REG - Skillcast Group PLC - Results for the 12 months ended 31 December 2023
25/04/2024 07:00
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RNS Number : 9381L Skillcast Group PLC 25 April 2024
The information contained within this announcement is deemed by the Company to
constitute inside information pursuant to Article 7 of EU Regulation 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 as amended.
25 April 2024
Skillcast Group PLC
("Skillcast", the "Group" or the "Company")
Results for the twelve months ended 31 December 2023
Skillcast (AIM: SKL), the provider of SaaS compliance platforms and
off-the-shelf e-learning, is pleased to announce its audited results for the
twelve months ended 31 December 2023.
Highlights
2023 2022 Change (2023 v 2022 )
Total Revenue £11.3m £9.8m +15%
Subscription revenue £8.6m £6.7m +28%
Gross margin (%) 69.7% 70.1% -0.4pps
Annualised recurring revenue (ARR)* £9.3m £6.8m +37%
Overheads £8.8m £7.4m +18%
(LBITDA)* -£0.6m -£0.3m n/a
Basic loss of earnings per share (pence) -0.733p -0.460p n/a
Total dividend per share (pence) 0.447p 0.447p -
Cash in bank £7.2m £7.7m -6%
Free cash flow ** -£0.1m £0.3m n/a
· Total revenues up 15% at £11.3 million (2022: £9.8 million)
o Revenue increase was driven by strong growth in recurring subscription
revenues, up 28% at £8.6 million (2022: £6.7 million)
o Annualised recurring revenue (ARR)* up 37% to £9.3 million (December
2022: £6.8 million) predominantly from new client acquisitions
o Recurring subscriptions contributed to 76% of total revenues (2022: 68%)
o Non-strategic professional services revenues declined 12% to £2.8 million
(2021: £3.1 million)
· Gross margin remained strong at 69.7% (2022: 70.1%)
· LBITDA of £0.6 million (2022: £0.3 million)
o Overhead investment rate slowed to increase on the prior year by £1.3
million (2022: £2.5 million).
o Headcount increased by 6% in the year to 118 (2022: 111)
o All research and development is expensed
· Strong net cash position at 31 December 2023: £7.2 million (31
December 2022 net cash: £7.7 million), representing c. 8 pence per ordinary
share in the Company
o Up-front payments on increased subscription revenues support losses
o Free cash flow** of -£0.1 million (2022: £0.3 million) despite LBITDA of
£0.6 million
· Basic LPS -0.733 pence per share (2022: LPS -0.460 pence)
· Total dividend of 0.447 pence per share (2022: 0.447 pence)
o Final dividend proposed: 0.279 pence
o Interim dividend paid: 0.168 pence
· Operational highlights
o Total client numbers grew to over 1,200
o Net retention of 105% supported by price rises and launch of new products
and reduced churn
o Launched Fast Track and new Global Compliance and microlearning Compliance
Bites course libraries
o Developed B2B e-commerce self-serve offer for small businesses
o Repositioned product offering into three levels: Basic, Standard and
Premium
o Recruited Head of Marketing to drive marketing activity
o Maintained excellent customer service records (Feefo Platinum Service
Award 4.9/5.0)
o ESG: retained our carbon-neutral position
Current trading and outlook
We have entered the new financial year in a good financial and operational
position. Our recent product enhancements and new go-to-market strategy have
increased enquiry levels from potential customers, which we are working to
convert into additional subscription revenues. Professional services activity
remains challenging due to on-going delays in corporate decision-making.
Since the period-end, the ARR from subscriptions has continued to increase on
the prior year. As of the end of Q1, our ARR was £10.0 million, up 36% from
twelve months ago (March 2023 ARR: £7.3 million). The Board remains confident
of meeting market expectations for the year ahead, of returning to
profitability, and of delivering on its longer-term strategic plan to achieve
its stated vision.
Vivek Dodd, Chief Executive Officer of Skillcast, said:
"Skillcast enables companies to digitise and automate their compliance
processes. We are the leading innovators in our sector and are passionate
about helping our clients engage their staff on compliance issues, make
data-driven decisions and reduce the cost of complying with regulations.
"We are delighted with our SaaS subscriptions ARR growth rate accelerating
from 16% in 2022 to 37% in 2023 and the consequent 28% growth in our
subscription revenue in 2023.
"This performance is underpinned by our improvements across our content and
technology product range, scalable technology infrastructure, and highly
responsive customer service, which received a Platinum Service Award based on
customer ratings for the fourth consecutive year.
"Trading in 2024 has started well and is in line with expectations. We expect
to maintain our growth with our compelling, risk-reducing SaaS solutions and
return to sustainable profits from the second half of the year."
*Further details on the calculation of adjusted EBITDA and ARR are set out in
the Financial Review below
Enquiries:
Skillcast Group plc +44 (0)20 7929 5000
Richard Amos, Chairman
Vivek Dodd, Chief Executive Officer
Richard Steele, Chief Financial Officer
Allenby Capital Limited (Nominated Adviser & Broker) +44 (0)20 3328 5656
James Reeve, Piers Shimwell (Corporate Finance)
Jos Pinnington, Tony Quirke (Sales and broking)
Chairman's Statement
Introduction
I am pleased to be reporting on another positive year of progress for
Skillcast. 2023 was an important year for us as we sought to generate
returns on the investments that we made in the prior year. We made good
progress in this regard over the last twelve months and are excited about
prospects for the future.
Results and Dividend
We achieved another strong set of financial results for the year ended 31
December 2023 with progress made on all the key financial metrics that we
target. Particularly important was that we returned to growth levels that
the business had historically achieved after the planned consolidation in the
prior year, as we invested to build a platform for growth. Revenue of £11.3
million was up 15% on the prior year (2022: £9.8 million) but within that the
strategically critical subscription-as-a-service (SaaS) revenue was up 28%.
Annualised Recurring Revenue ('ARR'), which is the key metric we track as a
guide for future prospects was up 37%. As anticipated, profitability has
been impacted by the full year impact of the headcount investment that we made
in the prior year. But the full year LBITDA of £0.6 million was all made in
the first half of the year, with the second half reporting a small positive
EBITDA as we started to see the returns on those investments. Our balance
sheet remains strong with £7.2 million of cash at the year end (31 December
2022: £7.7 million).
It is the Board's stated policy to maintain the full year dividend at least at
the recent historic level for the foreseeable future as we seek to return the
business to profitability. We see that as an important financial discipline
for a business with repeatable revenues that provide strong cash generation.
Accordingly, at the AGM on 25 June 2024, the Board will propose a final
dividend per share of 0.279p. Taken in combination with an interim dividend
per share of 0.168p that was paid in October 2023 this will retain the full
year dividend at £400,000 (2022: £400,000) with the full year dividend per
share unchanged at 0.447p (2022: 0.447p). The Board will review and consider
a progressive dividend policy when the Group has returned to profitability.
Strategy
Skillcast's overall strategy remains as set out when we came to the AIM market
in 2021. Our purpose is to enable companies to build ethical and resilient
workplaces and our vision is to be the leading provider of digital training
and technology for workplace compliance.
Companies face an ever increasing burden of compliance and at the same time
are facing a real need to find efficiencies in the current cost-pressured
environment. Vivek Dodd's CEO Review sets out how Skillcast is helping
companies meet these challenges and highlights some important enhancements
that we have made over the last twelve months to make our solutions easier for
customers to engage with and more compelling commercially.
Our primary strategic imperative remains on driving the organic growth of
repeatable subscription-based revenues through a focus on supporting existing
clients with a wider range of products and by acquiring similar new
customers. We primarily target new clients in regulated industries where the
burden of compliance is at its highest although our services are equally
applicable to all companies that have a need for efficient workplace
compliance solutions. And whilst we are equally able to support companies of
all sizes, our 'sweet spot' is medium sized enterprises for whom compliance
requirements are increasingly complex but who are not large enough to warrant
full bespoke solutions.
Our priorities going forward will primarily revolve around organic growth.
However, with under-utilised cash resources on our balance sheet and having
built the technology and people-related infrastructure of the business over
the last two years, we are now prepared to enhance that organic growth through
targeted bolt-on acquisitions. Appropriate targets are likely to be UK
focused and would bring additional content and customer relationships into our
existing capabilities. As well as offering an increment to our organic
growth plans, once integrated they would be expected to contribute organic
growth of their own.
People and Organisation
As planned, headcount growth in 2023 was much slower than it had been in the
prior year, and we now feel that we have the team in place to grow the
business significantly and to operate at that larger size. I would like to
take this opportunity to congratulate and thank our team for their hard-work
and success over the last year.
Isabel Napper, who has been an independent non-executive director since prior
to the IPO in 2021 and who was both instrumental in helping us through that
process and influential on the Board since, has decided that she will not
stand for re-election at the forthcoming AGM. I would like to thank her for
her counsel over the last three years. We are in an active process to
replace Isabel and anticipate making an announcement in due course.
Shareholder Engagement
I would like to thank investors for their support over the last twelve months.
The UK small cap market remains a challenging one for both companies and
investors. Skillcast has become a member of the Quoted Companies Alliance
and intends to work with them to lobby for the structural and regulatory
changes that are needed to restore efficiency to the market.
We have enjoyed meeting with investors over the last twelve months at both
formal meetings and various investor conferences and we welcome the
opportunity to speak with existing and prospective investors and look forward
to welcoming shareholders to our AGM on 25 June.
Current Trading and Outlook
.
We have entered the new financial year in a good financial and operational
position. Our recent product enhancements and new go-to-market strategy have
increased enquiry levels from potential customers, which we are working to
convert into additional subscription revenues. Professional services activity
remains challenging due to on-going delays in corporate decision-making.
Since the period-end, the ARR from subscriptions has continued to increase on
the prior year. As of the end of Q1, our ARR was £10.0 million, up 36% from
twelve months ago (March 2023 ARR: £7.3 million). The Board remains confident
of meeting market expectations for the year ahead, of returning to
profitability, and of delivering on its longer-term strategic plan to achieve
its stated vision.
Richard Amos
Non-Executive Chairman
24 April 2024
CEO's Review
I am pleased to present Skillcast's Annual Report for 2023. It's been over two
years since our IPO in December 2021 - and during this time we've completed a
disciplined programme of investment in our talent, product and marketing and
have achieved our revenue growth targets. Our ARR growth was up at 37% in 2023
and in H2 2023, our SaaS subscription revenues growing faster than our costs.
However, the financials only tell a part of our story. Even more encouraging
are the teams we've built at all levels, the robust procedures we've put in
place for performance, financial control and governance, and the product and
service improvements we've made for our customers. All of these should sustain
our growth in the future.
Purpose and vision
Skillcast exists to help companies build ethical and resilient workplaces with
our technology, content and service. We are a leading provider of compliance
portals and digital courseware in the UK. This gives us access to a growing
market with resilient demand. Our critical mass of clients gives us insights
into compliance challenges and emerging needs that feed into our product
development. Our experienced workforce and passion for customer service result
in long-lasting relationships with clients, enabling us to innovate and drive
down their compliance costs.
We have strengthened our organisational structure for growth with clear and
connected objectives and key results (OKRs). This framework was agreed at a
Company level following a Board strategy session and is broken down into
numerous smaller objectives across the organisation. Progress against the OKR
framework is monitored monthly.
We prioritise developing and promoting our existing talent to build knowledge
and experience within our organisation.
Our values and culture
We strive to achieve our purpose through embedding and living our four values
across the organisation:
Innovation: continually striving to make things better and making them happen
Customer Focus: delivering successful outcomes for our customers
Teamwork: sharing knowledge and building strong working relationships
Professionalism: taking pride in what we do, who we are and working towards
our aligned goals
On 1 January 2023 the Board appointed a Chief People Officer to the executive
management team to lead on the people and culture initiatives. All employees
are eligible to receive additional remuneration above their base pay linked to
their performance.
All employees use Skillcast's platform and tools to read and attest to
policies and receive compliance training.
During the year the following initiatives were undertaken to promote our
values and culture:
· Our executive management team held quarterly all-company virtual
meetings to cascade the business strategy and performance
· A regular in-house magazine was launched giving updates to everyone
on major commercial and product initiatives and people changes and events
· In December 2023 a staff survey was conducted to ascertain the key
people issues and concerns
· Inboarding and induction programme was put in place for new joiners
· A risk committee chaired by the CFO with representatives from every
function maintains the risk register. Awareness initiatives and training on
Cyber breaches tool place throughout the Company.
Business model
Skillcast offers innovative solutions to enable companies to digitise and
automate their compliance training, record-keeping, monitoring and other
processes. Digital compliance transformation aims to reduce operational costs
while enhancing employees' compliance experience. By consolidating these
functions onto a single platform, Skillcast streamlines operations and
minimises the risk of compliance oversights, ensuring a more efficient and
secure compliance framework for our clients.
We offer over 400 e-learning courses with comprehensive coverage of corporate
compliance. Our Essentials and Compliance Bites libraries cover all the key
topics for general compliance in the UK. Our FCA Compliance and Insurance
Compliance libraries cover all the key topics in the FCA Handbook for UK
financial services firms. Our Global Compliance and Global Risk libraries
cater to the needs of multinational corporations that need
jurisdiction-neutral, multilingual training. Our off-the-shelf courses can be
customised easily to meet every client's unique needs and risk perceptions.
Skillcast Portal is our technology platform, which features a Learning
Management System (LMS) and various tools designed to facilitate compliance
management. These tools include a Policy Hub for delivering corporate policies
and gathering employee attestations, Anonymous Surveys for honest employee
feedback, Staff Declarations for self-reported disclosures, Compliance
Registers for documenting various compliance-related activities such as gifts
& hospitality, and other features for managing and recording in-person
training and events. This integrated platform ensures a uniform user and
administrator experience, consolidates data by breaking down silos, and
reduces the risk of compliance failures.
We offer three product plan levels for our technology: Premium, Standard and
Basic. These plans are available through annual subscriptions, simplifying
procurement and allowing businesses to deploy training and compliance
resources on time and with minimal effort.
Skillcast Premium suits companies of all sizes that want a fully featured,
branded and managed platform to transform staff compliance. This plan includes
our widest set of features and brings these together under a single platform.
Skillcast Standard suits companies of all sizes that want to build their
compliance platform flexibly, with full corporate branding and managed
customer service. Most customers start this plan with one tool, such as our
LMS, and add individual tools as their needs grow.
Skillcast Basic suits small teams and companies of up to 50 users who want a
simple, self-service platform with readymade compliance e-learning. You can
set up all your employees with access to 80+ engaging compliance courses
within minutes. You can monitor all activity from your admin dashboard, and
users can download their completion certificates.
We further support our clients through dedicated Customer Success Managers
(CSM), ensuring a seamless and effective compliance management experience. Our
commitment to excellence is reflected in receiving the Feefo Platinum Trusted
Service Award for the sixth consecutive year in 2023, an accolade based on
genuine customer feedback and ratings.
High-quality revenues
Staff compliance is a non-discretionary cost for many companies, especially in
regulated sectors like financial services. This provides us with the potential
to grow in even stagnant economic environments.
Subscriptions to our content and technology are the key drivers in our growth
strategy. These subscriptions constitute a book of high-quality annual
recurring revenues (ARR) contracts, which grew organically at 37% to £9.3
million in December 2023 (2022 growth 16% to £6.8 million in December 2022).
In 2023, 76% (2022: 68%) of our revenues came from such subscriptions, with
the rest from professional services, which include bespoke e-learning
development and customisation of OTS courses and was slightly lower at £2.8
million (2022: £3.1 million). Nevertheless, we remain committed to our
professional services, which are critical for helping its clients make their
compliance messages more relevant and engaging for their staff.
Our total revenue increased by 15% to £11.3 million (2022: £9.8 million),
and an LBITDA loss of £0.6 million (2022: LBITDA of £0.3 million). After a
loss-making H1 2023 due to accelerated headcount investment in the prior year,
we reached breakeven in H2 2023 as our month-on-month revenue growth
outstripped the growth in our cost base.
We typically enter into annual contracts for our subscriptions and invoice
upfront. This gives us healthy cash flows from operations and high revenue
visibility over the coming twelve months. Our free cash flow was -£0.1
million (2022: +0.3 million) despite the LBITDA loss for the year.
Growth initiatives
Our key focus remains on organically growing subscription revenues, as
measured by the size of our ARR book. Over the last year, we accelerated its
growth rate from 16% to 37%. With such a large market we believe the main
route to this is through acquiring new customers. In addition, we aim to
increase net retention through upsells from continued product development and
minimal churn through maintaining excellent customer success. Although we
serve customers of all sizes and in all industry segments, most of this growth
came from the adoption of our Standard Plan by mid-sized companies. We see
this remaining as the mainstay of our growth in 2024.
In addition, we are working on several initiatives to increase our appeal to
the smallest and the largest companies. In late 2023, we launched our new
Skillcast Basic offering for small companies and teams with less than 50
employees, which form a sizable and underserved market segment. This new plan
is more affordable, easy to manage, and pre-customised for industry sectors, a
crucial requirement for smaller companies.
For larger companies, we will promote the concept of embedded compliance. This
involves embedding direct links to training and compliance controls in
business processes and communications, e.g. policy documents, emails and chat
messages. Consequently, employees can access these activities directly from
their business environment instead of going to a dedicated compliance portal
to find and complete them. A Gartner study found that embedded controls cut
staff compliance breaches by 58%.
Having completed our post-IPO investment plans for our operations, we are now
open to customer and business growth opportunities through partnerships and
acquisitions.
The key challenges to executing our strategy are outlined in the Risk section
of this report.
ESG
Environmental, Social, and Governance (ESG) lies at the heart of the services
we offer to our clients. Our mission is to foster inclusivity, sustainability,
integrity, and compliance with laws and regulations in the workplace. By
helping to digitise training and other processes, we further aid our clients
in minimising energy usage and reducing their carbon footprint. We are also
vigilant about our own environmental and social impact. Highlights of our
commitment include:
· Maintaining our Carbon Neutral certification through meticulous
emissions measurement and offsetting
· Completed company-wide carbon literacy training
· UK office energy confirmed as 100% renewable
· Withdrew employee car parking n Malta
· Upholding the principles of a Living Wage employer since 2019,
ensuring fair compensation beyond our direct employees, and
· Commitment to diversity, well-being and personal development in our
workplace.
We are committed to generating shareholder value while helping companies meet
their ESG goals and strengthening their employee compliance culture. We are
convinced that our innovative spirit, customer-centric approach, collaborative
effort and ambition are fundamental to realising this corporate vision.
Vivek Dodd
Chief Executive Officer
24 April 2024
Financial Review
Revenues for the year ended 31 December 2023 increased by 15% to £11.3
million (2022: £9.8 million), driven by new subscription customers, with ARR*
climbing 37% on the year to £9.3 million (2022: £6.8 million). As a
consequence of our planned investment programme, LBITDA was a loss of £0.6
million (2022: £0.3 million). Net cash at year-end of £7.2 million was 6%
below last year (2022: £7.7 million), with free cash flow of -£0.1 million
(2022: £0.3million).
Key Performance Indicators
Key performance indicators (KPIs) are tracked through monthly reviews against
targets approved by the Board.
2023 2022 % change
£'000 £'000
Revenue 11,302 9,830 +15%
Software-as-a-service revenue (SaaS revenue) 8,547 6,690 +28%
Gross Margin 69.7% 70.1% -0.4 pts
Overheads 8,759 7,442 +18%
(LBITDA)/EBITDA -625 -316 n/a
*Annual recurring (SaaS) revenue (ARR) as at 31 December 9,303 6,780 +37%
Churn (as a percentage of ARR) 7% 12% -5pts
Deferred revenue from subscriptions as at 31 December 4,276 3,213 +33%
Cash at 31 December 7,221 7,704 -6%
Free cash flow ** -82 271 n/a
Number of employees at 31 December 118 111 +6%
* defined later in the financial report in Alternative Performance Measures
section
Revenue
Total revenues of £11.3 million were up 15% on the comparable period last
year (2022: £9.8 million), driven by software-as-a-service ("SaaS")
subscription revenues, predominantly from new clients. Subscription revenues
typically accrue from twelve-month contracts, invoiced up front, for our
compliance e-learning libraries and compliance technology. During 2023,
subscription revenue growth helped grow the proportion of revenues from
subscriptions to 76% (2022: 68%) of total revenues. 88% of subscription
revenues were derived from our core e-learning products, with the remaining
12% of subscription revenues delivered from our suite of "Regtech" products
(2022: 10%).
Subscription ("SaaS") revenues grew 28% to £8.5 million (2022: £6.7
million). The growth in subscription revenues was driven by a combination of
new client, product upsells/more users and lower churn.
Revenue growth was supported by the launch of several new products during the
year. In February 2023, we launched our FastTrack product, which, when added
to our off-the-shelf ("OTS") courses, enables experienced employees to
demonstrate their compliance understanding with a pre-assessment and opt for a
shorter version of the course. In March 2023, we launched our Global
Compliance and Global Risk courses. Compliance is generally a nationally
focussed activity reflecting the rule of law. These global libraries open up
the market for multinational companies, particularly in Europe, that need
their courses to be based on global best practices and be available in
multiple languages. In April 2023, we launched our new micro-learning
Compliance Bites: a library of short, engaging videos on key compliance topics
designed to improve employee retention. In October 2023 we launched our Basic
Plan offer, B2B e-commerce new self-service plan to supply compliance training
to small UK businesses of up to 50 employees. We also launched our Premium
Plan offer, which encompasses our whole product portfolio in one-price
wrapper.
*Annual recurring revenue (ARR), our key performance indicator to measure
subscription sales progress, grew by 37% to £9.3 million over the past 12
months (December 2022: £6.8 million). New sales lifted ARR by 50% from
December 2022, and a net retention rate of 105% (2022: 92%), which included 7%
churn (2022: 12%). 2023 net retention was boosted by a standard 10% price rise
on new business and renewals throughout the year which impacted net retention
by 8.2 percentage points. Excluding price rises net retention was 96.8% (2022:
91.5%).
Revenue from professional services was £2.8 million, which was 12% below the
same period last year (2022: £3.1million). The reduction reflected a lower
average spend per client as increased economic uncertainty impacted client
budgets for bespoke e-learning solutions.
Total client numbers grew to over 1,200 in 2023 with 61% of revenues coming
from financial services (2022: 55%).
Gross profit
Gross Margin fell 0.4 percentage points to 69.7% (2021: 70.1%). The reduction
was primarily due to the fall in the less strategic and predictable
professional services revenue and a predominantly fixed cost base.
Investing for growth slows
The rate of overhead growth on the prior year reduced to 18% from 49% in the
prior year (excluding IPO costs in 2021) as the planned post-IPO investment
phase was predominantly completed.
In absolute terms overheads were £8.8 million in the period, an increase of
£1.3 million (2022: £2.5 million). 75% of overheads are people-related
(2022: 73%) and £1.1 million of the increase in the year was from headcount
increase, salary increases averaging 5% and full year employment costs from
the headcount increase in the prior year. The biggest area of people
investment was in the commercial team, increasing their costs by £0.7 million
on the previous year. Marketing activity costs also increased in the year by
43% to £0.3 million (2022: £0.2 million).
Overheads excluding depreciation and amortisation as a percentage of ARR
reduced during the year. In H2 2023 they represented 46% of ARR, 2 percentage
point above H2 2021 (excluding IPO costs).
On 31 December 2023, the total headcount had increased to 118 (31 December
2022: 111). Total average headcount increased in 2023 by 15% to 115 (2022:
100). The largest area of growth was in the sales and marketing function with
an average of 7 more heads during the period. Total staff costs and employee
related costs increased 20% to £9.0 million (2022: £7.5 million), with
average salary increases of 5% awarded in January 2023.
LBITDA
Due to the 12% reduction in non-strategic and unpredictable professional
services revenues and continued increased investment, the Group delivered a
loss of earnings before interest, tax, depreciation and amortisation (LBITDA)
of £0.6 million in 2023 (2022: £0.3 million). This loss performance reflects
the intended investment programme, supported by the fundraising in December
2021.
Interest receivable
£0.3 million of bank interest was received on cash balances during the year
(2022: £0 million) as the Group benefited from the higher interest rates and
putting surplus cash on deposit.
Tax
The Group reported a loss before tax of £0.7 million in the year and
consequently was not liable for any corporation tax in its UK or Malta
jurisdictions..
The Group had unutilised tax losses carried forward of approximately £1.3
million as of 31 December 2022 (2021: £0.7 million) due predominantly to
research and development credits. These are expected to increase in 2023
through trading losses and further research and development claims. Given the
varying degrees of uncertainty as to the timescale of the utilisation of these
losses, the Group has not recognised the potential deferred tax assets
associated with these losses.
In the prior year, a withholding tax rebate of £136,983, due to Inmarkets
Group Ltd regarding dividends declared by Inmarkets International Ltd for
2021, was reflected as a tax credit in 2022. The rebate is based upon
dividends declared by Inmarkets International Ltd and paid to Inmarkets Group
Ltd during 2022. Its settlement depends upon all necessary tax returns filed
and accepted by the relevant authorities. In the current year no rebate is due
in Inmarkets International since all the Maltese taxed retained earnings have
been utilised.
A rebate of £226,846 was received in 2023 by Inmarkets Group Ltd (2022:
£nil) in relation to dividends declared by Inmarkets International Ltd. The
balance due to the Inmarkets Group Ltd for all Maltese tax rebates as at 31
December 2023 was £628,057 (31 December 2022: £854,903).
Earnings per share (EPS)
No ordinary shares were issued during the year. The basic loss per share was
-0.733 pence on 89.5 million shares (2022: -0.460 pence).
Dividends
With a business backed by strong ARR growth supporting future recurring
revenues that provide strong cash generation, the Board is committed to paying
dividends. The Board is recommending a final dividend of 0.279 pence per share
which, together with the 0.168 pence interim dividend paid in October 2023,
gives a total dividend of 0.447 pence. The final dividend will be paid on 26
July 2024 to shareholders on the register on 5 July 2024.
The Board's policy is to at least maintain the total aggregate annual dividend
of £400,000, consistent with previous years. It will review and consider a
progressive dividend policy when the Group has returned to sustainable
profitability.
Balance sheet and cash flow
Net assets at 31 December 2023 were £5.7 million (31 December 2022: £6.6
million). The £0.9 million reduction in the year was due to the £0.7 million
reduction in comprehensive income in the year from planned investments and
£0.4 million of dividend payments, partly offset by £0.1 million increase in
the share option reserve.
Non-current assets of £0.8 million at 31 December 2023 (31 December 2022:
£0.9 million) reduced by a net £0.1 million as reducing office lease
liabilities in accordance with IFRS 16 were partially offset by a £0.2
million office refit in Malta. The Group does not capitalise any intellectual
property additions to its products' content or technology, and costs are
expensed as they are incurred. The Group expenses all product and technology
development.
Current assets, excluding cash, were £4.2 million at 31 December 2023 (31
December 2022: £3.3 million). This predominantly includes trade receivables
which grew 42% to £3.0 million at 31 December 2023 (31 December 2022: £2.1
million). This was slightly above the 37% growth in ARR, with a higher
invoicing at the end of the year. As a consequence, debtor days at 31 December
2023 were 67 (31 December 2022: 48). Debtors more than 60 days overdue
represented 14% of trade receivables at 31 December 2023 (31 December 2022:
20%). There was no increase in the allowance for expected credit losses in
the year. A further £0.6 million of trade receivables is due from the Maltese
tax authorities relating to withholding tax rebates on dividends declared from
Inmarkets International Ltd and payable to Inmarkets Group Ltd. £0.2
million of rebates were received during the year.
Total liabilities at 31 December 2023 of £6.6 million increased by £1.3
million on the year (31 December 2022: £5.3 million). The biggest contributor
to the increase was a £1.1 million increase in unrecognised revenue from
subscription revenue signed contracts, representing a 33% increase on the
year.
The Group has no bank debt and at 31 December 2023, held cash of £7.2 million
(31 December 2022: £7.7 million). Free cash flow** during the year was -£0.1
million (2022: +£0.3 million) despite the Group generating a loss, after the
planned accelerated investment, primarily due to reduced trade receivables.
Alternative Performance Measures
The Group elects to report certain financial measures not defined or
recognised under IFRS, including EBITDA (see note 3 of the Group Consolidated
Accounts), Annual Recurring Revenue (ARR) and Free cashflow defined below.
*Annual Recurring Revenue (ARR)
ARR is also used to assess the performance and the trend of subscription
revenue. ARR is calculated by multiplying the Monthly Recurring Revenue
("MRR") by twelve. MRR is defined as the subscription revenue recognised in a
month, excluding any retrospective upward adjustments arising at the end of
the contract where there have been more subscribers than a client originally
contracted for, less any contract losses (Churn) or downward adjustments
arising on contract renewal. The Directors consider that the ARR, derived from
software-as-a-service (SaaS) sales, is a key measure of the performance of the
business. The ARR increased by 37% in the year to £9.3 million at 31 December
2023.
** Free cash flow
Free cash flow is calculated as net cash flows from operations less capital
expenditure and lease costs.
Richard Steele
Chief Financial Officer
24 April 2024
Consolidated Financial Statements
Skillcast Group PLC
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2023
Note 2023 2022
£ £
Revenue 4 11,301,700 9,830,431
Cost of sales (3,429,372) (2,942,092)
Gross profit 7,872,328 6,888,339
Administrative expenses (8,759,363) (7,442,068)
Operating profit (887,035) (553,729)
Loss before interest, tax, depreciation & amortisation 3 (625,325) (316,314)
Other Income - 3,013
Finance income 258,752 15,996
Finance expense (19,680) (21,307)
Loss before tax 5 (647,963) (556,027)
Income tax 7 (7,473) -
Income tax rebate 7 - 144,237
Loss after tax and total comprehensive income (655,436) (411,790)
Loss of earnings per share:
Basic 17 (0.733) (0.460)
Skillcast Group PLC
Consolidated statement of financial position
As at 31 December
Note 2023 2022
£ £
Assets
Non-current assets
Property, plant and equipment 10 323,762 254,288
Right-of-use assets 11/20 459,923 616,024
Deferred tax assets 15 11,999 11,999
795,684 882,311
Current assets
Trade and other receivables 8 4,239,768 3,330,574
Cash and cash equivalents 9 7,221,681 7,704,003
11,461,449 11,034,577
TOTAL ASSETS 12,257,133 11,916,888
Issued capital and reserves attributable to owners
Share capital 16 89,459 89,459
Share Premium 3,490,541 3,490,541
Share Option Reserve 19 355,029 223,331
Retained earnings 1,757,376 2,812,695
Total equity 5,692,405 6,616,026
Liabilities
Current liabilities
Trade and other payables 12 1,570,820 1,199,370
Contract liability 13 4,501,025 3,437,764
Current lease liabilities 118,674 188,586
Income tax payable 14 23,794 16,320
6,214,313 4,842,040
Non-current liabilities
Long-term lease liabilities 350,415 458,822
350,415 458,822
Total liabilities 6,564,728 5,300,862
TOTAL EQUITY AND LIABILITIES 12,257,133 11,916,888
Skillcast Group PLC 2022
Consolidated statement of changes in equity
For period ended 31 December 2022
01 January 2022 89,459 3,490,541 17,000 3,624,369 7,221,369
Comprehensive Income for the period
(Loss) for the year - - - (411,790) (411,790)
Total comprehensive Income for the period - - - (411,790) (411,790)
Total contributions by and distributions to owners
Share Option Reserve - - 206,331 - 206,331
Dividends - Prior Year (249,592) (249,592)
Dividends - Current Year - - - (150,292) (150,292)
Total contributions by and distributions to owners - - 206,331 (399,884) (193,553)
31 December 2022 89,459 3,490,541 223,331 2,812,695 6,616,026
01 January 2023 89,459 3,490,541 223,331 2,812,695 6,616,026
Comprehensive Income for the period
(Loss) for the year - - - (655,436) (655,436)
Total comprehensive Income for the period - - - (655,436) (655,436)
Total contributions by and distributions to owners
Share Option Reserve - - 131,698 - 131,698
Dividends - Prior Year (249,591) (249,591)
Dividends - Current Year - - - (150,292) (150,292)
Total contributions by and distributions to owners - - 131,698 (399,883) (268,185)
31 December 2023 89,459 3,490,541 355,029 1,757,376 5,692,405
2022
Skillcast Group PLC 9,830,431
Consolidated statement of cash flows
For the year ended 31 December
2023 2022
£ £
Cash flows from operating activities
Loss before tax (647,963) (556,027)
Adjustments for:
Depreciation of property, plant and equipment 105,609 88,405
Amortisation of right-of-use assets 156,101 149,010
Finance income (258,752) (15,996)
Share based payment 131,698 206,331
Finance expense 19,680 21,307
(493,627) (106,970)
(Increase)/decrease in trade and other receivables (909,194) 468,249
Increase in trade and other payables, including contract liabilities 1,434,714 159,398
Cash generated from operations 31,893 520,677
Income taxes paid - (22,831)
Net cash flows from operating activities 31,893 497,846
Investing activities
Purchases of property, plant and equipment (175,084) (65,995)
Interest received 258,752 15,996
Net cash generated/(used) in investing activities 83,668 (49,999)
Financing activities
Principal paid on lease liabilities (178,319) (178,779)
Dividends paid (399,884) (399,884)
Interest paid on lease liabilities (19,680) (21,307)
Net cash (used) in financing activities (597,883) (599,970)
Net (decrease) in cash and cash equivalents (482,322) (152,123)
Cash and cash equivalents at beginning of period 7,704,003 7,856,126
Cash and cash equivalents at end of period 7,221,681 7,704,003
9,830,431
Notes to the consolidated financial statements
Skillcast Group PLC
Notes to the consolidated financial statements
31 December 2023
1 General Information
Skillcast Group PLC ('Company') is registered in the United Kingdom with
registration number 12305914 and is limited by shares and registered on the
London AIM stock exchange. Its registered office is at 80 Leadenhall Street,
London, England, EC3A 3DH. The Company is the ultimate parent of Inmarkets
Ltd, Inmarkets Group Ltd and Inmarkets International Ltd.
This report and financial statements reflect the consolidated activities and
transactions of the Company and other group companies ('Group').
The Company is primarily involved in providing management services to other
entities in the group. The Group provides software and content subscriptions
and related professional services to enable companies to transform their staff
compliance. Operating from its two bases, in London and Malta, the Group helps
companies across a broad spectrum of industry sectors in the UK, EU and in the
rest of the world, to train their staff and demonstrate compliance with
various laws, regulations, and standards that are relevant for their business.
2.1 Basis of preparation and statement of compliance
The Financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2023 or 2022 but
is derived from the 2023 accounts.
A copy of the statutory accounts for the year to 31 December 2023 will be
available on the Company's website and will be delivered to the Registrar of
Companies following the Company's AGM. The auditors have reported on those
accounts, their report was (i) Unqualified, (ii) did not include a reference
to any matters to which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2022
nor 2023.
Whilst the financial statements from which this announcement is derived have
been prepared in accordance with UK-adopted International Accounting Standards
and applicable law, this announcement does not itself contain sufficient
information to comply with the UK-adopted International Accounting
Standards. The Annual Report, containing full financial statements that
comply with UK-adopted International Accounting Standards, will be published
to shareholders later in May 2024.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future.
Therefore, in the preparation of the 2023 financial statements they continue
to adopt the going concern basis. These financial statements have been
prepared in accordance with UK adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006. They have been
prepared under the historical cost convention and on a going concern basis.
The financial statements are presented in Pounds Sterling, which is the
Group's presentation currency.
2.2 Changes in Accounting Policies and Disclosures
The Company has adopted all of the new or amended UK adopted International
Accounting Standards and Interpretations that are mandatory for the current
reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet
mandatory have not been early adopted for the annual reporting period ended 31
December 2023. The Company has initially assessed and concluded that they may
not be material.
2.3 Summary of material accounting policies
Revenue recognition
Software as a Service (SaaS) subscriptions
The Group provides subscriptions for theo right to its access content and
technology products to clients for subscription periods of typically twelve
months.
Revenue is recognised evenly (apportioned on a monthly basis), over the
contractual period of the subscription as the client simultaneously receives
and consumes the benefits of the Group's services.
The balance of the revenue which has not been recognised at the reporting date
is deferred as a contract liability in current liabilities, until it is due to
be recognised as revenue.
Where a contract includes multiple performance obligations, the transaction
price is allocated to each performance obligation based on the stand-alone
selling prices.
Professional services
The Group provides customised and standard content to its clients provided
under fixed-price contracts which is generally non-recurring revenue.
Fixed price contracts are recognised on the percentage of completion method
unless the outcome of the contract cannot be reliably determined, in which
case contract revenue is only recognised to the extent of contract costs
incurred that are recoverable. This is because either the Group is creating an
asset with no alternative use to it and the contract contains the right to
payment for work completed to date, or the client is simultaneously receiving
and consuming the benefits of the Group's services as it performs.
Business development costs incurred as part of a bid or tender process are
expensed as incurred. There are no material costs incurred during the period
between the contract being awarded and service delivery commencing.
For fixed-price contracts, the client pays the fixed amount based on a payment
schedule. If the services rendered by the Group exceed the payment, an amount
recoverable on contract assets is recognised. Conversely, if the payments
exceed the services rendered, a liability is recognised.
Amounts recoverable on contracts are included in current assets and represent
revenue recognised on account.
Segmentation
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision-maker (which takes the form of the Board of Directors of
the Group), in order to allocate resources to the segment and to assess its
performance. The Directors of the Group consider the Group is organised as one
business unit and all assets, liabilities, revenues and expenditure are
retained and recorded as such. However, the Group does segment revenue by type
of revenue, namely SaaS subscriptions and Professional Services, and on a
geographic basis.
Foreign currencies
The financial statements are presented in the Company's functional currency,
Pounds Sterling, being the currency of the primary economic environment in
which the Group operates. Transactions denominated in currencies other than
the functional currency are translated at the rates of exchange ruling on the
date of transaction. Monetary assets and liabilities denominated in currencies
other than the functional currency are re-translated to the functional
currency at the exchange rate ruling at year end. Exchange differences arising
on the settlement and on the re-translation of monetary items are dealt with
in the statement of comprehensive income. When deemed to be material these
will be disclosed.
Taxes
Current and deferred tax is recognised in profit or loss, except when it
relates to items recognised in other comprehensive income or directly in
equity, in which case the current and deferred tax is also dealt with in other
comprehensive income or in equity, as appropriate.
Current tax is based on the taxable result for the period. The taxable result
for the period differs from the result as reported in profit or loss because
it excludes items which are non-assessable or disallowed and it further
excludes items that are taxable or deductible in other periods. It is
calculated using tax rates that have been enacted or substantively enacted by
the end of the reporting period.
Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax
rates that have been enacted or substantively enacted by the end of the
reporting period.
Current tax assets and liabilities are offset when the Group has a legally
enforceable right to set off the recognised amounts and intends either to
settle on a net basis, or to realise the asset and settle the liability
simultaneously.
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to set off its current tax assets and liabilities and the
deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable
entities which intend either to settle current tax liabilities and assets on a
net basis, or to realise the assets and settle the liabilities simultaneously,
in each future period in which significant amounts of deferred tax liabilities
or assets are expected to be settled or recovered.
In Malta, Inmarkets Group Ltd is able to reclaim a proportion of the
corporation tax paid by its subsidiary, Inmarkets International Ltd, as long
as it meets certain criteria laid down by the Maltese tax authorities. The
criteria include that the relevant corporation tax has been paid by Inmarkets
International Ltd and that dividends to Inmarkets Group Ltd have been declared
by Inmarkets International and are payable to non-Maltese tax resident
shareholders. It is Group policy to reclaim Maltese corporation tax to the
fullest extent permissible and to recognise this income in Inmarkets Group Ltd
based upon dividends declared, or that will be declared once tax returns are
completed, for the financial year. The reclaimed corporation tax is presented
as netted off with the income tax expense and in other receivables.
3 Loss before interest, tax, depreciation and amortisation (LBITDA)
2023 2022
£ £
Operating profit (887,035) (553,729)
Depreciation 105,609 88,405
Amortisation 156,101 149,010
LBITDA (625,325) (316,314)
LBITDA is not a term recognised under IFRS and therefore the reported figures
may not be comparable to other companies with similar measures.
4 Revenue
2023 2022
£ £
Major product lines
Software as a Service (SaaS) subscriptions (i) 8,547,389 6,689,710
Professional services (ii) 2,754,311 3,140,721
11,301,700 9,830,431
(i) SaaS subscriptions - The Group provides right of access of subscriptions
to its content and technology products to the customer over time for the
subscription periods that are typically twelve months. The revenue is
recognised is evenly over the period of subscription. This revenue includes
subscriptions to: (a) Skillcast Portal - the Group's integrated compliance
management application that comes with a broad range of tools, namely SELMS,
Policy Hub, Compliance Declarations, Surveys, Compliance Registers, Training
360, Events Management and SMCR 360; and (b) the Skillcast OTS course
libraries, namely Essentials, FCA Compliance, Insurance Compliance and Risk.
(ii) Professional services - The Group provides customised and standard
content to its clients under fixed-price contracts. This non-recurring revenue
includes: (a) bespoke e-learning development projects for large corporates;
(b) translations of those bespoke courses; (c) customisation of OTS courses
for subscription clients; and (d) other content and technology consultancy.
2023 2022
£ £
Geographic split by customer
UK 8,913,470 7,627,351
Europe 942,870 1,344,694
Rest of world 1,445,360 858,386
11,301,700 9,830,431
Non-current assets in which they are based are shown below:
Property, plant and equipment
UK 175,327 197,744
Malta 148,435 56,544
323,762 254,288
Right of use assets
UK 255,042 365,968
Malta 204,880 250,056
459,922 616,024
5 Loss before taxation
The loss before taxation is stated after charging the following amounts:
2023 2022
£ £
Staff cost (CoS) 2,194,546 1,846,407
Subcontracted services (CoS) 785,053 797,125
Staff costs (Admin) 5,779,421 4,835,911
Directors' compensation 1,053,731 848,496
Professional fees 269,952 215,534
Depreciation and amortisation expense 261,710 237,415
Fees payable to the Company's auditor for the audit of Parent and Subsidiaries 47,133 73,870
There were no non-audit fees incurred by Crowe UK LLP in 2023 and 2022.
6 Staff costs and employee information
2023 2022
£ £
Salaries & wages 7,847,604 6,488,702
Social security costs 873,174 718,605
Pension 124,747 102.924
Share-based payment expenses 131,698 206,331
Other payroll costs 50,475 14,252
9,027,698 7,530,814
Number of staff
The average number of persons employed by the Group during the year was 115,
and at December 2023 the number of persons employed was 118, analysed by
category as follows:
At 31 December At 31 December Average Average
2023 2022 2023 2022
Directors 7 7 7 7
Administration 5 2 4 2
Client Service 26 23 25 21
Operations/Production 21 24 22 23
Sales & Marketing 34 33 34 26
Finance 5 4 4 4
Technology 20 18 19 17
118 111 115 100
Key management personnel
The remuneration of key management personnel (considered to be the Directors
and Senior Management) is £1,486,336 (2022: £1,267,456) and is set out below
in aggregate for each of the categories specified in IAS24: Related Party
Disclosures. Compensation has been disclosed in this note, while further
information can be found in the remuneration report in the Annual Report.
2023 2022
Directors Senior Management Total Directors Senior Management Total
£ £ £ £ £ £
Wages and Salaries 912,511 199,883 1,112,394 820,346 93,757 914,103
Social Security 137,011 4,154 141,165 114,772 2,384 117,156
Pension 38,522 0 38,522 11,597 0 11,597
Share-based payment expenses 20,335 9,501 29,836 20,743 9,174 29,917
Consultancy fees 0 164,419 164,419 55,190 139,493 194,683
1,108,379 377,957 1,486,336 1,022,648 244,808 1,267,456
On 1 January 2023, Sharon Mulligan joined as Chief People Officer, became a
member of the Senior Management Committee and she is also a director in
PsyPotential Limited. The Company made payments to PsyPotential Limited for
HR and Recruitment services of £27,585 in the year ended 31 December 2023.
Morten Damsleth, whose remuneration is included in Senior Management above, is
the owner of Monad IKE. The Company made payments to Monad IKE for
Operations Director and related services of £136,834 (2022: £139,493).
The Company made contributions to defined contribution personal pension
schemes for three Directors in the period (2022: four).
7 Income tax expense
2023 2022
£ £
Current tax on profits for the year 7,473 -
Deferred tax expense - (7,254)
Withholding taxes credit on intercompany dividends - (136,983)
7,473 (144,237)
A reconciliation of the current income tax expense applicable to the profit
before taxation at the statutory rate to the current income tax expensed at
the effective tax rate of the Company is as follows:
2023 2022
£ £
Profit(loss) before taxation (647,963) (556,027)
Tax calculated at applicable UK statutory tax rate of 23.52% (2022: 19%) (152,401) (105,645)
Tax effects of:
-Expenses not deductible for tax purposes 84,732 52,481
-Taxable losses carried forward 89,002 (28,209)
-Withholding tax credit on intercompany dividends - (136,983)
-Research and Development Credits -
-Differing tax rates due to trade in different jurisdictions (6,691) 9,002
-Other adjustments (7,169) 65,117
Current income tax 7,473 (144,237)
The Company provides for income taxes on the basis of its income for financial
reporting purposes, adjusted for items that are not assessable or deductible
for income tax purposes in accordance with the regulation of domestic tax
authorities.
The effective rate of tax for the year ended 31 December 2023 was -1% (2022:
-26%). This effective tax rate is a combination of the following items:
* the tax rates and tax regimes in the UK and Malta in which the businesses
of the Company operate;
* the diverse tax treatments of deferred consideration amounts applied in
each jurisdiction;
* the tax loss carry forward regulations in different jurisdictions.
The tax rates applicable in the jurisdictions are:
* UK: The applicable statutory tax rate for 2022/23 is 23.52%. UK
statutory tax rate increased to 25% 1st April 2023.
* Malta: Income taxes are due at 35% of taxable income.
In 2023 a withholding tax rebate of £0 (2022: £136,983) is netted against
the income tax expense. The rebate relates to withholding taxes on dividends
declared by Inmarkets International Limited to the Inmarkets Group Limited.
In November 2023 HMRC opened an enquiry into the 2021 corporation tax research
and development claim for the Group's UK subsidiary, Inmarkets ltd. The Group,
with the assistance of their tax advisors have submitted a response to HMRC
and await further communication. On advice, the Group has not yet submitted
a research and development claim for 2022 as it is awaiting the outcome of
the enquiry.
8 Current assets - trade and other receivables
2023 2022
£ £
Trade receivables 3,008,270 2,120,467
Less: Allowance for expected credit losses (95,353) (92,514)
2,912,917 2,027,953
Prepayments 472,379 241,651
Accrued Income 157,668 146,018
Maltese withholding tax 628,057 854,903
Other receivables 68,747 60,049
1,326,851 1,302,621
As of 31 December 2023, trade receivables totalled £3,008,270
(2022:£2,120,467). Within this figure £1,649,657 were not due (2022:
£1,249,337) and the remaining amounts were past due but not impaired. These
primarily relate to customers for whom there is considered a low risk of
default. An allowance of £95,353 (2022: £92,514) have been set up to
offset credit risks.
During the year £226,846 of withholding tax rebates were received by the
Company (2022: £0). The claim for the remaining balance is in the process
of being filed, and relates to withholding tax rebates post a Group
restructure necessary for the IPO in December 2021. Due to an error in the
original filing of the restructure, which has now been rectified, the
withholding tax rebate filing was delayed.
9 Current assets - cash and cash equivalents
2023 2022
£ £
Cash at bank 7,221,681 7,704,003
7,221,681 7,704,003
2023 2022
£ £
Geographic split
United Kingdom 6,644,470 4,935,131
Malta 577,211 2,768,872
7,221,681 7,704,003
2023 2022
£ £
Cash Held by Currency (in Pound Sterling)
Pound Sterling 6,962,276 7,592,698
Euro 254,382 57,925
Czech Koruna 2,326 -
US Dollar 2,697 53,380
7,221,681 7,704,003
10 Non-current assets - property, plant and equipment
Reconciliations of the written down values at the beginning and end of the
current and previous financial year are set out below:
Computer Software & Hardware Furniture and Fixtures Office Equipment Leasehold Improvements Total
Balance at 1 January 2022 87,520 83,180 2,291 103,706 276,697
Additions 53,452 12,064 479 - 65,995
Disposals - - - - -
Depreciation expense (53,644) (12,600) (1,420) (20,741) (88,405)
Balance at 31 December 2022 87,328 82,644 1,350 82,965 254,287
Balance at 1 January 2023 87,328 82,644 1,350 82,965 254,287
Additions 36,825 36,358 2,418 99,483 175,084
Disposals - - - - -
Depreciation expense (53,869) (16,174) (1,288) (34,278) (105,609)
Balance at 31 December 2023 70,284 102,828 2,480 148,170 323,762
11 Non-current assets - Right-of-use assets
Reconciliations of the written down values at the beginning and end of the
current and previous financial periods are set out below:
Leasehold property Car leases Total
Balance at 1 January 2022 575,113 7,404 582,517
Additions 182,516 - 182,516
Disposals - - -
Amortisation expense (146,978) (2,031) (149,009)
Balance at 31 December 2022 610,651 5,373 616,024
Balance at 1 January 2023 610,651 5,373 616,024
Additions - - -
Disposals - - -
Amortisation expense (150,728) (5,373) (156,101)
Balance at 31 December 2023 459,923 - 459,923
The Group leases its offices, typically for a period of several years, with an
option to extend (see note 20 of the Annual Report). On renewal, the terms of
the lease are renegotiated.
12 Current liabilities - trade and other payables
2023 2022
£ £
Trade payables 94,095 186,783
Accruals 794,740 550,987
Amount due to shareholders 450 450
Sales and payroll taxes 628,339 433,466
Wages & Pension payable 53,196 27,684
1,570,820 1,199,370
13 Current liabilities - Contract liability
Subscriptions Professional Services
Balance at 1 January 2022 2,695,496 341,688
New Contracts 7,206,947 3,024,064
Revenue Recognised (6,689,710) (3,140,721)
Balance at 31 December 2022 3,212,733 225,031
Balance at 1 January 2023 3,212,733 225,031
New Contracts 9,610,826 2,754,135
Revenue Recognised (8,547,389) (2,754,311)
Balance at 31 December 2023 4,276,170 224,855
14 Current liabilities - Income tax
2023 2022
£ £
Corporation tax payable 23,794 16,320
15 Non-current liabilities - Deferred tax
The deferred tax (liability)/asset for the year is analysed as follows. 2023 2022
£ £
At beginning of the period 11,999 4,745
Credited to statement of comprehensive income - 7,254
At end of the period 11,999 11,999
Deferred tax asset
Temporary differences - on non-current assets due to accelerated tax 11,999 11,999
depreciation
16 Equity - issued capital
2023 2022
£ £
Issued Shares 89,459,460 89,459,460
Par value per share 0.10p 0.10p
Total 89,459 89,459
All shares in the Company are fully paid up. Ordinary shares entitle the
holder to participate in dividends and the proceeds on the winding up of the
Company in proportion to the number of, and amounts paid, on the shares held.
On a show of hands, every member present at a meeting in person or by proxy
shall have one vote and upon a poll, each share shall have one vote.
17 Earnings per share
Earnings per share (EPS) is calculated on the basis of profit attributable to
equity shareholders divided by the weighted average number of shares in issue
for the year.
2023 2022
£ £
Loss after tax -655,436 -411,790
Non-recurring expenditure 0 0
Earnings -655,436 -411,790
Weighted average number of ordinary shares (undiluted) 89,459,460 89,459,460
Earnings per share (basic): -0.733p -0.460p
Basic per share of -0.743p (2022: -0.460p) has been impacted by non-core
operating expenses.
18 Dividends
2023 2022
Pence per £ Pence per £
share share
Dividend declared - Final 2022 0.279p 249,592
Dividend declared - Interim 2023 0.168p 150,292
Dividend declared - Final 2021 0.279p 249,592
Dividend declared - Interim 2022 0.168p 150,292
Dividend declared per share 0.477p 0.477p
During the period under review, the Group generated a loss before tax of
-£647,963 (2022: -£556,027). A final dividend of £249,592 (0.279p) was
declared and paid with regards to the year ended 2022 and £150,292 (0.168p)
interim dividend was declared and paid with regards to the year ended 2023.
The Group's policy is to at least maintain dividend payments.
The Board is proposing a final dividend of 0.279p per share. In combination
with the interim dividend, if confirmed by the shareholders at the AGM, this
will represent a total dividend for the year of £399,884 (2022: £399,884) or
0.447p per share based upon the number of shares currently in issue. If
further approved by shareholders at the AGM on 25 June 2024, the final
dividend will be paid on 26 July 2024 to shareholders on the register at the
close of business on 4 July 2024.
19 Share options and warrants
Share options
The share option scheme, adopted by the Company after admission to AIM on 1
December 2021, was established to reward and incentivise the executive
management team and staff for delivering share price growth. The option
schemes are equity settled.
The share scheme is administered by the Remuneration Committee.
1,600,000 options were granted during 2023 (2022: 360,000) with a weighted
average fair value of 4 pence (2022: 7 pence). 540,000 options lapsed
during 2023 (2022: 410,000) with a weighted average fair value of 7 pence
(2022: 4 pence) These fair values were based on the Company's share price at
the date of grant. Out of the 5,730,000 outstanding options (2022:
4,163,000), 2,129,700 options were exercisable (2022: 1,017,500).
A charge of £131,698 (2022: £206,331) has been recognised in the
consolidated statement of comprehensive income for the year relating to these
options.
Options are exercisable in accordance with the contracted vesting schedules;
if an employee leaves the employment of the Company prior to the options
vesting, then unless otherwise agreed, the share options will lapse.
Details of the share options outstanding at the year-end are as follows:
Number WAEP* Number WAEP*
2023 2023 2022 2022
Outstanding at 1 January as per 2023 Reporting 4,670,000 37p 4,830,000 37p
Adjustment to 2022 Grants -50,000 37p -110,000
Granted during the year 1,600,000 21p 360,000 24p
Exercised during year - 0p - 0p
Lapsed during year 540,000 28p 410,000 37p
Outstanding at 31 December 5,680,000 32.5p 4,670,000 37p
Thereof exercisable at 31 December 2,070,300 36p 1,017,500 37p
* Weighted average exercise price
The weighted average remaining contractual life of the options outstanding at
the statement of financial position date is 8.3 years.
Share options granted are valued under the Black-Scholes model. All options
granted vest equally over 3 or 4 years. A dividend yield was assumed based on
the Group's stated policy of paying £400,000 per annum. An expected
volatility of 27% has been assumed has been assumed for options granted in the
year (2022: 50%). Options granted in the year had an exercise price of 21
pence (2022: 24 pence). Options granted at the time of the IPO in 2021 had
an exercise price equal to the IPO price of 37 pence.
20 Financing cash flows
A reconciliation of the financing cash flow is set out below:
2023 2022
£ £
Lease liability
At 1 January 647,408 643,671
Additions - 182,516
Interest expense 19,680 21,307
Lease payments (197,999) (200,086)
Disposal -
At 31 December 469,089 647,408
Dividend liability
At 1 January - -
Dividends declared 399,884 399,884
Dividend payments (399,884) (399,884)
At 31 December - -
Changes to Equity
Capital Raised (Admission into AIM) - -
Share Option Reserve* (131,698) 206,331
At 31 December (131,698) 206,331
Net financing payments (729,581) (393,639)
Financing per statement of cash flows (597,883) (599,970)
*The difference between the Net financing payments and Financing per statement
of cash flows is due to the non-cash movement of share option reserves.
A final dividend of £249,592 was declared and paid in 2023 with regards to
the year ended 31 December 2022 and £150,292 interim dividend was also
declared and paid for the year ended 31 December 2023.
21 Events after the reporting period
Apart from the final dividend declared as disclosed in note 18, no other
matter or circumstance has arisen since 31 December 2023 that has
significantly affected, or may significantly affect the Group's operations,
the results of those operations, or the Group's state of affairs in future
financial years.
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