a solicitors' client account.
1 October 2022 Cash flows Non-cash Changes 31 December 2023
£ £ £ £
Cash and cash equivalents 7,059,643 (6,651,164) - 408,479
Leases (263,993) 356,114 (215,137) (123,016)
Borrowings (3,305,000) 3,854,395 (7,708,790) (7,159,395)
Net cash / (debt) 3,490,650 (2,440,655) (7,923,927) (6,873,932)
26. Reverse acquisition
On 16 February 2024, Sorted Group Holdings PLC acquired all the outstanding
share capital in Sorted Holdings Limited (refer to note 2.3). The acquisition
was one whereby a nominal value of £66,73 was paid in cash to acquire the
outstanding share capital of SHL. Consequentially, new directors were
appointed, being directors and key management personnel from SHL.
Consistent with the AIM Rules classifying this transaction as a reverse
takeover, management assessed and concluded that the acquisition is, in
substance, a reverse acquisition in accordance with the principles in IFRS 3.
However, given that Sorted Group Holdings PLC and subsidiaries (before the
acquisition) did not meet the definition of a business in accordance with IFRS
3, the reverse acquisition is rather accounted for by analogy to the reverse
acquisition accounting principles in IFRS 3 and the principles in IFRS 2 (as
generally acceptable accounting principles exist).
As a result, the acquisition is accounted for such that SHL is identified as
the acquirer and the net assets of Sorted Group Holdings PLC and subsidiaries
(before the acquisition) deemed acquired. The consideration for the reverse
acquisition is measured at the fair value of the cash transferred and the
deemed consideration of the loan previously granted to SHL, which remains
outstanding on 16 February 2024.
Accordingly, the resulting balances and transactions for the periods prior to
16 February 2024 are those of SHL and subsidiaries (before the acquisition).
£
Cash 67
Loan previously provided 2,516,491
2,516,558
The allocation of the consideration transferred to the net assets acquired by
Sorted Holdings Limited is as follows:
£
Cash 2,691,816
Accounts receivable and other receivables 178,772
Accounts payable and accruals (803,086)
Listing costs expensed 449,056
2,516,558
The amount of £2,474,861 recognised as an adjustment within equity (other
reserves) is a function of the above allocation of consideration and other
adjustments. The other adjustments are mainly related to the accounting
implications of the reverse acquisition as set out in note 2.3, whilst
presenting the legal share capital and share premium of Sorted Group Holdings
PLC.
27. Events after the reporting date
The £3m Bidco 2024 Loan Facility that was entered into in January 2024
remains in place, covering the period until 31 January 2026. However, a new
Bidco 3 Limited loan facility for £1m has subsequently been entered into,
covering the period from 1 February 2026 to 31 January 2027. There was no
requirement to draw upon the Bidco 2024 Loan Facility either during FY24 or
after the period end to date.
The net proceeds from the sale of the Clicksit business and its associated
intellectual property (refer to note 12) were committed to settling
outstanding liabilities related to Clicksit. In line with this commitment and
following an agreement with Shard, a portion of these proceeds was placed into
an escrow account to cover any potential future liabilities, although these
are deemed unlikely to materialise. This approach was adopted as a
conservative measure instead of immediately repaying the Shard Loan. The
escrowed funds will to be released later in FY25 to support working capital
requirements within the Sorted business.
On 26(th) June 2025, Shard agreed to the Change of Terms outlined in Note 19
Borrowings Shard Loan.
28. Impact of transition to IFRS
A reconciliation is provided here of SHL and its subsidiaries' total equity
and total comprehensive income reported previously under Financial Reporting
Standard 102 to the equivalent reported in accordance with IFRS. In accordance
with IFRS, the reconciliations below show adjustments to total equity and
total comprehensive income rather than line by line:
1 October 2022 31 December 2023
£ £
Total equity reported in accordance with FRS 102 9,150,367 (565,155)
Effect of transition to IFRS:
Right-of-use assets 254,473 114,648
Lease liabilities (263,993) (123,016)
Deferred tax - -
Total equity in accordance with IFRS 9,140,847 (573,523)
15 month period ended 31 December 2023
£
Loss as reported in accordance with FRS 102 (9,955,640)
Effect of transition to IFRS:
Reversal of rent expense on operating leases 356,906
Depreciation of right of use assets and interest on lease liabilities (355,636)
Total loss in accordance with IFRS (9,954,370)
Impact on Equity and Total Comprehensive Income
Lease liabilities and right of use assets
Under IFRS 16, a right-of-use asset and a lease liability are recognised for
all leases except for a practical expedient relating to 'low-value' and
'short' term leases where lease payments can be recognised on a straight-line
basis over the lease term. The main change from FRS 102 on application of IFRS
16 is in respect of the accounting for 'operating leases' where rentals
payable (as adjusted for lease incentives) were previously expensed on a
straight-line basis over the lease term.
At 1 October 2022 right-of-use assets of £254,473 and lease liabilities of
£263,993 have been recognised, with a corresponding adjustment of £9,520
within equity. The net impact on profit or loss of additional depreciation and
interest expense for the period ended 31 December 2023 less than the rental
expense is an increase in profit or loss of £1,270.
Effect on Cash Flows
The transition to IFRS had only a presentational effect on the cash flows
reported in accordance with IFRS as compared with those reported in accordance
with FRS 102. The presentation in the Consolidated Statement of Cash Flows in
accordance with IFRS differs from the presentation in accordance with FRS 102
as cash flows relating to operating lease expenses under FRS 102 previously
reported within net cash flows from operating activities are now presented as
repayments of lease liabilities and finance expenses within financing
activities.
29. Share-based payments
Sorted announced the implementation of new share incentive awards ("New
Awards") under the existing Sorted Group Holdings plc Share Option Plan, to
retain and incentivise key management personnel. The New Awards have been
granted to one Director of the Company, certain persons discharging managerial
responsibilities ("PDMRs"), and several senior management team members.
The New Awards comprise 763,964 new share options over ordinary shares of 62.5
pence each in the Company ("Ordinary Shares"). The options vest in three equal
instalments on the first, second, and third anniversaries of the grant date,
conditional upon achieving minimum share price targets of 75p, 90p, and 110p
respectively, measured against the average closing mid-market price of
Ordinary Shares over the preceding 30 days. No charge has been made in these
financial statements as a result of the issue of the New Awards on the basis
that the fair value of the New Awards is considered to be immaterial.
These Options carry an exercise price of 62.5p and have a ten-year life span
from the grant date, exercisable once the vesting conditions have been
satisfied. Any Ordinary Shares acquired upon exercising the Options must be
held for at least twelve months thereafter.
Allocation of the options is as follows:
Recipient Number of options granted
Mahmoud Warriah - Chief Financial Officer (Director) 115,000
Paul Hill - Product Director (PDMR) 115,000
Victoria Hill - Carrier Director (PDMR) 115,000
Russell Waite - Engineering Director (PDMR) 115,000
Steve Allen - Dealer Principal (PDMR) 38,000
Senior managers (10 individuals) 265,964
763,964
Following this grant, the total number of Ordinary Shares under option is
763,964, representing approximately 10% of the Company's current issued
ordinary share capital.
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AnnouncementREG - Sorted Group Hldgs. - Share Option Awards
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