REG-Acuity RM Group Plc: Annual Financial Report
13/06/2024 07:45
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
13 June 2024
ACUITY RM GROUP PLC
("Group" or the "Company")
Final results for the year ended 31 December 2023
Acuity RM Group plc (AIM: ACRM) is pleased to announce its final results for
the year ended 31 December 2023
Highlights
* In the year the Company acquired the remaining shares in Acuity Risk
Management Limited (“Acuity”) that it did not already own
* Acuity is the award winning risk management cybersecurity software company
that owns the STREAM® brand with applications in the growing GRC sector
* Post acquisition the focus has been to increase the pace of expansion of
Acuity – the success of which has been evidenced by strengthening Key
Performance Indicators (KPIs) as follows: * Sales pipeline has grown to £7.9m
(£4.2m 2023) 88% growth
* Orders won at annual contract value £1.6m (£1.1m 2023) 45% growth
* Forward contracted revenues £2.9m (£2.2m 2023) 34% growth
* Two largest contracts won
* Developing Partner programme with 15 active partners to accelerate growth in
the US and other key markets
* Recruitment to strengthen Acuity’s management team to enable fast growth *
Finance and Technical directors
* Sales and marketing executives
* On 12 June 2024 the Group had Cash balances of £787,110 and current debtors
£353,845
Angus Forrest, Chief Executive commented on the results:
“This was a year of transformation for the Company. It acquired, Acuity, a
software company which it knows and understands, having been an investor for
the past two and a half years, during which it has grown consistently. We
believe there are opportunities to accelerate that growth, the value of the
business and shareholder value. Since acquisition this has been evidenced by
the KPIs shown above.”
For further information:
Acuity RM Group plc 020 3582 0566
Angus Forrest, Executive Chairman www.acuityrmgroup.com
WH Ireland (NOMAD & Joint Broker) https://www.whirelandplc.com/capital-markets
Mike Coe / Sarah Mather 020 7220 1666
Peterhouse Capital Limited (Joint Broker)
Lucy Williams / Duncan Vasey 020 7469 0936
Clear Capital Markets Limited (Joint Broker) 020 3869 6080
Bob Roberts
Chairman’s Statement
I am pleased to present the results of Acuity RM Group plc (“Company” or
“Group”) for the period ended 31 December 2023.
2023 was a year of significant change for the Group in which it acquired the
remaining shares in Acuity Risk Management Limited (Acuity RM), which it did
not already own (previously a 25% shareholding). As a result of this
transaction, the Group’s status changed from an investing to a trading
company which should offer benefits for Acuity RM’s trading:
* the higher profile of a public company and as a plc similar to the majority
of its customers; and
* easier access to finance and at a lower cost, as well as the opportunity to
use its shares as a currency;
and for the Group’s shareholders:
* trading companies are usually valued on a more attractive basis, a multiple
of trading metrics, than investing companies whose valuation typically is a
discount to net asset value.
A transaction such as the acquisition of Acuity RM takes up much management
time and attention so is disruptive to the underlying business. I would like
to thank Simon Marvell and Richard Mayall, founders and senior directors of
Acuity RM, for their support.
In the second half of the year new management appointments were made to
strengthen the team and provide additional resource to grow the business.
Acuity RM won its two largest contracts ever and made significant progress in
putting in the infrastructure to facilitate further and faster growth. This
will require further investment in 2024 and 2025 to enable it to increase
customer numbers and average order value which, in turn, should be reflected
in a higher valuation for the business. More detail about Acuity RM and its
progress are included in the Chief Executive’s report.
The Group’s results for the year ended 31 December 2023 reflect the
acquisition of the share capital in Acuity RM not already owned by the
Group. In 2022, the 25% stake in Acuity RM was shown as an investment, and
for the year ended 2023 the results of Acuity RM have been consolidated from
the date of acquisition, 25 April 2023.
Board changes
There have been several Board changes during the year. Simon Marvell who
co-founded Acuity RM, joined the Group Board on the acquisition of Acuity RM
and then retired on 27 June and resigned as a director. The Board would like
to acknowledge his contribution to Acuity RM over many years. Even though
Simon is now no longer involved in the day to day running of Acuity RM, he has
remained as a consultant and non-executive board member of Acuity RM, so it
continues to benefit from his knowledge and years of experience. Simon
Bennett, who served as a director over three years, retired having overseen
the acquisition and the Company’s change from an investing to a trading
company. The Board would like to thank Simon Marvell and Simon Bennett for
their contributions and wishes them well for the future.
Kerry Chambers who had been Commercial Director of Acuity RM for two years
stepped up to become Chief Executive of Acuity RM and a Group Board director
on 3 July.
Outlook
Acuity RM operates in a large, high growth market with customers in the UK,
North America and Germany as well as other territories and is successfully
winning new contracts with key customers and forging relationships with
partners to accelerate future growth. I would like to thank all shareholders
for their continuing support and our advisers who made significant
contributions to the major achievements in the year. I look forward to
reporting further progress over the coming months.
Shareholders can stay informed by visiting the Group website
www.Acuityrmgroup.com .
Chief Executive’s Report
Overview
I am delighted to report on Acuity RM’s performance for the period ended 31
December 2023, following its acquisition by Acuity RM Group plc. The names
of both companies are now aligned with the underlying business. Reflecting
on our achievements since assuming the role of CEO, Acuity RM, in July 2023, I
am immensely proud of the strategic investments we have made to position our
company for sustainable growth and success.
We are excited about the potential for growth in global markets. We already
have proven success with high-profile private and public sector clients
worldwide in highly regulated and targeted industries and are well positioned
to expand on this.
Operating review
Acuity offers an award-winning risk management software platform called
STREAM® used for enterprise risk and assurance management. Organisations use
it to identify and manage key risks while ensuring compliance with
regulations, standards, and contracts. STREAM® is configured to manage
certain risks, it collates and analyses all data relating to each risk in real
time and provides alerts and alarms for managers to take action when
performance deviates from acceptable standards. Implementing STREAM® is
quick and easy, with either preconfigured set-ups or custom set up. It enables
strategic decision-making, prioritisation of resources and justification of
expenditure. Acuity has proven success supporting customers worldwide in
highly regulated industries.
The platform is sold in the Governance, Risk, and Compliance (GRC) market,
where it ranks among the top GRC products in Gartner's Peer Insights. It
scores highly in all categories and has 100% of peers recommending it. The GRC
market was worth $14.9bn in 2022 (MarketsandMarkets) and is growing strongly.
It is driven by legislation, regulation and best practice.
In the second half of 2023 having identified the key areas for change and
investment essential to improve our performance, maintain our technical
prowess and grow our customers, orders and revenues, I initiated several
changes including:
Technical – recruitment of a new Chief Technology Officer (CTO) who has
reviewed our IT technologies and is preparing for a comprehensive software
re-write to add new features and improve efficiencies whilst ensuring that the
STREAM platform remains at the forefront of GRC technology and maintains the
platform’s functionality and configurability.
Sales and Marketing – there has been a recruitment campaign to increase
internal sales and marketing capability as well as supporting and intensifying
our partner programme, a cornerstone of our growth strategy. The focus is on
growth: (1) upsell to existing customers, (2) new customers and higher value
per contract. I am pleased to report that Acuity RM won its two largest
orders in 2023 each valued at c. £500,000.
I believe these actions represent an important investment in our future,
positioning us to capitalise on emerging opportunities and navigate evolving
market dynamics.
Whilst we continue to demonstrate growth, revenues increased by 14% during the
period 1 April 2023 to 31 December 2023 (on an annualised basis compared to
the 12 months ended March 2023, Acuity RM’s previous financial year end).
I am delighted that the following Alternate Performance Indicators (APIs) for
future performance demonstrate increasing strength:
% increase 31 December 2023 31 March 2023
£’000 £’000
Forward contracted revenue 1 32% 2,900 2,200
Orders won at annual contract value 2 45% 1,600 1,100
Sales pipeline at annual contract value 3 88% 7,900 4,200
The change of year end in order to make both companies’ years co-terminus
resulted in a nine month period for Acuity RM.
1 Forward contracted revenue is deferred income per the balance sheet and
forward contracted revenue. Forward contracted revenue is not an IFRS measure.
2 Comparing the nine month period ended December 2023 with the same period
in 2022. Orders at annual contract value is not an IFRS measure but is the
basis for sales revenue.
3 Sales leads are included in the sales pipeline using an industry standard
sales qualification methodology. Sales pipeline is not an IFRS measure
We remain committed to innovation, growth, and delivering value to all our
stakeholders. We are confident in our ability to seize opportunities,
overcome challenges and drive sustainable growth.
I would like to welcome the employees who joined us during the year and
acknowledge the contribution of every employee and others who we work with.
Information about the trading business and STREAM® is available on the Acuity
RM website www.acuityrm.com .
Group statement of comprehensive income
for the year ended 31 December 2023
Notes Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000
Continuing operations
Revenue 1 1,366 60
Cost of sales (112) -
Gross profit 1,254 60
Administrative expenses 2 & 3 (2,167) (316)
Operating (loss) (913) (256)
Finance Income Finance Expense Loss on Investments Exceptional costs Share based payment expense 4 4 5 6 21 1 (20) (66) (282) (61) - - (85) -
Loss for the period before taxation (1,341) (341)
Taxation 8 — -
Loss for the year from continuing operations (1,341) (341)
Other comprehensive income
Total comprehensive income for the year attributable to shareholders of the parent company (1,341) (341)
Earnings per share
Basic and diluted earnings per share from total and continuing operations 9 (1.39)p (0.81)p
The accompanying accounting policies and notes form an integral part of these
consolidated financial statements.
Group statement of financial position
as at 31 December 2023
Notes As at 31 December 2023 £’000 As at 31 December 2022 £’000
Non-current Assets
Intangible assets Tangible assets Goodwill 10 10 11 233 8 5,154 - - -
Investments at fair value through profit or loss 12 244 930
5,639 930
Current assets
Trade and other receivables 14 1,255 122
Cash and cash equivalents 100 222
1,355 344
Total assets 6,994 1,274
LIABILITIES
Current liabilities Trade & other payables Deferred Income Loans & borrowings 16 17 17 557 1,016 165 47 - -
Tota Current liabilities 1,738 47
Long term liabilities Deferred Income Loans & borrowings 18 18 1,014 154 - -
Total long term liabilities 1,168 -
Total Liabilities 2,906 47
Net Assets 4,088 1,227
EQUITY
Share capital 19 2,767 2,688
Share premium 12,447 8,385
Share based payment reserve 21 112 51
Merger reserve 1,012 1,012
Retained earnings (12,250) (10,909)
Total Equity 4,088 1,227
The consolidated financial statements were approved by the Board of Directors
and authorised for issue on 12 June 2024.
Group statement of changes in equity
for the period ended 31 December 2023
Share capital £’000 Share premium £’000 Share based payment Reserve £’000 Merger reserve £’000 Retained earnings £’000 Total equity £’000
Balance at 1 January 2022 2,688 8,385 30 1,012 (10,568) 1,547
Loss for the year - - - - (341) (341)
Total comprehensive expense for the year - - - - (341) (341)
Transactions with owners in own capacity
Issue of share options - - 21 - - 21
Balance at 31 December 2022 2,688 8,385 51 1,012 (10,909) 1,227
Balance at 1 January 2023 2,688 8,385 51 1,012 (10,909) 1,227
Loss for the year - - - - (1,341) (1,341)
Other comprehensive income – issue of share warrants. - - 61 - - 61
Total comprehensive expense for the year - - 61 - (1,341) (1,280)
Transactions with owners in own capacity
Ordinary Shares issued in the period 78 4,375 - - - 4,453
Issue Shares for adviser fees 1 130 - - - 131
Share issue costs - (443) - - - (443)
Transactions with owners in own capacity 79 4,062 - - - 4,141
Balance at 31 December 2023 2,767 12,447 112 1,012 (12,250) 4,088
Group statement of cash flows
for the period ended 31 December 2023
As at 31 December 2023 £’000 As at 31 December 2022 £’000
Cash flows from operating activities
Loss before taxation (1,341) (341)
Adjustments for:
Depreciation & Amortisation 137 -
Fair value adjustment for listed investments 61 85
Share based payments 61 21
(Increase) in trade and other receivables (823) (99)
Increase/(Decrease) in trade and other payables 898 (5)
Net cash outflow/inflow from operating activities (1,007) (339)
Cash flows from investing activities
Purchase of tangible fixed assets (3) -
Purchase of investments in subsidiaries, net of cash acquired (500) -
Cash acquired on acquisition 331
Net Cash flows used in investing activities (172) -
Cash flows from financing activities
Cash raised through issue of shares (net of transaction costs) 1,057 -
Net cash flow from financing activity 1.057 -
Net (decrease) in cash and cash equivalents (122) (339)
Cash and cash equivalents at the beginning of the period 222 561
Cash and cash equivalents at end of the year 100 222
During the year there were the following material non-cash transactions:
- On 25 April 2023 the Company issued 45,709,570 ordinary
0.1p shares to the shareholders of Acuity RM as part of the consideration for
the acquisition.
- On 25 April 2023 and 9 October 2023, the Company issued in
total 1,642,539 ordinary 0.1p shares to the advisers as part payment for fees.
The accompanying accounting policies and notes form an integral part of these
consolidated financial statements.
The accompanying accounting policies and notes form an integral part of these
consolidated financial statements.
Notes to the Financial Statements
for the year ended 31 December 2023
1. Revenue and segmental analysis
The following is an analysis of the Group’s revenue for the year from
continuing operations:
Year ended 31 December 2023 £’000 Year ended 31 December 2023 £’000
Fees and Income from investee companies 15 60
Provision of software licences and Services consisting of: 1 1,351 -
revenue from subscriptions 1,114
revenue from services 237
The geographical analysis of revenue is as follows:
United Kingdom 832 -
Europe 220 -
USA 165 -
South Africa 52 -
Canada 37 -
Rest of World 45 -
1,351 -
1 Revenue from the subsidiary is included from acquisition date, 25 April
2023.
1. Administrative expenses
Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000
Expenses by nature
Staff and related costs 1,286 149
Professional fees 207 100
Office related costs 104 15
Depreciation 5 -
Amortisation 133 -
Software services 88 -
Other expenses 344 52
Total 2,167 316
1. Staff Costs
Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000
Staff costs – including directors
Wages and salaries 1,092 144
National insurance 127 5
Other pension costs 40 -
Other staff related costs 27 -
1,286 149
Year ended 31 December 2023 Year ended 31 December 2022
No. of employees No. of employees
The average number of employees (including Directors) of the Group was: 23 5
Further details of individual Directors’ remuneration, pension fund and
interests in the Company are shown in the table on page 17.
1. Finance Costs
Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000
Finance Costs
Interest on bank deposits (1) -
Bank Interest payable 8 -
Other interest payable 12 -
19 -
1. Gain/Loss on remeasurement of financial assets and liabilities
Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000
Loss on remeasurement of CBIL Loan 5 -
Loss on revaluation of investment in KCR Residential REIT plc 61 85
66 85
1. Exceptional costs
Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000
Legal fees related to the acquisition of Acuity RM 149 -
Other 133 -
282 -
1. Auditors’ remuneration
Year ended 31 December 2023 £’00 0 Year ended 31 December 2022 £’000
Auditor’s remuneration 57 22
Transaction services in respect of the re-admission to AIM 100 -
157 22
1. Corporation tax
There is no tax charge or credit for the current year. The tax assessed for
the prior year is higher than the standard rate of corporation tax in the UK
of 23.5% (2022: 19%). The differences are explained as follows:
Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000
Loss on ordinary activities before taxation (1,341) (341)
Loss on ordinary activities multiplied by standard rate of UK corporation tax of 23.5% (2022: 19%) (315) (65)
Effect of:
Disallowable items 62 20
Addition / (utilisation) of tax losses arising 253 45
Total tax charge/(credit) - -
The Group has unrecognised deferred tax assets of £1,757,000 (2022:
£1,504,000) as a result of losses in the current year and prior periods
carried forward of £8,990,000 (2021: £8,013,000).
1. Earnings per ordinary share
The calculation of basic and diluted earnings per share is calculated by
dividing the profit or loss for the year by the weighted average number of
ordinary shares in issue during the year.
Year ended 31 December 2023 Year ended 31 December 2022
Loss attributable to equity shareholders (£’000) (1,341) (341)
Weighted number of ordinary shares in issue 96,242,220 41,982,024
Loss per ordinary share 1 (1.39)p (0.81)p
1 The 2022 loss per ordinary share is based on the post consolidation number
of shares in issue. See note 18 for details.
Diluted earnings per share has been calculated as the Group’s average share
price during the period is above the exercise price of one tranche of share
options. However, as the options were exercisable from 25 November 2020 and
using the treasury method to calculate diluted EPS, the impact was negligible
and diluted earnings per share is equal to basic earnings per share.
For the remaining share options and warrants, the Group’s average share
price during the period is lower than the exercise price of the share options
and warrants and therefore the effect of including the share options and
warrants is anti-dilutive.
1. Tangible and intangible assets - Group
Group Tangible Assets £’000 Group Software development £’000 Group Customer contracts £’000 Group Website £’000 Group Total Intangible £’000
Cost or valuation
At date of acquisition 25 April 2023 30 670 227 37 934
Additions 3 0 0 0 0
C/F 31 December 2023 33 670 227 37 934
Accumulated depreciation
At date of acquisition 25 April 2023 20 331 208 29 568
Charge for year 5 106 19 8 133
C/F 31 December 2023 25 437 227 37 701
Net Book Value 31 December 2023 8 233 0 0 233
1. Goodwill
Group 31 December 2023 £’000 Group 31 December 2022 £’000
Goodwill arising on the acquisition of Acuity RM on 25 April 2023 5,154 -
The goodwill arises on the acquisition of Acuity RM in April 2023. The
goodwill has been tested for impairment using a discounted cashflow forecast
model. The model is for 5 years and uses a 10% growth rate on new sales and
upsell reducing to 5% in the last year. The growth rate used in costs varies
depending on the type of cost, with the biggest growth being employment costs
as these are the most significant. The pre tax weighted average cost of
capital used in the model was 5.07%. No impairment was deemed necessary at the
reporting date.
1. Investments held at Fair Value through Profit and Loss
Group Group Company Company
31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000
Cost of investments
B/F cost 2,330 2,330 2,330 2,330
Additions - -
Transfer to investment in subsidiaries 1 (625) (625)
C/F cost 1,705 2,330 1,705 2,330
Fair Value Movement
B/F fair value (1,400) (1,315) (1,400) (1,315)
Fair Value adjustment (61) (85) (61) (85)
C/F Fair Value movement (1,461) (1,400) (1,461) (1,400)
Fair Value of Investments 244 930 244 930
1 Acuity RM Group plc previously held a 25% stake in Acuity RM. On 25 April
2023 it acquired 100% of the ordinary share capital of Acuity RM. The
investment in Acuity RM has been transferred to an investment in subsidiary.
See note 13.
The Company acquired its legacy investment in KCR Residential REIT plc at a
price of £0.70 per share in 2018. KCR is an AIM listed real estate investment
trust focused on the residential property market. The investment was classed
as fair value through profit and loss in accordance with IFRS 9. The share
price at 31 December 2023 was £0.10 per share so the investment was valued
downwards at the year-end by £61,143 in accordance with IFRS 13. The closing
value at 31 December 2023 was £243,571. (31 December 2022: £304,714).
Fair value hierarchy
As KCR Residential REIT plc is an AIM listed company, it is measured under
level 1 of the fair value hierarchy in accordance with IFRS 13:
- Level 1: quoted prices in an active market for identical
assets or liabilities. The fair value of financial instruments traded in
active markets is based on quoted market prices at the balance sheet date. A
market is regarded as active if quoted prices are readily and regularly
available and those prices represent actual and regularly occurring market
transactions on an arm’s-length basis. The quoted market price used for
financial assets held by the Group is the closing price on the last day of the
financial year of the Group. These instruments are included in level 1 and
comprise FTSE and AIM-listed investments classified as held at fair value
through profit or loss.
All assets held at fair value through profit or loss were designated as such
upon initial recognition.
1. Investment in subsidiaries
At 31 December 2023 the Company held 100% of the ordinary share capital of the
following companies:
Company Company
31 December 2023 £’000 31 December 2022 £’000
Investment in Acuity RM
25% investment in Acuity RM 1 625 625
Remaining 75% stake in Acuity RM 2 3,585 -
C/F investment in Acuity RM 4,210 625
1 Prior to the acquisition of Acuity RM, the Company held a £625,000
investment in Acuity RM. This was shown as an investment at fair value through
profit or loss– see note 12
2 On the 25 April 2023 the Company completed the successful acquisition of
Acuity RM. The Company issued 45,709,570 ordinary shares and paid £500,000 in
cash to acquire the remaining share capital of Acuity RM and now holds 100% of
the share capital. Total value of consideration was £3.6m.
In addition, Acuity RM Group plc held 100% of the ordinary share capital of
World Life Sciences Ltd. It is a dormant company with a value of £nil and was
dissolved on 12 March 2024.
1. Trade and Other Receivables
Group Group Company Company
31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000
Trade Receivables 1,093 12 - 12
Prepayments and Accrued Income 150 110 16 110
Other Receivables 12 - - -
1,255 122 16 122
1. Inter-Group Receivable
Company Company
31 December 2023 £’000 31 December 2022 £’000
Inter-group loan - Acuity RM 1 392 -
1 The inter-group loan is repayable on demand
1. Trade and other payables
Group Group Company Company
31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000
Trade payables 115 2 52 2
Employment taxes and VAT 250 21 14 21
Accruals 182 24 38 24
Other payables 10 - - -
557 47 104 47
1. Other current liabilities
Group Group Company Company
31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000
Deferred Income 1,016 - - -
Bank Loans 1 68 - - -
Other loans 97 - - -
1,181
1. Other non-current liabilities
Group Group Company Company
31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000
Deferred Income 1,014 - - -
Bank Loans 1 154 - - -
1,168 - - -
1 The bank loan is a CBIL that was taken out in July 2021. The loan is
repayable over 6 years and is secured by a debenture. Under the terms of the
CBIL no interest was payable for the first 12 months, therefore the CBIL has
been fair valued through profit and loss. The fair value adjustment is
disclosed in note 5.
1. Share capital
Allotted, called up and fully paid
Number of ordinary shares of 0.1p each Year ended 31 December 2023 Year ended 31 December 2022
B/F 419,822,048 419,822,048
Consolidation and subdivision 1 (377,839,648) -
Shares issued during the year 2 45,709,570 -
Shares issued during the year 3 32,222,222 -
Shares issued during the year 4 1,642,539 -
C/f 121,556,731 419,822,048
1 On 24 April 2023 a resolution was approved by shareholders in a general
meeting whereby the ordinary shares were subject to a consolidation and
subdivision effectively reducing the number of shares and share options by a
factor of 10. At the same time the number of deferred shares increased by
377,839,648.
2 On 25 April 2023 the Company issued 45,709,570 ordinary 0.1p shares to the
shareholders of Acuity RM as part of the consideration for the acquisition.
3 On 25 April 2023 the Company issued 32,222,222 ordinary 0.1p shares to raise
capital including, inter alia, £500,000 to pay the shareholder of Acuity RM
as part of the consideration for the acquisition.
4 On 25 April 2023 and 9 October 2023 the Company issued in total 1,642,539
ordinary 0.1p shares to the advisers as part payment for fees.
Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000
Allotted, called up and fully paid
121,556,731 (2022: 419,822,048) ordinary shares of 0.1p each 121 420
2,645,954,765 (2022: 2,268,113,165) deferred shares of 0.1p each 2,646 2,268
2,767 2,688
1. Deferred shares
On 24 April 2023 at the General Meeting of the Ordinary Shareholders a
resolution to consolidate and subdivide the Ordinary shares was approved. The
effect of this was to reduce the number of Ordinary shares in issue on the
basis of 1 for 10 but the underlying assets remain at the same value so assets
per share increased tenfold; and to create additional Deferred Shares which
are effectively valueless.
The other rights of the deferred shares are:
• no right to any dividend;
• the right to receive notice of any general meeting and to attend such
meeting but no right to vote thereat.
1. Share options and warrants
The Group operates an unapproved share option scheme. Awards under each scheme
are made periodically to employees. The share options in this scheme vest
three years after the date of grant and have an exercise period of seven
years. The options may only be exercised by option holders while they are
still employees of the Group. If death in service occurs the options can be
exercised (to the extent that they have vested) by the option holder’s
personal representatives within 12 months from the date of death. If an option
holder ceases to be employed and the Directors deem the option holder to be a
‘Good Leaver’ the options can be exercised (to the extent that they have
vested) within six months from the date of cessation of employment.
A reconciliation of share option movements over the year ended 31 December
2023 is shown below:
Number
Outstanding at 31 December 2022 and 31 December 2023 1,500,000
At 31 December 2023 outstanding options granted over ordinary shares, adjusted
for the share reorganisation in April 23 were as follows:
Share option scheme Exercise price Number Date granted Dates Exercisable
Company unapproved 6.5p 1,100,000 15 July 2020 15 July 2023 to 14 July 2030
Company unapproved 5.5p 400,000 25 Nov 2020 25 Nov 2023 to 24 Nov 2030
Further details on the share options can be found in the Remuneration Report
on page 18.
The weighted average exercise price for the Group’s options are as follows:
Options outstanding at 31 December 2023: 6.2p
Options exercisable at 31 December 2023: 1,500,000
The weighted average remaining contractual life of the share options
outstanding at the end of the year is 6 years (2022: 7 years).
The Group has used the Black-Scholes formula to calculate the fair value of
outstanding share options. The assumptions applied to the Black-Scholes
formula for share options issued and the fair value per option are detailed in
the table below for options issued. The charge calculated up to 31 December
2023 is £nil (2022: £21,000). Volatility was calculated using historical
share price information for the six months prior to the date of grant.
Unapproved share options 2020 grant
Date of grant 15 July 2020
Expected life of options based on options exercised to date 3 years
Volatility of share price 87%
Dividend yield 0%
Risk free interest rate 0.01%
Share price at date of grant – adjusted for share reorganisation April 2023 6.5p
Exercise price – adjusted for share reorganisation April 2023 6.5p
Fair value per option – adjusted for share reorganisation April 2023 4.6p
Date of grant 25 Nov 2020
Expected life of options based on options exercised to date 3 years
Volatility of share price 96%
Dividend yield 0%
Risk free interest rate 0.01%
Share price at date of grant – adjusted for share reorganisation April 2023 4.8p
Exercise price – adjusted for share reorganisation April 2023 5.5p
Fair value per option – adjusted for share reorganisation April 2023 3.5p
Warrants
On 25 April, in connection with the acquisition of Acuity RM, the Company
issued certain advisers with warrants to subscribe for the number of shares
shown below at a price of 4.5 pence per share. The first date of exercise to
be 25 April 2024 and the warrants expire on 24 April 2026.
Share Warrant Holders Exercise price Number Date granted Dates Exercisable
Clear Capital Markets Ltd 4.5p 1,674,465 25 April 2023 25 April 2024 – 24 April 2026
Peterhouse Capital Ltd 4.5p 475,534 25 April 2023 25 April 2024 – 24 April 2026
Warrants exercisable at 31 December 2023: nil
The Group has used the Black-Scholes formula to calculate the fair value of
outstanding share options. The assumptions applied to the Black-Scholes
formula for share warrants issued and the fair value per warrant are detailed
in the table below for warrants issued. The charge calculated up to 31
December 2023 is £61,000 (2022: £nil).
Date of grant 25 April 2023
Expected life of the Warrants 3 years
Volatility of share price 60.2%
Dividend yield 0%
Risk free interest rate 3.67%
Share price at 31 December 2023 6.0p
Exercise price 4.5p
Fair value per option – adjusted for share reorganisation April 2023 3.1p
1. Pensions
The Group operates a defined contribution pension scheme for all qualifying
employees. The assets of the scheme are held separately from those of the
Group in an independently administered fund. Employer contributions for the
year were £39,999.
Contributions payable to the pension scheme are charged to the income
statement in the year to which they relate. The Group has no further payment
obligations once the contributions have been paid.
1. Transactions with related parties
Group and Company
The key management personnel of the Company are considered to be the
Directors.
Acuity RM Limited, a 100% owned subsidiary, was charged £45,000 for
management fees for the period ended 31 December 2023. (12 months ended March
2023: £60,000). At the end December 2023 Acuity RM owed £75,000 plus VAT for
unpaid management fees (March 2023: £25,000 plus VAT). These amounts form
part of the inter group balance between the Company and Acuity RM.
1. Business combinations
On the 25 April 2023 the Company completed the successful acquisition of
Acuity RM. The Company issued 45,709,570 ordinary shares and paid £500,000 in
cash to acquire the remaining share capital of Acuity RM and now holds 100% of
the share capital. Total value of consideration was £3.6m. Prior to the
acquisition of Acuity RM, the Company held a £625,000 investment in Acuity
RM.
Consideration £’000
B/f cost of 25% stake in Acuity Ltd acquired in 2020 625
Consideration to acquire remaining share capital of Acuity RM on 25 April 2023
Issue of ordinary shares 3,085
Cash consideration 500
Total consideration 4,210
Management have undertaken a purchase price allocation exercise to assess the
value of the net assets acquired on acquisition. Management have concluded
that the fair value of the net assets acquired is equal to the book value,
with the difference between the consideration paid and the nets assets being
allocated to goodwill – see below. The value of the goodwill represents
Acuity RM’s effective approach to risk assurance, their know how and
technical understanding of the market and deep customer relationships which
are all driven by a strong assembled workforce.
The goodwill has been tested for impairment at the reporting date as described
in note 11.
Recognised amounts of assets and liabilities acquired Book Value £’000 Fair Value Adjustments £'000 Total £’000
Goodwill 1,673 (1,673) -
Capitalised software 338 338
Other fixed assets 37 37
Trade and other receivables 310 310
Cash 331 331
Trade and other payables (327) (327)
Deferred Income (1,369) (1,369)
Borrowings (264) (264)
Total identifiable net assets 729 (1,673) (944)
Goodwill 5,154
Total consideration 4,210
Since 25 April 2023, Acuity RM has contributed a loss of £709,614 and revenue
of £1,351,185. Had Acuity RM been consolidated from 1 January 2023 it would
show an additional loss of £175,048 and revenue of £614,697.
1. Financial instruments and risk
profile
The Group’s and Company’s financial instruments comprises investment, cash
balances, debtors and creditors that arise directly from its operations and
derivative instruments. The Group and Company are exposed to risk through the
use of financial instruments and specifically to liquidity and market price
risk and foreign exchange rate risks, which result from the Group’s
operating activities.
The Board’s policy for managing these risks is summarised below.
Liquidity and market price risks
The Group currently has an investment in KCR Residential REIT plc. Although
this is a traded investment it has limited liquidity. The Group and Company
are exposed to market price risk as shown by movements in the value of its
equity investment. Any such risk is regularly monitored by the Directors.
Foreign exchange rate risks
Acuity RM trades overseas and invoices in the local currency in territories
with currencies traded in major markets, but in less developed areas it will
invoice in £ Sterling or other major currency as agreed with the customer.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s
ability to continue as a going concern in order to provide returns for
shareholders, benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. The Group monitors capital on
the basis of the carrying amount of equity, less cash and cash equivalents as
presented on the face of the Statement of financial position. The movement in
the capital to overall financing ratio is shown below:
Group Group Company Company
31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000
Equity 4,088 1,227 4,798 1,227
Less: cash and cash equivalents (100) (222) (40) (222)
Capital 3,988 1,005 4,758 1,005
Equity 4,088 1,227 4,798 1,227
Borrowings 319 - - -
Overall financing 4,407 1,227 4,798 1,227
Capital to overall financing 90.5% 81.9% 99.2% 81.9%
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
Credit risk
The Group’s exposure to credit risk is limited to the carrying amount of
financial assets recognised at the balance sheet date.
Group Group Company Company
31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000
Trade and other receivables 1,255 122 16 122
Cash and cash equivalents 100 222 40 222
Inter group loan - - 392 -
1,355 344 448 344
The Directors consider that all the above financial assets are of reasonable
quality. No amounts shown above are considered to be past their due date.
Summary of financial assets and liabilities by category
The carrying amount of financial assets and liabilities as recognised at the
balance sheet date of the reporting periods under review may also
be categorised as below:
Group Group Company Company
31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000
Current assets
Trade and other receivables 1,255 122 16 122
Cash and cash equivalents 100 222 40 222
Inter group loan - - 392
Financial assets at amortised cost 1,355 344 448 344
Financial assets at FVTPL 244 930 244 930
Current liabilities
Trade and other payables 557 47 - 47
Deferred income 1,016 - -
Loans 68 - -
Financial liabilities carried at amortised cost 1,641 47 - 47
Financial liabilities carried at FVTPL 97 - - -
Non current liabilities
Deferred Income 1,014 - - -
Financial liabilities carried at amortised cost 1,014 - - -
Financial liabilities carried at FVTPL 154 - - -
The financial instruments held at fair value through profit or loss have been
valued in accordance with IFRS 13. In the current year, these are determined
by reference to quoted prices where there is an active market for identical
assets or liabilities. Otherwise, the fair value is determined by using
valuation techniques such as earnings multiples. There is no material
difference between the carrying value and fair value of the Group’s
aggregate financial assets and liabilities.
Interest rate risk profile of financial liabilities
Group Group Company Company
31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000
Floating rate financial liabilities - - - -
Fixed rate financial liabilities 319 - - -
Financial liabilities on which no interest is paid 2,587 47 104 47
2,906 47 104 47
1. Subsidiary undertakings
At 31 December 2023 the Group held 100% of the equity of the following:
Company name Country of registration Principal activity Holding Class of shares
Acuity Risk Management Ltd England Software development 100% Ordinary
World Life Sciences Limited England Dormant 100% Ordinary
The registered address of the Acuity Risk Management Ltd is the same as that
of the parent company see note 27.
The registered address of World Life Sciences Limited is Burnham Yard, London
End, Beaconsfield, HP9 2JH. It is a company with no assets and was dissolved
in March 2024.
1. Company information
The Company is a Public Limited Company registered in England and Wales. The
registered office is 2nd Floor, 80 Cheapside, London EC2V 6EE.
1. Ultimate controlling party
The Directors believe that there is no overall controlling party of the
Company.
1. Events after the balance sheet date
There are no events after the reporting date to be disclosed.
1. Contingent Liabilities
There are no contingent liabilities to be disclosed.
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