INSG Insig Ai Plc

5 September 2024

Insig AI plc

("Insig AI" or the "Company")

Final results for the year ended 31 March 2024

and

Posting of the Annual Report and Accounts and Notice of Annual General Meeting

 

Insig AI plc (AIM:INSG), the data science and machine learning solutions company  and its subsidiaries (the "Group") is pleased to announce its results for the year ended 31 March 2024.

The Group's Annual Report & Accounts, along with the Company's Notice of Annual General Meeting ("AGM") will be posted to shareholders today and will be available shortly on the Group's website: www.insg.ai/investor-relations/. The AGM will be held at 1 Heddon Street, London, W1B 4BD on 30 September 2024 at 12:30 p.m.

​

Highlights

·      Reduced adjusted EBITDA loss of £0.6 million from £2 million in the previous year

·      Recognised by the FCA as a key contributor in its anti-greenwashing technology initiative

·      New product launch of the Transparency and Disclosure Index

·      In discussions with three of 'The Big Four' Accounting Practices

·      In discussions with UK asset manager regarding partnering on a new fund launch

·      Visibility of regulatory tailwinds

 

Richard Bernstein, CEO commented: "After a two year wait, we finally have visibility of regulatory tailwinds that should represent the compelling event in the nascent market of non-financial corporate disclosures. We are ideally positioned to benefit. Alongside our capabilities to structure data for clients to utilise AI, with improved execution, the coming months are set to bear fruit from our substantial investment."

 

For further information, please visit www.insg.ai or contact:

 

Insig AI plc                                                                                        richard.bernstein@insg.ai

Richard Bernstein (CEO)          

  

Zeus (Nominated Adviser & Broker)

David Foreman / James Hornigold                                                         +44 (0)20 3829 5000

 

 

Chief Executive's Report

 

Dear Shareholders,

It is now three months since I became Chief Executive. I am also delighted that John Wilson has become Chairman. Set out below is my assessment of the performance of the business during the year ended 31 March 2024, together with an update on recent progress and of prospects. First, let me turn to the year ended 31 March 2024. 

Financial headlines

In summary, we are reporting an operating loss before non-cash impairments of intangible assets of £2.2 million. This compares with an operating loss prior to impairment for the previous year of £4.8 million. Within the loss for the year, the non-cash expense of depreciation and amortisation was £1.6 million, resulting in an operating loss of £0.6 million prior to these non-cash charges. The equivalent loss for the previous year was £2.0 million. 

Revenues for the year were £0.4 million as against £0.7 million in the year to March 2023.

The financial results reflect not only trading but some accounting standard led treatments of intangible assets, and loan notes which have a distorting impact on the optics of the results in my view. As I set out below, the financial year ended 31 March 2024 as well as the current financial year to date, represents a period of progress, right-sizing of the business and pleasingly, significantly improved relationships with several hopefully long term and significant prospective partners of Insig. Frustratingly however, these developing relationships did not yield significant revenues in the financial year ended 31 March 2024.

Following the conversion of £0.75 million of loan notes into equity, outstanding convertible loan notes reduced from £2.3 million to £1.5 million as at 31 March 2024.

Disposal of Sports in Schools Limited and The Elms Group Limited

Sports in Schools and Elms Group combined generated a profit before tax of approximately £210,085 (2023: £19,000). In November 2023, the Company's 85.87% owned subsidiary, Pantheon Leisure plc ("Pantheon"), entered into a sale agreement for Sports in Schools and Elms Group with Haygreen Limited for a total cash consideration payable of £0.3 million (the "Cash Consideration"). The joint profit before tax for Sport in Schools and Elms Group up to November 2023 was.

The directors of Pantheon Leisure plc, which previously held the Group's interest in Sports in Schools, have decided to proceed with striking off the company. The company no longer conducts any form of trade, has no recoverable assets or funds. Therefore, the Directors believe it appropriate to apply for strike off under s1003 of the Companies Act 2006.  The Directors consider that the strike off proposal is in the best interests of the Company and its Shareholders as a whole. This will result in a reduction in legal and administrative costs.

In November 2023, I agreed to release security over my loan of £0.75 million to the Company and I converted the loan plus accumulated interest into 3,925,380 ordinary shares at 20p per share.

Successful equity funding

In April 2023, the Company announced that it had completed an equity subscription raising £0.9 million at 17p per share, and as part of which, I subscribed for £0.15 million.

Post period end, in April and May 2024, I subscribed to the Company for 1,250,000 shares at 20p. In June 2024, the Company successfully raised £0.81 million at 12.5p per share, with NR Holdings Limited becoming a new shareholder.

The report card for the year to 31 March 2024

In the first few months of the year under review, much of our resources were focussed on our data and technology collaboration agreement, working with the Financial Conduct Authority ("FCA"). In April 2023, we announced that we would be providing the data and software platforms to the FCA's 2023 TechSprint, known as the Global Financial Innovation Network's (GFIN) Greenwashing TechSprint. The GFIN Greenwashing TechSprint brought together 13 international regulators.

The goal of the project was to develop a tool or solution to help regulators tackle or mitigate the risks of greenwashing in financial services across the globe. The project focused on how technology, including AI and Machine Learning, can enable regulators and supervisors to verify that ESG-related product claims are accurate and complete and how technology can help monitor, collate, and identify examples of greenwashing.

Insig AI provided our data and technology platform for onboarding of partners and participants of the GFIN Greenwashing TechSprint. The core data set comprised our database of pdf and machine-readable corporate financial and ESG documents with entity mapping and sentence-level classification against 15 ESG issues.

Our endeavour was recognised last September, when the FCA publicly referred to Insig AI as a key contributor.

In October 2023, we announced the launch of The Transparency and Disclosure Index ("TDI"). Using evidence-based analysis of more than 200 million machine readable sentences from our corporate disclosure document repository, the TDI demonstrates what stakeholders and market participants require: how well a company is disclosing non-financial information and how transparent it is. Scoring highlights gaps that are actionable for each company to remedy.

The TDI framework is based on best practice principles behind the convergence of reporting standards. Reports are compared to best practice, benchmarking against peer groups, measuring website clarity and accessibility of documents. It highlights where the range of sustainability documents is considered excessive and flags where companies may be over-using certain keywords identified as being commonly used in greenwashing without evidence and are possibly misleading. Using our search tools and our machine learning database, users can perform a deep dive into every aspect of a multitude of disclosures. Whist the TDI is not seeking to accuse any company, in 2022, both Signature Bank and Home REIT were flagging material issues in terms of very poor transparency and disclosure.

Despite the Company's engagement with the FCA and launching of the Transparency and Disclosure Index, these efforts failed to translate into new business wins. As Chief Executive, my immediate priority on appointment was to identify why this was the case and to then implement the changes required to be able to translate efforts into commercial success.

In mitigation, there can be no doubt that over the last two years, the UK asset management industry has experienced a "bear market," with fund outflows and consequential budgetary pressures. Against this backdrop, investment decisions, particularly in new solutions, has become a casualty. Secondly, until there is regulation in place that requires certain compliance, there is no compelling event that necessitates a spend.

There have however, been some encouraging indicators recently that the UK asset management industry is beginning to recover and that this will result in an easing of budgetary constraints. Of more importance though is that from January 2025, for EU companies with more than 250 employees, the Corporate Sustainability Reporting Directive (CSRD) comes into force. Penalties for non-compliance include fines (in Germany up to 5% of turnover) and prison sentences for directors of up to five years. In the UK, the FCA's anti-greenwashing rules are already in force. In the US, climate related risk disclosures come into effect in January 2025.

It might be easy to attribute the lack of new business wins to the "bear market" and the delay in regulation. It is my assessment, this would not be accurate. "The fault, dear Brutus, is not in our stars but in ourselves," springs to mind.  For too long, the business was engaging with people who were not authorised to make the spending decision. Furthermore, we could have been articulated the offering in a way that showed the benefits to prospective customers in my opinion and we could also have contacted a greater quantity of prospects. All these issues have now been identified: we are establishing clear measurable deliverables and setting specific timelines and performance reviews to monitor progress. Conversations with prospects are now focused solely on the benefit to that prospect, rather than how clever the technology is. Delivering on the core goals of the business is now fundamental. There will be further enhancements in the coming weeks and months, including improved marketing and new partnerships that can bring revenues by making available our products and services to new markets.

Where we are today

Let me set out what Insig AI has to offer. There are two distinct parts of the business. Firstly, a vast repository of corporate reports that enables regulators, corporates, asset managers and all market participants to access, interrogate and compare disclosures within and between companies. Our database uses the best of machine learning and AI tools in this area. Secondly, our ability to provide fast, accessible AI-ready data. Asset managers can gain insights into their holdings, manage risk and increase alpha. Insig AI can structure and centralise data making it secure whilst increasing the efficiency and productivity.

When I was appointed Chief Executive, I commented that sales cycles to large corporates for emerging technologies can take up to 18 months. This remains the case. The business is in detailed discussions with several prospects and given that our offering involves AI, in some cases, we are being told that the decision-making process involves multiple parties within an organisation.

Some of these discussions include a number of the Big 4 Accounting Practices. In the case of one of those firms, we have invested significant resources, including participating in a workshop with FTSE100 companies and been introduced as this firm's 'AI partner'. Our offering is able to benefit this firm's top line as well as reducing regulatory risk to many of its clients. Our solutions ought to be a 'no brainer'. Feedback has been very positive. However, procurement processes in these huge enterprises are extraordinarily lengthy and complex and lack the sense of urgency that we would expect. Whilst these timelines are incredibly frustrating, on success, they should convert into material, long-term substantial revenues.

Prospects

For the current year, we continue to expect to grow revenues. As importantly, we are working to convert ongoing discussions with potential strategic partners into commercial agreements that will enable their customers to access our machine learning capabilities. 

Amongst these, we are now engaging with three of the "Big 4" Accounting Practices. We are also now in discussions with one of the "Big 3" Management Consultancy firms. Separately, we have been approached by one of the UK's largest financial PR advisors to assist in advising clients to comply with the new Corporate Sustainability Reporting Directive.

We are in dialogue with a UK asset manager with assets under management of more than £2 billion, with a view to partnering on a new fund launch. On the data science side, we are expecting to win a long-term contract with an asset manager who has indicated that it wants to work with us to improve its structured data as it rapidly expands and wins new mandates.

As Insig AI's largest shareholder and someone who has a track record of "skin in the game" in effecting positive change and delivering for stakeholders, I am as keen as any shareholder to report on tangible positive results as soon as possible. Operating in a hitherto nascent market has required patience.

Whether you own one share or one million shares, you are a part owner of this business. The legendary investor Warren Buffett has said that investors often focus on a daily share price movement rather than on making an objective assessment of the long-term prospects of a company and deciding what the business might be worth in the coming years.

I will do whatever it takes to ensure that the business delivers on both its ideal market positioning within corporate reporting and structured AI data and its significant commercial potential. Victory will not be achieved overnight: it requires thought, planning, strong execution and some patience. I regard our success as a matter of not if but when.

 

Richard Bernstein

Chief Executive Officer

5 September 2024

 

Consolidated statement of financial position

	Note	31 March 2024 £	31 March 2023 £
Non-Current Assets
Property, plant and equipment	12	5,652	37,648
Right of Use Assets	13	-	28,266
Intangible assets	14	4,404,000	20,309,278
Investment in subsidiaries	15	-	-
		4,409,652	20,375,192
Current Assets
Trade and other receivables	16	104,740	719,840
Cash and cash equivalents	17	37,847	280,584
		142,587	1,000,424
Total Assets		4,552,239	21,375,616
Non-Current Liabilities
Lease liabilities	19	-	16,868
Deferred tax liabilities	21	1,101,000	2,586,096
		1,101,000	2,602,964
Current Liabilities
Trade and other payables	18	338,238	932,927
Lease liabilities	19	-	10,386
Convertible loan notes	20	1,544,324	2,261,769
		1,882,562	3,205,082
Total Liabilities		2,983,562	5,808,046
Net Assets		1,568,677	15,567,570
Equity attributable to owners of the Parent
Share capital	23	3,149,058	3,109,804
Share premium	23	40,810,725	39,077,403
Other reserves	25	516,015	377,381
Share based payments reserve	24	2,485	18,845
Retained losses		(42,880,866)	(26,964,846)
Equity attributable to shareholders of the parent parent company		1,597,417	15,618,587
Non-controlling interests		(28,740)	(51,017)
Total Equity		1,568,677	15,567,570

 

The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company Income Statement and Statement of Comprehensive Income. The loss for the Company for the year ended 31 March 2024 was £17,185,547 (31 March 2023: loss of £21,180,437).

The Financial Statements were approved and authorised for issue by the Board of Directors on 5 September 2024 and were signed on its behalf by:

Richard Bernstein

Chief Executive Officer

 

Consolidated statement of comprehensive income

Continued operations	Note	Year ended 31 March 2024 £	Year ended 31 March 2023 £
Revenue	5	369,860	693,734
Cost of sales	5	-	(50)
Gross profit		369,860	693,684
Administrative expenses	7	(2,562,208)	(5,474,077)
Other gains/(losses)	9	(102,965)	(15,796)
Other income	10	3,160	-
Impairments	14	(15,317,338)	(16,558,296)
Operating loss		(17,609,491)	(21,354,485)
Finance income	11	263	101
Finance costs	11	(126,390)	(80,072)
Loss before income tax		(17,735,618)	(21,434,456)
Tax credit/(charge)	27	1,615,430	2,865,865
Loss for the year after income tax from continued operations		(16,120,188)	(18,568,591)
Discontinued operations
Profit for the year from discontinued operations (attributable to equity holders of the Parent)		210,085	6,245
Group loss for the year		(15,910,103)	(18,562,346)
Loss for the year attributable to owners of the Parent		(15,932,380)	(18,563,996)
Profit/(Loss) for the year attributable to Non-controlling interests		22,277	1,650
Basic and Diluted Earnings/(Loss) Per Share (expressed in pence per share)
Continued operations		(17.71)p	(17.89)p
Discontinued operations		0.21p	0.01p
Total	28	(17.50)p	(17.88)p

 

Consolidated statement of changes in equity

	Note	Share capital £	Share premium £	Share based payments reserve £	Other reserves £	Retained losses £	Total £		Non Controlling Interest £	Total
Balance as at 1 April 2022		3,109,804	39,077,403	17,240	325,583	(8,400,850)	34,129,180		(52,667)	34,076,513
Profit/(Loss) for the year		-	-	-	-	(18,563,996)	(18,563,996)		1,650	(18,562,346)
Other comprehensive loss for the year
Items that may be subsequently reclassified to profit or loss		-	-	-	-	-	-		-	-
Total comprehensive loss for the year		-	-	-	-	(18,563,996)	(18,563,996)		(1,650)	(18,562,346)
Share based payments		-	-	1,605	-	-		1,605	-	1,605
Equity component of CLN issued in period		-	-	-	51,798	-		51,798	-	51,798
Total transactions with owners, recognised directly in equity		-	-	1,605	51,798	-		53,403	-	53,403
Balance as at 31 March 2023		3,109,804	39,077,403	18,845	377,381	(26,964,846)		15,618,587	(51,017)	15,567,570

 

Balance as at 1 April 2023		3,109,804	39,077,403	18,845	377,381	(26,964,846)	15,618,587		(51,017)	15,567,570
Profit/(Loss) for the year		-	-	-	-	(15,932,380)	(15,932,380)		22,277	(15,910,103)
Other comprehensive loss for the year
Items that may be subsequently reclassified to profit or loss		-	-	-	-	-	-		-	-
Total comprehensive loss for the year		-	-	-	-	(15,932,380)	(15,932,380)		22,277	(15,910,103)
Expired options		-	-	(16,360)	-	16,360		-	-	-
Equity component of CLN issued in period		-	-	-	138,634	-		138,634	-	138,634
Issue of shares		39,254	1,733,322	-	-	-		1,772,576	-	1,772,576
Total transactions with owners, recognised directly in equity		39,254	1,733,322	(16,360)	138,634	16,360		1,911,210	-	1,911,210
Balance as at 31 March 2024		3,149,058	40,810,725	2,485	516,015	(42,880,866)		1,597,417	(28,740)	1,568,677

 

	Note	Share capital £	Share premium £		Share based payments reserve £	Other reserves £	Retained losses £	Total equity £
Balance as at 1 April 2022		3,109,804	39,077,403		17,240	325,583	(3,508,817)	39,021,213
Loss for the year		-	-		-	-	(21,180,437)	(21,180,437)
Total comprehensive loss for the period		-	-		-	-	(21,180,437)	(21,180,437)
Share based payments		-	-		1,605	-	-	1,605
Equity component of CLN issued in the period		-	-		-	51,798	-	51,798
Total transactions with owners, recognised directly in equity		-	-		1,605	51,798	-	53,403
Balance as at 31 March 2023		3,109,804	39,077,403		18,845	377,381	(24,689,254)	17,894,179
Balance as at 1 April 2023		3,109,804	39,077,403		18,845	377,381	(24,689,254)	17,894,179
Loss for the year		-	-		-	-	(17,185,547)	(17,185,547)
Total comprehensive loss for the year		-	-		-	-	(17,185,547)	(17,185,547)
Expired options		-	-		(16,360)	-	16,360	-
Equity component of CLN issued in the period		-	-		-	138,634	-	138,634
Issue of shares		39,254	1,733,322		-	-	-	1,772,576
Total transactions with owners, recognised directly in equity		39,254	1,733,322		(16,360)	138,634	16,360	1,911,210
Balance as at 31 March 2024		3,149,058	40,810,725		2,485	516,015	(41,858,441)	2,619,842

 

 

Consolidated statements of cash flows

		Note		31 March 2024 £	31 March 2023 £
	Cash flows from operating activities
	(Loss)/profit before income tax			(15,910,103)	(18,562,346)
	Adjustments for:
	Depreciation and amortisation			1,578,916	2,839,889
	Disposal of PPE			(650)	-
	Share based payments	23		-	1,605
	Impairments			15,317,338	16,558,296
	Net finance (income)/costs			130,546	81,518
	Gain on disposal of subsidiaries			(164,300)
	Provision for deferred tax liabilities			(1,485,096)	(1,573,992)
	Changes in working capital:
	(Increase)/Decrease in trade and other receivables			394,606	(433,296)
	Increase/(Decrease) in trade and other payables			(160,651)	121,131
	Net cash used in operating activities			(299,394)	(967,195)
	Cash flows from investing activities
	Sale/(Purchase) of property, plant and equipment	12		837	(8,788)
	Purchase of intangible assets	14		(1,020,516)	(1,456,436)
	Net cash from disposal of subsidiaries			187,204	-
	Net cash used in investing activities			(832,475)	(1,465,224)
	Cash flows from financing activities
	Proceeds from issue of share capital			900,000	-
	Proceeds from Borrowings			-	2,250,000
	Repayment of leasing liabilities			(10,868)	(10,387)
	Net cash generated from financing activities			889,132	2,239,613
	Net decrease/(increase) in cash and cash equivalents			(242,737)	(192,806)
	Cash and cash equivalents at beginning of year			280,584	473,390
	Cash and cash equivalents at end of year	17		37,847	280,584

 

Notes to the financial statements

1.   General information

Insig AI plc is a public company limited by shares, domiciled and incorporated in England and Wales and its activities are as described in the Strategic Report.

These financial statements are prepared in pounds sterling being the currency of the primary economic environment in which the Group operates.

2.   Summary of significant accounting policies

The principal Accounting Policies applied in the preparation of these Consolidated Financial Statements are set out below. These Policies have been consistently applied to all the periods presented, unless otherwise stated.

2.1. Basis of preparation of Financial Statements

      The Group and Company Financial Statements have been prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The Group and Company Financial Statements have also been prepared under the historical cost convention.

     

      The Financial Statements are presented in Pound Sterling rounded to the nearest pound.

     

      The preparation of Financial Statements in conformity with UK adopted International Accounting Standards (IAS) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group and Company Financial Statements are disclosed in Note 4.

 

2.2. New and amended standards

 

The following amendments to standards have become effective for the first time for annual reporting periods commencing on 1 January 2023 and have been adopted in preparing these financial statements:

 

 

Standard		Impact on initial application		Effective date
IAS 1 (Amendments) and IFRS Practice Statement 2		Disclosure of Accounting Policies		1 January 2023
IAS 8 (Amendments)		Definition of Accounting Estimate		1 January 2023
IAS 12 Income Taxes (Amendments)		Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction		1 January 2023

 

The adoption of these amendments had no material impact on the financial statements.

At the date of approval of these financial statements, the following amendments to IFRS which have not been applied in these financial statements were in issue, but not yet effective, until annual periods beginning on 1 January 2024:

Standard		Impact on initial application		Effective date
IAS 7 (Amendments) and IFRS 7		Supplier Finance Arrangements		1 January 2024
IAS 1 (Amendments)		Classification of Liabilities as Current or Non-Current		1 January 2024
IFRS 16 (Amendments)		Lease Liability in a Sale and Leaseback		1 January 2024
IAS 1 (Amendments)		Presentation of Financial Statements		1 January 2024
IAS 1 (Amendments)		Non-Current Liabilities with Covenants		1 January 2024
IAS 21 (Amendments)		Lack of Exchangeability		1 January 2024

 

*Subject to endorsement by the UK

2.3. Basis of Consolidation

The Consolidated Financial Statements consolidate the financial statements of the Company and its subsidiaries made up to 31 March 2024. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

·      The contractual arrangement with the other vote holders of the investee;

·      Rights arising from other contractual arrangements; and

·      The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Investments in subsidiaries are accounted for at cost less impairment within the parent company financial statements. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation.

2.4. Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represent amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. Under IFRS 15 there is a five-step approach to revenue recognition which is adopted across all revenue streams. The process is: 

·      Step 1: Identify the contract(s) with a customer; 

·      Step 2: Identify the performance obligations in the contract; 

·      Step 3: Determine the transaction price; 

·      Step 4: Allocate the transaction price to the performance obligations in the contract; and 

·      Step 5: Fees are recognised once the work is completed and provided to the client.

The Group has two types of revenue streams being machine learning and data services and sports activities.

Machine learning and Data services revenue comprises of:

1.   ESG Research Tool

Fees are recognised as the agreed work is conducted.

2.   Machine Readable Data

Fees are recognised as the agreed work is conducted.

3.   Bespoke Data Science Solutions

Charged on a project basis and includes work related to data migration, design fees, communication fees and technological services. The fees are recognised as the agreed work in conducted.

For the services detailed above, revenue is recognised and invoiced in accordance with milestones agreed within each contract with the customer, which can vary on a case-by-case basis. In all scenarios, the revenue is recognised in accordance with the provision of the agreed services provided or, where the quantum and timing of the services can be difficult to predict, rateable over the period of the agreement. Depending on the client, invoices can be monthly, quarterly or ad-hoc. Invoices can be adjusted in situations where the agreed scope of work is exceeded or additional work is applied.

Up until the sale of Sport in Schools, sports activities revenue was recognised once performance obligations have been satisfied and work is completed with payment due in advance of the performance obligations. Under the Group's standard contract terms, customers may be offered refunds for cancellation of sports and leisure activities. It is considered highly probable that a significant reversal in the revenue recognised will not occur given the consistent low level of refunds in prior years.

2.5. Going concern

The preparation of financial statements requires an assessment on the validity of the going concern assumption. The Directors have reviewed projections for a period of at least 12 months from the date of approval of the financial statements as well as potential opportunities. Any potential short falls in funding have been identified and the steps to which Directors are able to mitigate such scenarios and/or defer or curtail discretionary expenditures should these be required have been considered. The directors have noted in their going concern assessment that the convertible loan notes provided to the Company are due for repayment on 30 September 2025 and the Company has forecast the receipt of a research and development refund in the coming months.

In approving the financial statements, the Board have recognised that there is a material uncertainty. This conclusion was reached after an in-depth review of the current sales position of the Group, as well as the uncertainty surrounding the forecasted sales pipeline of the Group. Therefore, operational results continue at a loss as the Group is not cash generative. The financial statements do not include any adjustments that may arise in the event of the Group not being a going concern. However, having made enquiries and considered the uncertainties outlined above, the Directors have a reasonable expectation that the Group will continue to be able to raise finance as required over this period to enable it to continue in operation and existence for the foreseeable future.  Accordingly, the Board believes it is appropriate to adopt the going concern basis in the preparation of the financial statements.

2.6. Foreign currencies

(a) Functional and presentation currency

Items included in the Financial Statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The functional currency of the UK parent entity and UK subsidiaries is Pounds Sterling, The Financial Statements are presented in Pounds Sterling which the Company's functional and Group's presentational currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

2.7. Intangible assets

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of subsidiary entities at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the statement of comprehensive income and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash generating units expected to benefit from synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, associate or jointly controlled entity, the amount of goodwill is included in the determination of the profit or loss on disposal.

Goodwill arising on acquisitions before the date of transition to IFRS's has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.

Development costs are expensed in arriving at the operating profit or loss for the year unless the Directors are satisfied as to the technical, commercial and financial viability of individual project. In this situation, the expenditure is recognised as an asset and is reviewed for impairment on an annual basis. Amortisation is provided on all development costs to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates:

Technology assets - 7 years straight line

Development costs - 7 years straight line

Customer relationships - 13 years straight line

Databases - 7 years straight line

2.8. Investments in subsidiaries

Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.

2.9. Property, plant and equipment

Property, Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates:

Plant and Equipment - 25% and 10% straight line

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. If an impairment review is conducted following an indicator of impairment, assets which are not able to be assessed for impairment individually are assessed in combination with other assets within a cash generating unit.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other (losses)/gains' in the Income Statement.

 

2.10.      Impairment of non-financial assets

Assets that have an indefinite useful life, for example, intangible assets not ready to use, and goodwill, are not subject to amortisation and are tested annually for impairment. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.11.       Financial Instruments

Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset and the net amount reported in the consolidated statement of financial position and income statement when there is a currently enforceable legal right to offset the recognized amounts and the Group intends to settle on a net basis or realise the asset and liability simultaneously. 

 

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

 

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company's business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

Financial assets

All Group's recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

 

Classification of financial assets

Financial assets that meet the following conditions are measured subsequently at amortised cost using the effective interest rate method:

 

•    the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

•    the contractual terms of the financial asset give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding.

The Company classifies the following financial assets at fair value through profit or loss (FVPL):

 

•    debt instruments that do not qualify for measurement at either amortised cost (see above) or FVOCI;

•    equity investments that are held for trading; and 

•    equity investments for which the entity has not elected to recognised fair value gains and losses through OCI.

The Group does not hold any financial assets that meet conditions for subsequent recognition at fair value through other comprehensive income ("FVTOCI").

Impairment of financial assets

The Group recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise  the financial asset and also recognises a collateralised borrowing for the proceeds received. 

 

Financial liabilities

The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics. All purchases of financial liabilities are recorded on trade date, being the date on which the Group becomes party to the contractual requirements of the financial liability. Unless otherwise indicated the carrying amounts of the Group's financial liabilities approximate to their fair values.

 

The Group's financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at fair value through profit or loss.

 

Financial liabilities measured subsequently at amortised cost

Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method. The Group's financial liabilities measured at amortised cost comprise convertible loan notes, trade and other payables, and accruals.

 

The effective interest method is a method of calculating the amortised cost of a financial asset/liability and of allocating interest income/expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts/payments through the expected life of the financial asset/liability or, where appropriate, a shorter period.

Convertible loan notes

On issue of a convertible loan, the fair value of the liability component is determined by discounting the contractual future cash flows using a market rate for a non-convertible instrument with similar terms. This value is carried as a liability on the amortised cost basis unless is designated as a Fair Value Through Profit and Loss ("FVTPL") at inception. 

 

Financial instruments designated as FVTPL are classified in this category irrevocably at inception and are derecognised when extinguished. They are initially measured at fair value and transaction costs directly attributable to their acquisition are recognised immediately in profit or loss. Subsequent changes in fair values are recognised in the income statement with profit or loss. 

 

Equity instruments are instruments that evidence a residual interest in the assets of an entity after deducting all of its liabilities. Therefore, when the initial carrying amount of a compound financial instrument is allocated to its equity and liability components, the equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. The value of any derivative features (such as a call option) embedded in the compound financial instrument other than the equity component (such as an equity conversion option) is included in the liability component.

 

Derecognition of financial liabilities

A financial liability (in whole or in part) is recognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the income statement.

 

2.12.       Leases

The Group leases certain property, plant and equipment.

The lease liability is initially measured at the present value of the lease payments that are not paid. Lease payments generally include fixed payments less any lease incentives receivable. The lease liability is discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. The Group estimates the incremental borrowing rate based on the lease term, collateral assumptions, and the economic environment in which the lease is denominated. The lease liability is subsequently measured at amortized cost using the effective interest method. The lease liability is remeasured when the expected lease payments change as a result of new assessments of contractual options and residual value guarantees.

The right-of-use asset is recognised at the present value of the liability at the commencement date of the lease less any incentives received from the lessor. Added to the right-of-use asset are initial direct costs, payments made before the commencement date, and estimated restoration costs. The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in lease liabilities, split between current and non-current depending on when the liabilities are due. The interest element of the finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Assets obtained under finance leases are depreciated over their useful lives. The lease liabilities are shown in Note 19.

Exemptions are applied for short life leases and low value assets, with payment made under operating leases charged to the Consolidated Statement of Comprehensive Income on a straight-line basis of the period of the lease.

2.13.       Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand.

 

2.14.       Equity

Equity comprises the following:

·      "Share capital" represents the nominal value of the Ordinary shares;

·      "Share Premium" represents consideration less nominal value of issued shares and costs directly attributable to the issue of new shares;

·      "Treasury shares" are the portion of shares that a company keeps in its own treasury. These can be gifted or purchased.

·      "Other reserves" represents the merger reserve, revaluation reserve and share option reserve where;

o  "Merger reserve" represents the difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange;

o  "Share option reserve" represents share options awarded by the group;

·      "Retained earnings" represents retained losses.

 

2.15.       Share capital and share premium

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available.

2.16.       Share based payments

The Group operates a number of equity-settled, share-based schemes, under which the Group receives services from employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third party suppliers' services received in exchange for the grant of the options is recognised as an expense in the Income Statement or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Income Statement and its value is determined by reference to the fair value of the options granted:

 

·      including any market performance conditions;

·      excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and

·      including the impact of any non-vesting conditions (for example, the requirement for employees to save).

 

The fair value of the share options and warrants are determined using the Black Scholes valuation model.

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.

When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.

2.17.       Taxation

Corporation tax is the main tax that a limited company must pay based on their profits, in addition to any gains from the sale of assets. For the year ended 31 March 2024, corporation tax is calculated as 25% of a company's profit for the year. No current tax is yet payable in view of the losses to date.

Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets and liabilities are not discounted.

2.18.       Discontinued operations

Discontinued operations define the parts of a Group Company that are sold, shut down, or no longer operational during the financial year of the Group. The financial performance of discontinued operations is presented separately to the Group in the consolidated statement of income, and the statement of cash flows.

2.19.       Research and development

Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised in the income statement as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique products controlled by the Group are recognised as intangible assets where the following criteria are met:

-  It is technically feasible to complete the asset so that it will be available for use;

-  Management intends to complete the asset and use or sell it;

-  There is an ability to use or sell the asset;

-  It can be demonstrated how the asset will generate probable future economic benefits;

-  Adequate technical, financial and other resources to complete the development and to use or sell the asset are available; and

-  The expenditure attributable to the asset during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the asset include the product development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

3.   Financial risk management

 

3.1. Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. None of these risks are hedged.

Risk management is carried out by the management team under policies approved by the Board of Directors.

Market risk

The Group is exposed to market risk, primarily relating to interest rate and foreign exchange. The Group has not sensitised the figures for fluctuations in interest rates and foreign exchange as the Directors are of the opinion that these fluctuations would not have a significant impact on the Financial Statements at the present time. The Directors will continue to assess the effect of movements in market risks on the Group's financial operations and initiate suitable risk management measures where necessary.

Credit risk

Credit risk arises from cash and cash equivalents as well as loans to subsidiaries and outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.

The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.

Impairment provisions for loans to subsidiaries are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. At year end it was assessed credit risk was low due to future profits forecast therefore no provision was required.

For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. At year end all receivables were less than 60 day outstanding and deemed highly likely to be received therefore no provision was required.

Liquidity risk

In keeping with similar sized groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed. With exception to deferred taxation, financial liabilities are all due within one year.

3.2. Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, to enable the Group to continue its activities, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts.

The Group defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future activities and may issue new shares in order to raise further funds from time to time.

 

4.   Critical accounting estimates and judgements

The preparation of the Financial Statements in conformity with the requirements of the Companies Act 2006 obliges management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the period.

Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Items subject to such estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, include but are not limited to:

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill is the deemed cost on first time application of UK Adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006.

Details of the carrying value of goodwill at the period end and the impairment review assessment are given in Note 14.

Impairment of intangible assets

The Company follows the guidance of IAS 36 to determine when impairment indicators exist for its intangible assets. When impairment indicators exist, the Company is required to make a formal estimate of the recoverable amount of its intangible assets. This determination requires significant judgement. In making this judgement, management evaluates external and internal factors, such as significant adverse changes in the technological market, economic or legal environment in which the Company operates as well as the results of its ongoing development programs. Management also considers the carrying amount of the Company's net assets in relation to its market capitalisation as a key indicator. For the year ended 31 March 2024, future sales forecasts related to the intangible assets of the Company were taken into consideration when finalising the impairment value.  Further details of the impairment of intangible assets are included in note 14.

Capitalised development costs

Development costs incurred in building the Group's key platform for future expansion have been capitalised in accordance with the requirements of IAS38. The majority of these costs consist of salary expenses to which an estimated proportion of development time has been applied. Salary expenses are capitalised because the work done is expected to lead to future economic benefits for the Group. The proportion of salary expenses that are capitalised is based on the judgement of management, taking IAS38 into account after reviewing how much each employee contributes to the Company's development projects respectively.

Investment in Subsidiaries

The Company considers the recoverability of the investment in subsidiaries to be a key area of judgment, and this is held at its carrying amount which is expected to be recovered from the subsidiary. The directors believe that the investment in subsidiaries balance at year end is recoverable based on the directors' expectation around the potential that the subsidiaries have to generate sufficient economic benefits in the foreseeable future.

The investment in subsidiaries includes loans as detailed in note 15. The loans are considered recoverable by management, and the investments made have been impaired in line with their level of recoverability.

Subsidiary investments are also reviewed to decide on whether impairments will be required, based on the valuation of the subsidiary's assets. Such impairments that occurred during the year are detailed in note 15.

Going Concern

As discussed more fully in the in the Strategic Report, these financial statements have been prepared on the going concern basis. This approach is based on management's judgement that cashflow requirements for the continued development can be achieved through operating activities and additional fundraising if required.

5.   Segment information

Business segments are identified according to the different trading activities in the Group.

During the year, the Group's trading segments were machine learning and data services representing revenue of £369,860 (2023: £693,734) and its sports and leisure activities, comprising sports tuition at schools representing its revenue of £928,807 (31 March 2023: £1,398,427 ). All revenue was generated in the UK. The sport and leisure activities were discontinued during the year as a result of the subsidiaries that provided this service being disposed in November 2023. Consequentially, the revenue recognised from the sport and leisure activities is representative of the period April to November 2023.

31 March 2024		Machine learning and Data services £	Sport in Schools £	Total £
Revenue		369,860	928,807	1,298,667
Cost of sales		-	(498,890)	(498,890)
Administrative expenses		(2,562,208)	(374,496)	(2,936,704)
Other gains/(losses)		(102,965)	164,093	61,128
Other income		3,160	384	3,544
Finance income		263	822	1,085
Finance costs		(126,390)	(4,156)	(130,546)
Impairments		(15,317,338)	-	(15,317,338)
Profit/(Loss) before tax per reportable segment		(17,735,618)	216,564	(17,519,054)
Additions to intangible assets		1,020,516	-	1,020,516
Reportable segment assets		4,552,239	-	4,552,239
Reportable segment liabilities		2,983,562	-	2,983,562

 

 

31 March 2023		Machine learning and Data services £	Sport in Schools £	Total £
Revenue		693,734	1,398,427	2,092,161
Cost of sales		(51)	(732,915)	(732,966)
Administrative expenses		(5,484,356)	(640,413)	(6,124,769)
Other gains/(losses)		(15,796)	(7,572)	(23,368)
Other income		1,291,873	444	1,292,317
Finance income		101	-	101
Finance costs		(81,518)	-	(81,518)
Impairments		(16,558,296)	-	(16,558,296)
Profit/(Loss) before tax per reportable segment		(20,154,309)	17,971	(20,136,338)
Additions to intangible assets		1,456,436	-	1,456,436
Reportable segment assets		20,809,036	566,580	21,375,616
Reportable segment liabilities		5,544,528	263,518	5,808,046

6.   Revenue

31 March 2024		Machine learning and Data services £	Sport in Schools £	Total £
Revenue		369,860	928,807	1,298,667

 

31 March 2023		Machine learning and Data services £	Sport in Schools £	Total £
Revenue		693,734	1,398,427	2,092,161

 

Lodbrok Capital LLP were the only customer that accounted for over 10% of the Group's revenue for the year, contributing £179,675 (2023: Lodbrok Capital LLP - £334,657).