i
-
n
e
x
u
s
G
o
b
a
l
l
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
9
i-nexus Global plc
Strategy Execution Software
Annual Report and Accounts 2019
Setting the standard for Strategy Execution
Strategy Execution Solutions
i-nexus Global plc
i-nexus Suite
George House
Herald Avenue
Coventry Business Park
Coventry CV5 6UB
www.i-nexus.com
Welcome to our 2019 Annual Report
At i-nexus, we believe that by digitally transforming Strategy
Execution, our customers take control and ensure that every
action, measurement and decision contributes to achieving
organisational goals
Contents
STRATEGIC REPORT
2019 Highlights
Company Overview – what is the problem,
how we solve it, how we do it and how the platform works
Chairman’s Statement
CEO’s Statement
Chief Financial Officer’s Report
Principal Risk and Uncertainties
CORPORATE GOVERNANCE
Board of Directors
Corporate Governance Statement
Group Directors Report
FINANCIAL STATEMENTS
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated and Company Statement of Cash Flows
Notes to the Financial Statements
Company Information
01
02
03
05
08
10
15
16
21
26
31
32
33
34
35
36
37
64
i-nexus Global plc
Designed and produced by Perivan 257530
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 01
2019 Highlights:
01
Increasing traction with our existing accounts
New Monthly Recurring Revenue (MRR) from existing clients three times higher than previous year
Unlocking potential through investments
Investments made in personnel across the Company, ensuring we have the right structure to address our
market opportunity and support our customer base
Moved our operations to the cloud, significantly increasing our scalability as a business
Step change in our product capabilities
Early adopter program launch of i-nexus Pulse and i-nexus Advisor, bringing increased analytics and a more
intuitive user experience to our enterprise solution
Refocused value proposition and messaging
Selected targeting of enterprises who are mature in their Strategy Execution and ready for a technology
solution
Our messaging now focuses on de-risking strategy and the digitalisation of Strategy Execution
Increased traction with partners
Increased our partners from one to six and leads emerging from this new route to market
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 02
02
STRATEGIC REPORT:
Company Overview
The i-nexus platform enables organisations to digitally transform their Strategy Execution,
empowering them to execute their strategies successfully, drive business transformation and
deliver Continuous Improvement.
Our Vision
To inspire organisations to focus on
best in class Strategy Execution by
delivering a technology platform that
removes complexity, accelerates
delivery, and puts leaders in control of
delivering their goals.
initiatives from achieving the expected
results. Failure to track performance,
alignment and results make it
impossible to tell whether an initiative
is working or not or potentially identify
the root cause of a significant problem
in the business operation.
Our vision is built on three key
principles:
• Taking ownership: our industry
standing, expertise and leading
technology keep us at the forefront
of innovation in the emerging
Strategy Execution market.
• Guiding the journey: our solutions
provide customers of all sizes with
the support they need to achieve
their strategic, transformational
and operational goals.
• Enabling transformation: our
rigorous, systematic approach
helps customers convert high-level
strategies into actionable goals and
deliver real-world business change.
What is the Problem?
When business leaders set out a new
strategy, they expect the rest of the
organisation to follow—yet most
businesses find putting strategy into
practice a significant challenge. If
there’s a disconnect between the
decisions made in the boardroom and
the day-to-day work of employees,
strategic initiatives can easily be
derailed.
If organisations fail to focus on
Strategy Execution, things can start
going wrong quickly. Failure to set and
communicate clear goals means that
people pursue the wrong objectives.
Failure to gain buy-in prevents
i-nexus Global plc
i-nexus Global plc
How do we Solve it?
As the leader in today’s Strategy
Execution market, we provide a
technology platform that helps
organisations drive, monitor and
control the day-to-day execution of
strategy.
Our platform provides a rigorous,
standardised methodology for
managing strategic initiatives,
cascading goals down through the
organisation and measuring progress
against the strategic plan. This
approach empowers our customers to
answer the key questions:
• How are we performing?
• Are our plans on track?
• Will we deliver our strategy?
We offer more than just technology.
With over 15 years’ experience in the
space, our expert guidance helps
organisations at all levels of maturity
raise the profile of Strategy Execution
within their business. Today, we
support nearly 40 customers in
managing over 150,000 strategic
programmes around the world.
As a thought leader, our mission is to
grow and educate the emerging
market for Strategy Execution
solutions. We are working towards a
future where all organisations will
recognize that digitalising their
Strategy Execution is the best way to
control the outcome. Strategy
Execution software is critical to their
success.
How Does the Platform Work?
Our platform fundamentally
transforms the way organisations
define, communicate, manage and
monitor the execution of their
strategies.
Instead of taking a manual approach
of managing Strategy Execution with a
mixture of documents, spreadsheets,
project management tools and
business analytics solutions, we
provide a central, secure, cloud-based
environment that acts as a single
source of insight for all strategic,
transformational and operational
activities, and enables seamless end-
to-end management.
Building on proven Continuous
Improvement methodologies, our
platform helps our customers to:
• Set, cascade and negotiate strategic
goals throughout their organisation
• Manage, coordinate and track
strategic programmes and projects
• Measure results and adjust
initiatives in real time to drive
improved performance
By enabling a relentless focus on
Strategy Execution, supported by
instant visibility, full accountability and
a closed loop for feedback and
improvement, our platform connects
stakeholders from the boardroom to
the rest of the organisation, helping to
create a single team that works in
harmony towards a clear, shared goal.
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 03
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
03
STRATEGIC REPORT:
Chairman’s Statement
“During tough economic times large enterprises
will focus unremittingly on being ever more
competitive and we believe Operational Excellence
and Strategy Execution are at the core of achieving
these goals. For these enterprises to successfully
implement such programmes requires automation
and the i-nexus products offer a market leading
solution to this challenge.”
This is our first full year as a plc after
our IPO in June 2018 and whilst
recognising that in certain respects it
has been a challenging year, with new
client conversion being slower than
anticipated, the team has focused on
developing our product range in order
to broaden our applicability to clients.
The team continues to rise to the
challenge of building an international
enterprise SaaS (Software as a Service)
business. Many aspects of the
business have been transformed from
a year ago.
The Company remains focused on
developing, delivering and
implementing cloud-based
Operational Excellence (OE) and
Strategic Execution (SE) (“SaaS”)
solutions to digitalise our customers’
enterprise programmes. Our
customers are typically Global 5000
companies running large, complex OE
and SE programmes; it is within this
setting that our technology platform
has the greatest applicability and
where it can add most value. Despite
our relative size and stage of
development, we count a growing
number of large, well established
enterprises as customers, which are
increasingly using i-nexus at the core
of their business processes.
As a Board, at IPO we defined three
crucial areas of business development
to take the business to the next stage,
being:
– Enhance the Company’s go-to-
market capabilities
– Develop our products’ capabilities
– Scale the Company’s partner
programme
The Company has invested
significantly in all areas, but the
substantial investment made in our
go-to-market teams has not yet
delivered the returns we had
expected. However, we remain
confident that our differentiated and
enhanced technology offering,
growing applicability and evolving
customer relationships leave us well
positioned for the future.
The Company has also invested
heavily in our Customer Success
teams in order to reduce churn and
allow us to drive service and upsell
revenues. Whilst frustrating that client
churn, in particular at the start of the
year, offset the progress made with
new customer wins and upsell, this
investment has resulted in a higher
level of engagement with a greater
number of prospects and stronger
relationships with our existing
customer base.
The quality, functionality and evolution
of our product is critical to our ability
to grow our applicability, retain and
expand with our current customers
and attract new ones. New EVP of
Product, James Davies, has refocused
our product strategy to meet the
needs of the three distinct sets of
users of i-nexus. Details of the
advancements made will be covered
in detail elsewhere in this report, but
as a Board we are excited about
where this can take us.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 04
04
STRATEGIC REPORT:
Chairman’s Statement continued
In 2020, the Board and management
of i-nexus Global plc are focused on
improving the execution of our go-to-
market strategy and continuing the
progress made in 2019 on the other
core strategic areas of development
identified above, while maintaining the
principle of careful cash management
and sound governance.
Despite the challenging global
headwinds, we look forward to the
next 12 months with cautious
optimism. During tough economic
times large enterprises will focus
unremittingly on being ever more
competitive and we believe
Operational Excellence and Strategy
Execution are at the core of achieving
these goals. For these enterprises to
successfully implement such
programmes requires automation and
the i-nexus products offer a market
leading solution to this challenge.
I look forward to engaging further with
shareholders at our AGM in March.
Richard Cunningham
Chairman
Part of our defined growth strategy is
to expand our market reach through
growing our partnerships with
specialist consulting organisations.
Pleasingly, we have seen a positive
response from several organisations
wishing to use our platform to replace
the currently manual processes with a
digital offering to deploy within their
existing corporate clients. Potential
partners see this as offering a
competitive edge and embedding
them more deeply with the
organisations they support. It is early
days, but traction is increasing and we
expect to benefit from our partners
delivering lower-cost, high-quality
leads for i-nexus.
Notwithstanding the positive progress
made, the Board recognises that
during this period, sales have fallen
short of our expectations. We expect
good levels of cash inflows in Q2 from
recently secured customer renewals
(in some cases also benefiting from
improved adoption), however it is vital
that the business focuses on tight
cash management. This is an ongoing
key priority of Board and executive
management.
On behalf of the Board, I would like to
thank all i-nexus staff for the
contribution they have made to the
successful growth and development of
the Group in 2019 through their hard
work and collaboration.
i-nexus Global plc
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 05
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
05
STRATEGIC REPORT:
CEO’s Statement
“We are operating in an attractive global market,
with a wide scope of application for the Company’s
proven technology, in which the Company is well
placed.
With a clear growth strategy, strong leadership,
careful cash management, good governance and a
significantly modernised product suite, i-nexus is
well positioned to build on our progress to date.”
Though last year was a year of
strategic progress across many fronts,
as a result of both internal and
external factors, this progress did not
translate into the level of overall
revenue growth we had originally
expected.
What we did see as encouraging, and
testament to our strategic focus on
Customer Success, was a substantial
increase in upsell and cross sell to
existing clients as our teams worked
with customers to unlock the full
potential of i-nexus’ SaaS solution. This
increase in upsell and cross sell and
associated service revenue has helped
offset slower than expected new deal
conversion and the previously
reported customer churn early in the
year. The benefits of our platform
when deployed effectively within
method-mature customers is
demonstrated by this increasing
adoption at our existing customer
base.
Our Growth Strategy
Strategy Execution is increasingly
recognised as a fundamentally
important process at the core of every
enterprise which only becomes more
complex and challenging to manage
as the organisation grows. i-nexus’
mission is to be synonymous with
Strategy Execution; when
organisations talk of delivering on
their strategy, they should see i-nexus
as a preferred solution.
At i-nexus we have a well-developed
Hoshin Kanri strategic plan, which we
have spent the past year executing on.
This has been essential for us to
deploy growth capital appropriately
and carefully manage our own
transformation.
The detail of the priorities we have
had this year in terms of delivering on
these Strategic Objectives are
extensive, however I would like to pull
out some key highlights that I think
frame this year’s result.
During FY19 the Company invested
significantly in its Sales and Marketing
capabilities. Despite this, our new
business performance in the year was
below our expectations. This is clearly
very disappointing, but we remain
encouraged and optimistic as to the
quality and the development of our
pipeline of new customer
opportunities. As a result of the
lessons learned in FY19, we are
constantly reviewing and refining our
approach to new business conversion.
We believe that our ability to capitalise
on the increased quality and volume
of opportunities, both within existing
and for new accounts, will improve as
we implement further enhancements
to our go-to-market strategy.
Where we have seen a stronger return
on our investment is our reach within
existing accounts. A strong team of
Customer Success Executives, coupled
with experienced new Account
Executives have made great inroads in
both growing the recurring revenue
from our existing accounts and
enhancing the visibility in and
knowledge of our existing accounts to
help de-risk churn.
We now have 100% coverage across
all of our customer accounts, both in
terms of regular senior level
interaction and ongoing engagement.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 06
06
STRATEGIC REPORT:
CEO’s Statement continued
The introduction of a market leading
success tool means we now have a live
dashboard covering a variety of
success measures to understand the
health of all our accounts. These two
things ensure that we really
understand the health of a
deployment both in terms of driving
increasing adoption but also the
potential risks or early warning signs
that could lead to churn or a reduced
renewal. Whilst our success in
embedding our solutions with
customers and driving reduction in
churn will only truly be seen in this
coming year, we have seen improved
adoption across our customer
accounts already.
This expanded reach within our
customers and improved adoption
provides i-nexus with the opportunity
to add incremental service and
recurring SaaS revenues. During FY19,
we benefited from both upsell and
cross sell within a number of our
existing accounts, delivering additional
Monthly Recurring Revenue (MRR),
comparing favourably to the previous
year. We are seeing a continuation of
this trend so far in FY20.
Driving an innovative approach in
product development has also been a
strong focus this year in order to grow
our applicability to clients and verticals
that we can target.
Following a strategic product review
earlier this year, i-nexus is pleased to
announce that two new products,
i-nexus Pulse and i-nexus Advisor,
have been made available to select
customers as beta products. The
revised product suite now includes
i-nexus Workbench (historically the
company’s flagship solution) as well as
the two new products, i-nexus Pulse
and i-nexus Advisor, both built on a
new cloud-native architecture and
both designed as mobile-fast
applications supporting a range of
devices.
I-nexus Pulse targets the majority of
i-nexus users who need to quickly and
easily enter updates to metrics and
projects. i-nexus Advisor, on the other
hand, provides Executives and
strategy leaders with real-time visibility
through data visualisation into the
robustness of strategic plans, delivery
of projects against these plans, and
the measurable value attributed to the
projects towards strategic objectives.
i-nexus Global plc
I-nexus Workbench remains focused
on the needs of expert users and
practitioners. A major release of
Workbench is planned for H1 CY20,
introducing a new user experience to
match the modern interface
introduced in i-nexus Pulse and
i-nexus Advisor.
We have continued to develop
relationships with potential channel
partners, which is a critical adjunct to
our direct sales capabilities. New
partners are typically specialist
Operational Excellence and Strategy
Execution consulting firms looking to
digitalise their current manual
implementations. Across the sector,
partners have acknowledged the need
for such digitalisation if customers are
to realise the true benefits of their
Operational Excellence (OE) and
Strategy Execution (SE) programmes,
also recognising that manual
implementation of complex, growing
OE and SE programmes is
unsustainable. What is positive is that
these consulting firms are actively
seeking us out, in search of a digital
solution to offer their customers to
differentiate them within their
competitive landscape. This was a
significant change in FY19 that we are
looking to capitalise on. The challenge
is to persuade partners and
customers to move from
predominantly in-house developed
solutions. Although early days, these
relationships are leading to
opportunities for i-nexus with mature
Operational Excellence and Strategy
Execution customers who recognise
the challenges of in-house
implementation platforms.
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 07
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
07
Our People
Looking Ahead
Our people are pivotal in driving us
forward and delivering on our goals.
We have invested substantially in new
employees this year to support our
core strategies and to build out the
structures and departments needed
by i-nexus going forward. Our
employee numbers have increased
from 62 at the end of FY18 to 90 as at
30 September 2019. This growth has
partly reversed post year-end. The
Board has always, and continues to
ensure prudent cash management is
adopted in all investment decisions.
While we did not achieve the level of
overall revenue growth we had
expected in this reported period, the
new financial year has started
satisfactorily. Despite slower than
expected progression, we have a
stronger platform from which to grow,
having created many exciting
developments in our product,
extended the reach within our existing
accounts, improved partner channel
relationships and have received great
feedback from new and exciting
customers.
We are operating in an attractive,
global market, with a wide scope of
application for the Company’s proven
technology, and in which the Company
is well placed.
With a clear growth strategy, strong
leadership, careful cash management,
good governance and a significantly
modernised product suite, i-nexus is
well positioned to take advantage of
our market position and the
investments made to date.
Simon Crowther
Chief Executive Officer
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 08
08
STRATEGIC REPORT:
Chief Financial Officer’s Report
“Careful cash management will continue to be a
priority focus for management and the Board for
the foreseeable future.”
Reported Revenue
Revenue was flat at £4.8m (FY18: £4.7m)
as both internal and external factors
adversely affected our rate of new
deal conversion. The Group signed
8 new customers (FY18: 10), all under
recurring contracts of at least one
year in length, typically paid annually
in advance. Upsell and Cross sell in
our existing accounts were
substantially higher in FY19, having
added £35k Monthly Recurring
Revenue (“MRR”) (FY18: £10k). This is
clearly encouraging and demonstrates
a good initial return on our
investments in Customer Success,
however some exceptional and in part
unexpected customer churn largely
outweighed this growth, and we exited
FY19 with closing MRR of £340k
(FY18 exit MRR: £335k).
Revenue from recurring contracted
software subscriptions was £4.0m
(FY18: £4.0m) and from associated
professional services was £0.8m
(FY18: £0.7m). After a sound start to
the year in terms of professional
services billing, this also weakened in
the second half, due to the lack of new
deals, giving us the opportunity to
invest resource in developing
relationships with potential Channel
Partners and existing accounts.
Gross Margin
Gross margin in the year was £3.5m,
or 74% (FY18: £3.3m, or 69%) after
accounting for commission payable to
the Group’s business partners. This
improvement in margin demonstrates
the results of our investment
programme, as anticipated. Reported
gross margin is the combined gross
margin over both recurring software
subscriptions and professional
services.
Overheads
Overhead (defined as the aggregate of
staff costs, other operating expenses
but excluding those costs included in
cost of sale, depreciation of tangible
assets and amortisation of intangible
assets, and share based payment
charges) increased in the year from
£4.1m to £7.8m. We have managed
our post IPO investments in the light
of weaker sales delivery to protect our
cash position and overall P&L result
and savings to our originally projected
investment plan have been made
without jeopardising our overall
strategy for future growth. Included in
these overheads was £0.1m of
non-recurring administrative
expenses. Interest expense at £67k is
down on the previous year as debt
has been repaid.
Capitalised development costs
amounted to £0.6m in the year. The
additional development capacity is
contributing to the Group’s products
marketability and the product
enhancements made recently are
strategically important to us and our
current customers and prospects.
Group loss before taxation rose from
£1.0m in FY18 to £4.3m, a result that
reflects the rate of investments made.
At this critical stage in i-nexus growth,
the investment has been necessary to
fuel our ambition to become the
leading enterprise software provider
in the Strategy Execution market.
i-nexus Global plc
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 09
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
09
Cash Flow
The Group has cash and cash
equivalents at the period end of
£1.5m (2018: £6.9m). Gross debt at
30 September was £0.4m of which
£0.2m was payable within one year.
The Group experienced a net outflow
of funds from operating activities of
£4.2m (2018 £1.6m). The Group had a
cash outflow of £0.4m (2018 £0.2m)
from the servicing of its debt finance.
The Group continues to apply treasury
and foreign currency exposure
management policies to minimise
both the cost of finance and our
exposure to foreign currency
exchange rate fluctuations.
Careful cash management will
continue to be a priority focus for
management and the Board for the
foreseeable future. We regularly
undertake scenario planning and
create contingency plans accordingly.
The Board's assessment in relation to
going concern is included in Note 2 of
the financial information. The Group
principal risks and uncertainties are
set out in the section Principle Risks
and Uncertainties.
Capital Expenditure
The Group operates an asset light
strategy and has low capital
requirements, therefore expenditure
on tangible fixed assets is low at 5% of
revenue (2018: 3.4%).
Alyson Levett
Chief Financial Officer
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 10
10
STRATEGIC REPORT:
Principal Risks and Uncertainties
Although the Directors seek to minimise the impact of risk factors, the Group is subject to a number of risks which may
have a material effect on its reputation, financial or operational performance. Key areas for on-going risk management are
as follows:
Risk
Description
Mitigation
Implementation of
Growth Strategy
Failure to successfully
implement its growth
strategies.
Digitalising Strategy
Execution
Failure of the market to
accept the need/urgency
to digitalise their Strategy
Execution
The Board recognises that executing the
Group’s strategy may be difficult to
implement/achieve and may not be as
successful as planned. Pressure on
management, limitations on operational
and financial resources, the potential
insufficiency of demand for the Group’s
products and a slower than anticipated
market acceptance of the Group’s
products could lead to failure to
successfully implement its strategies and
so adversely affect the Group’s
reputation, prospects, results of
operations, and its financial condition.
A large proportion of the Group’s target
market continues to use traditional
methods and in-house developed
systems to assist in their SE. The Board
believes the market needs further
education in the benefits of digitalising
SE. Potential customers may prefer to
"do nothing" and be unnecessarily
cautious about investing in the Group’s
software. Failure by the Group to
adequately explain the value proposition
to increase the market’s readiness to
accept the technology will lead to slower
than projected growth.
The Board monitors and manages these
strategies against market conditions,
monthly performance against budget
and cash available.
The Group has internal sales and
marketing functions, which are also
supported by a growing network of
consulting partners, that work with
potential customers to educate on the
benefits the product can offer an
organisation.
The StratexHub and regular customer
Consortias and Breakfast Briefing also
promote this education.
i-nexus Global plc
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 11
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
11
Risk
Description
Mitigation
One of the key strategies followed by the
Group is investment in its Success teams
aimed at broadening and deepening our
reach within accounts. In addition our
product strategy pivots around user
experience at all levels which should
drive greater adoption.
Substantial focus has been maintained
on this area this year. The CEO is
personally heavily involved in the
evolution of this strategic theme and the
Board is closely monitoring progress.
Account Proliferation
Failure of our existing
accounts to grow,
resulting from
dissatisfaction with the
product and/or
deployment issues.
Dependence on
Channel Partners
Failure to develop this
additional route to
market effectively.
An important aspect of the Group’s
growth strategy is to proliferate sales of
its i-nexus software with existing
customers as a result of the natural
evolution of the software use over time.
Although the Group has a number of
examples where this has occurred in the
past, this is no guarantee that it will
continue to happen at the increasing
rate predicted. Any failure of this
anticipated account proliferation to
happen will affect the Group’s future
success and adversely affect its
business, prospects and results of
operations and financial position.
Part of the Group’s strategy is to
increasingly sell its software through
channel partners. There are no
guarantees that sufficient channel
partners will be found to sell the Group’s
software at the rates planned. The
Directors are confident that
engagements to date by existing and
prospective channel partners provide
strong evidence of the opportunity in
this regard. However, there is a risk that
the loss of any one or more existing
channel partners and/or failure to
secure enough productive channel
partners in the future could affect the
Group’s future success and adversely
affect its business, prospects and results
of operations and financial position.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 12
12
STRATEGIC REPORT:
Principal Risks and Uncertainties continued
Risk
Description
Mitigation
Dependence on key
Customers
Failure to retain our
larger key customers.
Software Reliability
Undetected defects in
the software provided by
the Group.
Software Applicability
The i-nexus software may
not perform as expected
or meet customers’
changing expectations
quickly enough.
A small group of key customers provide
nearly half of the Group’s MRR. One of
the Group’s key customers represents
approximately 15 per cent of current
MRR and five other customers together
represent approximately 30 per cent. of
MRR. The Group’s top ten customers
generated 58 per cent of annual revenue
in FY2019. The Group’s financial
performance is therefore partly
dependent on the continued business
relationship with these key customers.
Failure to manage the ongoing renewal
of the contracts with these key
customers on a commercially acceptable
basis could materially affect the Group’s
operations and/or its financial condition.
If the software provided to our
customers contains undetected defects
when first introduced or when upgraded
then the group may fail to meet its
customers performance requirements
or otherwise satisfy contract
specifications. As a result it may lose
customers and/or become liable to its
customers for damages and this may
among other things damage the Group’s
reputation, business, prospects, results
of operation and financial condition.
There is no guarantee that the i-nexus
software will perform as intended or
meet customer expectations either in
terms of functionality, performance or
usability. Costs spent on developing the
i-nexus software may therefore not be
recouped at the rate anticipated or at all,
and this may result in reduced
profitability for the Group.
The Group has invested heavily in
Success activities and its Sales and
Account management teams. The
introduction of industry leading Success
Management software gives us the
visibility we need across our key
accounts and forms the basis of a clear
strategy of interaction with them. Whilst
this cannot guarantee renewal in the
face of disruptive external factors we
can't foresee or manage, risk is generally
lower than a year ago.
The Group targets significant investment
in product R&D. This includes
performance enhancements, bug fixes
and integration of new technologies, all
of which undergo substantial testing
before releasing to customers. In
addition the Group endeavours to
negotiate limitations of liability clauses in
its customers’ contracts.
Along with the substantial investment
made in product R&D since IPO, the
appointment of James Davies as EVP
Product has led to a review of the
Group’s product strategy that has seen
major enhancements of some strategic
importance being developed in just 6
months. The Board feels that the
Group’s product strategy and R&D focus
has been de-risked as a result of this.
i-nexus Global plc
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 13
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
13
Risk
Description
Mitigation
The Board do not consider this year’s
new deal performance to be indicative of
an underlying weakness in the market
for the Group’s product. It is clear from
competitor activity and Gartner and
Forrester interactions that the Strategy
Execution Management market is
evolving and we expect a Magic
Quadrant to be created in due course.
The Group invests in R&D and product
development to ensure that the product
remains market leading. The recent
addition of a highly experienced Head of
Marketing gives the Board comfort that
the marketing strategy will become
increasingly robust and competitive.
Market Growth
Failure of Strategy
Execution market to grow
at the rate expected.
Competitors
The Group may face
competition in a rapidly
evolving market.
The Directors believe that there is strong
evidence supporting the growth in the
adoption of Strategy Execution software.
However, there can be no assurance
that this growth will happen at the rate
envisaged by the Directors. If the market
fails to adopt Strategy Execution
software at the rate envisaged then this
will affect the Group’s future success and
adversely affect its business, prospects
and results of operations and financial
position.
The Group may face an increasing
amount of competition in the future as
the market expands, making entry to it
more attractive. Whilst the Group has
achieved its market position through a
deep understanding of the market, and
the 10 years of development of its
i-nexus software which places the Group
in a strong position, there is no
guarantee that the Group’s competitors
and potential competitors (who may
have significantly greater financial,
marketing, service, support, technical and
other resources than the Group) may be
able to develop competing products,
respond more quickly to changes in
customer requirements and devote
greater resources to the enhancement,
promotion and sale of their products,
which could have a negative impact and
disadvantage the Group’s business. The
entry into the market of strong, well
funded competitors, could have a
negative impact on sales volumes or
profit margins achieved by the Company
in the future.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp01-pp14.qxp 19/02/2020 16:09 Page 14
14
STRATEGIC REPORT:
Principal Risks and Uncertainties continued
Risk
Description
Mitigation
Security Breaches &
Cyber Attacks
Vulnerability of the
Group’s systems to
security breaches or
cyber attacks.
International
Operations
Failure of the Group to
adequately manage risks
of operating
internationally.
The Group is a Data Processor for its
customers’ confidential data. Although
the Group is ISO27001 accredited and
therefore employs security and testing
measures for the software it deploys and
the broader security environment is well
documented, these measures may not
protect it from all possible security
breaches that could harm the groups or
its customers’ business. Given the
reliance of the Group on its information
technology systems then its software is
at risk from cyber attacks. Either of these
security events may result in significant
costs being incurred and other negative
consequences including reputational
damage and a loss of investor
confidence.
A substantial proportion of the Group’s
customers and prospects operate
overseas and as a result the Group is
exposed to various risks; operational
challenges around distance, language
and culture, human resource issues,
foreign exchange movements and
different legal and taxation
environments.
The group takes its Information Security
very seriously as demonstrated by its
ISO27001 accreditation. Employees are
trained in this area including the risks of
phishing and the best practice for
Information Security. The Group has
cyber security insurance in place and the
Group endeavors to secure limitations of
liability clauses in its customer contracts.
North America represents a substantial
proportion of the Group’s revenue. As a
result we invested in setting up a New
York based team this year with both
Sales/Account Management and
Customer Support and Success teams
member employed. The remainder of
revenue flows from UK and Western
European organisations that can be
readily serviced from the UK. Other
geographies are not being considered at
this time.
i-nexus Global plc
257530 i-nexus AR pp15.qxp 19/02/2020 16:09 Page 15
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
15
CORPORATE GOVERNANCE:
Board of Directors
Richard Cunningham, Independent Non-Executive Chairman
Richard Cunningham is a technology entrepreneur who has built and sold a number of
businesses and who has extensive experience in equity research, financial analysis and
corporate finance, focusing on technology companies. He built one of the UK’s leading
independent corporate telecommunications service providers, Project Telecom Plc, before
listing it on the London Stock Exchange and eventually selling it to Vodafone. Richard also
founded Octium Ltd to “buy and build” a digital connectivity and applications business, which
was exited successfully through a sale to MDNX. He is currently Chairman of two private
technology businesses, CommonTime Ltd and Viewber Ltd. Richard also sits on the investment
committee of Herald Ventures, the venture capital business of Herald Investment Management.
Simon Crowther, Chief Executive Officer
Simon Crowther joined the Company as Software Development Manager in 2006 and has
worked within every key area of the business prior to becoming COO in 2013 and led a process
of change and refocus of the business since becoming CEO in 2016. Simon has a background
in software development, having also spent almost three years at Intascape (a division of See
Tickets) as a senior software architect. He has two masters degrees from Birmingham
University: one in mathematics and the second in computer science.
Alyson Levett, Chief Financial Officer
Alyson Levett joined the Company as Finance Director in 2012, assuming a strategic role and
day-to-day responsibility for planning, implementing, managing and controlling all finance-
related activity. Alyson has an extensive background in finance, including as Finance Director of
Griffin Internet prior to its acquisition by MDNX in 2012. Alyson was also a Director of AML
Financial Consultancy Limited, through which she provided consultancy services to businesses
on a range of finance related matters. She has a masters degree in economics from Cambridge
University and is a qualified Chartered Accountant.
Nigel Halkes, Independent Non-Executive Director
Nigel Halkes is an experienced Non-Executive Director and a former Managing Partner of Ernst
& Young, UK & Ireland (“EY”). He is a Non-Executive Director of Hargreaves Services plc, an AIM
listed company, where he chairs the audit committee and he is a Non-Executive Director of
Tribal Group Plc, also an AIM listed Company. Nigel was also a Non-Executive Director of
FreeAgent Holdings plc, a provider of cloud-based SaaS accounting software, which was
admitted to AIM in November 2016 and was subsequently sold to Royal Bank of Scotland for
£53 million on 1 June 2018. Nigel was a partner at EY for 25 years, during which time he led
their Technology, Media & Telecommunications business through a period of sustained growth.
In his leadership role at EY, Nigel was responsible for the UK firm’s growth strategy, key account
programme and the business development function.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 16
16
CORPORATE GOVERNANCE:
Corporate Governance Statement
Chairman’s Introductory Statement on Corporate Governance
As Chairman, my role is to lead the Board, ensure it operates effectively and contains the right balance of skills, diversity
and experience. The Board is collectively responsible for the long-term success of the Company and for setting and
executing the business strategy. I believe our culture is consistent with the Company’s objectives, strategy and business
model and is supportive in minimising our principal risks and uncertainties.
Good corporate governance is a key element of our business success and we have in place a strong and effective
governance framework and practices to ensure that high standards of governance, values and behaviours are consistently
applied throughout the Company. These elements are critical to business integrity and maintaining the trust of all
stakeholders in i-nexus.
The following Corporate Governance Report contains a summary of the Company's governance arrangements and the
regulatory assurances required under the UK Corporate Governance Code.
Overview
The Directors recognise the value and the importance of high standards of corporate governance. From 28 September
2018 AIM companies have been required to apply a recognised corporate governance code. The Company has adopted
and complies with all 10 principles of the Corporate Governance Code published by the Quoted Companies Alliance (the
QCA Code). The ways in which the Company complies with the QCA Code are identified below and can also be found on
our website.
1. Long-term Value and Strategy
The Company’s business model is designed to promote long-term value for all stakeholders. It is explained more in the
CEO Statement above.
2. Shareholder Engagement
The Company actively engages in dialogue with shareholders. The Chief Executive Officer and Chief Financial Officer
regularly meet with institutional shareholders and analysts, including after the announcement of full year and half-year
results, and are responsible for ensuring that their expectations are understood by the Board. In addition the Chairman is
available should shareholders need his input. The AGM also provides an opportunity for all shareholders to engage and to
ask questions of the Board. In addition, the Company engages with its shareholders through regular RNS communications
to provide updates on financial and commercial matters.
3. Stakeholders
The Board considers the interests of shareholders and all relevant stakeholders in line with section 172 of the Companies
Act 2006. The Company focuses on building strong and sustainable relationships with a range of different stakeholders in
order to support the long-term success of the Company. The primary external stakeholders are customers. Along with the
Customer Success teams that have regular interactions with the customer during the course of implementation of the
Company’s solution and during the life of a customer contract to ensure that feedback can be provided and responded to,
we also run a series of customer Consortia within our core geographies to share information with our customers and
obtain their feedback on the strategic direction of the product. With the evolution of our channel partner programme we
will look to develop some form of partner Forum, at which we will share information about our product and solicit feedback
and market intelligence. For our primary internal stakeholders, employees, we create a motivational and supportive work
environment to promote high performance and low turnover. Regular employee engagement events are held through live
webinar due to the geographically dispersed nature of the Company’s workforce, and the CEO and members of the
Executive team regularly hold local employee “town hall” meetings when visiting the global offices.
i-nexus Global plc
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 17
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
17
4. Risk Management
The Company is exposed to a number of potential risks which may have a material effect on its reputation, financial or
operational performance. The Board has overall responsibility for risk management and internal controls and is fully
supported by the Audit Committee. More detail about the identified principal risks and uncertainties can be found on
pages 10 to 14. The Board has overall responsibility for the Company’s system of internal control and for reviewing its
effectiveness. The processes to identify and manage the key risks of the Company are an integral part of the internal
control environment. Such processes, which are regularly reviewed and improved as necessary, include strategic planning,
approval of annual budgets, regular monitoring of performance against budget (including full investigation of significant
variances), control of capital expenditure, ensuring proper accounting records are maintained, the appointment of senior
management and the setting of high standards for health, safety and environmental performance.
5. Board Practice
The Board consists of the Chairman, two Executive Directors and one Non-Executive Director. The biographical details of
the Board members can be found on page 15. The Board has determined Nigel Halkes is independent in character and
judgement. The Chairman, Richard Cunningham, is not considered to be independent, however the Board considers that
his long experience as Chairman of the Board of i-solutions Global Limited (which is the Operating entity of i-nexus Global
plc) is of benefit to the Board in providing continuity of knowledge and additional industry expertise to the Company. The
Board meets sufficiently regularly, at least ten times throughout the year. Meetings of the Non-Executive Directors without
the Executive Directors being present are held at least annually. Further information on the Board, its constitution and
procedures can be found below.
6. Board Composition and Performance
The Board considers its overall size and current composition to be suitable and have an appropriate balance of sector,
financial and public markets skills and experience as well as an appropriate balance of personal qualities and capabilities.
Further details on our compliance in this area can be found on page 18.
7. Board Evaluation
The Board recognises that it continually needs to monitor and improve its performance. This is achieved through an
informal annual performance evaluation, full induction of new Board members and ongoing Board development activities.
The Chairman is responsible for ensuring that all Non-Executive Directors receive ongoing training and development. Our
Non-Executive Directors are conscious of the need to keep themselves properly briefed and informed about current issues.
8. Company Culture
The Company has no pre-defined set of values formally documented, however the following graphic identifies behaviours
and attitudes the Company expects employees to reflect.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 18
18
CORPORATE GOVERNANCE:
Corporate Governance Statement continued
These values are reflected in everything that we do, beginning with the selection criteria used in the employee recruitment
process and continuing throughout all elements of the Company’s business. The Board ensures that ethical behaviours are
expected and followed by approving a set of internal policies on matters such as anti-bribery and whistleblowing, and by
ensuring that appropriate systems and controls are in place to ensure compliance with those policies.
9. Governance
Whilst the Board is collectively responsible for defining corporate governance arrangements, the Chairman is ultimately
responsible for corporate governance. The governance structures within the Company have been assessed by the Board
and are considered appropriate for the size, complexity and risk profile of the Company. This will be reviewed by the Board
to ensure governance arrangements continue to be appropriate as the Company changes over time. There is a formal
schedule of matters reserved for the decision of the Board that covers the key areas of the Company’s affairs. The schedule
includes approval of the Annual Report and any other financial statements, the adoption of the budgets and business
plans, material financial commitments, and the release of inside information. The Chairman and Chief Executive Officer
have clearly defined roles and responsibilities. The role of the Chairman is to lead the Board and ensure it is operating
effectively in approving and monitoring the strategic direction of the Company. The role of the Chief Executive is to propose
strategic direction to the Board and to execute the approved strategy by leading the executive team in managing the
Company’s business. The Board is supported by an Audit Committee and a Remuneration Committee.
10. Communication
The Company is committed to open communications with all its shareholders. Communication is primarily through the
Company’s website and the Annual General Meeting. All shareholders will receive a copy of the Annual Report. Copies of
historical Annual Reports and notices of general meetings covering the period since the shares of the Company were
admitted to trading on AIM are also available on the Company’s website. The Company reports on the responsibilities and
activities of each of the Committees in the Annual Report.
Board Constitution and Procedures
As at 30 September 2019, the Board comprised the Non-Executive Chairman, the Chief Executive Officer, the Chief
Financial Officer, and one Non-Executive Director.
The Directors, together, act in the best interests of the Company via the Board and its Committees, devoting sufficient time
and consideration as necessary to fulfil their duties. Each Director brings different skills, experience and knowledge to the
Company, with the Non-Executive Directors additionally bringing independent thought and judgement.
The Non-Executive Directors are considered by the Board to be independent of management and freely able to exercise
their independent judgement in all matters related to the Board. Any conflicts of interest are declared at the start of each
Board meeting.
Board meetings are convened monthly where all Directors are provided with comprehensive information to digest and
discuss. Any specific actions arising during meetings agreed by the Board are followed up and reviewed at subsequent
Board meetings to ensure their completion.
i-nexus Global plc
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 19
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
19
Attendance at Meetings
Since the issue of the last Annual Report there were 10 Board Meetings. The details of attendees are shown below:
BOARD REMUNERATION AUDIT
MEETINGS COMMITTEE COMMITTEE
Richard Cunningham 12/12 2/2 2/2
Nigel Halkes 12/12 2/2 2/2
James Davies 3/3
Simon Crowther 12/12
Alyson Levett 11/12
Paul Docherty 4/4
Roles and Responsibilities
The roles of the Chairman and Chief Executive Officer are separated and clearly defined.
The Chairman provides leadership to the Board by ensuring that the Board has sufficient time to discuss issues on the
agenda and facilitating constructive discussion on these items.
The Chief Executive provides day to day management of the Group’s employees and is responsible for the leadership of the
i-nexus Senior Management team. He is responsible, along with the Senior Management team, for the execution of strategy
approved by the Board and the implementation of Board decisions.
Internal Control
Management has considerable autonomy to run and develop the business of the Group’s. The Board believes that a
well-designed system of internal reporting and control is necessary. The Board has overall responsibility to develop and
strengthen internal controls as required. The Audit Committee, on behalf of the Board, has the responsibility for reviewing
internal controls. The system is designed to provide reasonable, but not absolute, assurance that the assets of the
Company are safeguarded, that proper accounting records are maintained, and that reliable financial information is
produced.
Audit Committee
The Audit Committee has responsibility for monitoring the integrity of the Group’s financial statements, reviewing
significant financial reporting issues, reviewing the effectiveness of the Group’s internal control and risk management
systems, assessing the need for internal audit and overseeing the relationship with the external auditor, including advising
on their appointment, reviewing the scope of their audit and their fees and ensuring their independence.
The Audit Committee comprises the Non-Executive Directors. Nigel Halkes chairs the Committee. He is a Chartered
Accountant, who brings a high level of financial and corporate governance experience to the Committee. The Board is
satisfied that he has recent and relevant financial experience. The Chief Financial Officer and External Auditor are invited to
attend the meetings. The External Auditor throughout the financial year was Saffery Champness LLP, who conducted the
external audit. The Committee meets at least two times a year to review the interim results, the external audit plan and the
full year results and external audit report.
The Committee reviewed the annual report and accounts before submission to the Board, including reviewing the reports
from Saffery Champness LLP on their work and findings from the external audit and compliance with the Group’s policies
and procedures and applicable accounting standards and legislation. Topics discussed included the Group’s compliance
with accounting standards on software revenue recognition and capitalisation of software development costs and the
Group’s going concern disclosures. These significant issues were discussed by the Committee taking guidance from the
Independent Auditor and discussions with the CFO.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 20
20
CORPORATE GOVERNANCE:
Corporate Governance Statement continued
The FRC’s ethical standard for auditors requires key audit partners of public interest entities or other listed entities to cease
their participation in the statutory audit not later than 5 years from the date of their appointment. When an entity becomes
a public interest entity or another listed entity, the time already served is considered and where the engagement partner
has acted for 4 or more years, that individual may continue to serve for not more than 2 years after the entity becomes
listed. Last year, the Board decided to extend Alistair Hunt of Saffery Champness LLP’s tenure as audit partner by a further
two years beyond the one remaining year before rotation is required. The audit firm, Saffery Champness LLP also agreed to
this extension to safeguard the quality of the audit engagement. This year, the Board discussed the plans to rotate audit
partners for 2020 and agreed that the candidates proposed by Saffery Champness LLP be interviewed by the Chair of the
Audit Committee and the CFO for suitability.
The Committee reviewed the effectiveness of the Group’s internal controls, including enquiry of the Independent Auditor
and concluded that they were appropriate for a business of the size, scale and complexity of i-nexus. The Committee also
determined that a separate internal audit function was not required during the year, but this decision will be kept under review.
The independence and objectivity of the Independent Auditor were considered and found to be satisfactory.
Independence and objectivity
The Committee has a policy governing the engagement of the external auditor to provide non-audit services. Safeguards
are in place to preserve Auditor independence; use of separate teams for tax compliance, the Board and Committee are
satisfied by these safeguards. As such the Committee has pre-approved that permitted non-audit services can be provided
up to a maximum of 50% of the Audit fees. For certain specific permitted services, the Committee has pre-approved that
Saffery Champness can be engaged by management, subject to the policies referred to above.
The Committee also received confirmation from Saffery Champness that there are no relationships between the Company
and Saffery Champness that may have a bearing on its independence.
Further details of the fees paid, for audit and non-audit services, to Saffery Champness for the 2019 and 2018 financial
years can be found in note 8 to the financial statements. Given the safeguards in place and to allow for continuity post IPO
the Committee decided not to use another independent firm for the non-audit services.
The Independent Auditor also met with the Chairman of the Committee without management present. The effectiveness of
the annual audit process was also reviewed and the quality of delivery and service levels provided were assessed.
Remuneration Committee
The Remuneration Committee was comprised of Richard Cunningham (Chairman), Nigel Halkes and James Davies until his
resignation from the Board on 1 January 2019. Since then it is comprised of the remaining two members. The Committee
meets at least annually and reviews the performance of the Executive Directors and makes recommendations to the Board
on matters relating to the remuneration of the Executive Directors and Senior Management, including bonus awards, share
incentive plans and objectives. The Committee also reviews and makes recommendations to the Board on the overall
remuneration policy of the Group, including the design of any performance related pay schemes, share incentive schemes
and employee benefit structures.
Nomination Committee
In the event of any new Director appointments being proposed, the Board will meet as a whole to discuss and as such no
nomination committee has been constituted.
i-nexus Global plc
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 21
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
21
CORPORATE GOVERNANCE:
Group Directors Report For the year ended 30 September 2019
Group Directors Report
The Directors of i-nexus Global plc (the “Company”) present their report and the Financial Statements of the Company and
its subsidiary undertakings (together the “Group” or “i-nexus”) for the year to 30 September 2019.
Directors
The Directors who served on the Board during the year and to the date of this report are as follows:
Richard Cunningham
Nigel Halkes
Simon Crowther
Alyson Levett
Paul Docherty (Resigned 13 February 2019)
James Davies (Resigned 1 January 2019)
Directors’ Responsibilities
The Directors are responsible for preparing the Strategic Report, the Corporate Governance Report and the Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law, the Directors
have elected to prepare the Group and Company Financial Statements in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union. Under company law, the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and
of the profit or loss of the Group for that period. The Directors are also required to prepare Financial Statements in
accordance with the Rules of the London Stock Exchange for companies trading securities on the Alternative Investment
Market and the ESM exchange of the Irish Stock Exchange.
In preparing these Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRS as adopted by the European Union, subject to any
material departures disclosed and explained in the Financial Statements;
• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
Company and enable them to ensure that the Financial Statements comply with the requirements of the Companies Act
2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Policy on Executive Directors and Senior Management Remuneration
When determining the Board policy for remuneration, the Remuneration Committee considers all factors which it deems
necessary including relevant legal and regulatory requirements and the provisions and recommendations of relevant
guidance. The objective of this policy is to help attract, retain and motivate the Executive and Senior Management of the
Company without paying more than necessary. The remuneration policy bears in mind the Company’s appetite for risk and
is aligned to the Company’s long term strategic goals. A significant proportion of remuneration is structured to link rewards
to corporate and individual performance and be designed to promote the long-term success of the Company.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 22
22
CORPORATE GOVERNANCE:
Group Directors Report For the year ended 30 September 2019
Base Salary Review
Having taken external advice the Remuneration Committee developed its 2019 remuneration proposals based on what the
Remuneration Committee believe to be appropriate remuneration levels for the Company at its current stage of
development.
Bonus Payments
All Executive Directors and Senior Management are eligible for a discretionary annual bonus. Annual cash bonuses are paid
on the achievement of pre-set financial objectives. The Committee in conjunction with the Board reviews and sets these
objectives at the start of each financial year. The primary objective is achieving the annual budget which is approved at the
start of each financial year.
In the current year, the Executive Management team did not achieve the pre-set objectives and have received 0% of their
target cash bonus.
Long Term Incentives
The Company has adopted both a Long Term Incentive Plan and an Employee Share Option Plan (the “Plans”) with all
Directors, Senior Management and employees of the Company eligible to receive awards on the Plans. No options were
granted under the plans in 2019. In accordance with UK best practice on corporate governance, it is the Company’s current
policy not to award share options to Non-Executive Directors.
Directors’ Remuneration – Current Year
The remuneration of Directors for the year ended 30 September 2019 was as follows:
Pension
Base Salary Contri- 2019
and Fees Bonuses butions Total
£‘000 £‘000 £‘000 £‘000
Simon Crowther 170 – 11 181
Alyson Levett 145 – 9 154
Richard Cunningham 48 – 1 49
James Davies 9 – 0 9
Nigel Halkes 35 – – 35
Paul Docherty 163* – 2 165
Frank Bury – – – –
Kevin Douglas – – – –
2019 TOTAL 570 – 23 593
Period to 30 September 2019 –
Share based payments – – – –
Period to 30 September 2019 – Total 570 – 23 593
* includes £50k relating to loss of office
2018
Total
£‘000
166
150
21
33
13
155
18
17
573
28
601
i-nexus Global plc
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 23
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
23
Directors and their Interests
Interest in ordinary shares of 10p
The Directors of the Company held the following interest in the ordinary shares of i-nexus Global plc:
Director
Simon Crowther
Alyson Levett
Richard Cunningham
Nigel Halkes
30 September 30 September
2019
%
2019
Number
868,475
777,796
1,083,100
20,331
2.94
2.63
3.66
0.07
Fees Retained for External Non-Executive Directorships
Executive Directors may hold positions in other companies as Non-Executive Directors and retain the fees. Non-Executive
Directors may hold positions in other companies as either Executive or Non-Executive Directors and retain the fees. Alyson
Levett and Simon Crowther held no external Non-Executive Directorships in the period. Both Richard Cunningham and
Nigel Halkes held external Non-Executive Directorships in the period.
Results and Dividends
The results for the year are set out on page 31 and are also discussed in the Strategic Report. The Directors do not
recommend payment of a dividend.
Share Capital Structure
The Company’s ordinary shares of 10p are listed on the Alternative Investment Market (“AIM”) market of the London Stock
Exchange (ticker: INX). At the date of this report, 29,571,605 ordinary shares of 10p each were in issue. Details of share
issues and changes to the capital structure during the year are set out in note 22.
Substantial Shareholdings
The Company is aware that the following had an interest of 3% or more in the issued ordinary share capital of the
Company:
Rank Investor
1 Herald Investment Management
2 Amati Global Investors
3 Alto Invest
4 Canaccord Genuity Wealth Management
5 Antrak Limited
6 Gresham House
7 Bury Fitzwilliam-Lay and Partners LLP
8 Chelverton Asset Management
9 Richard Cunningham
10 The Capital for Enterprise Fund LP
30 September 30 September
2019
%
2019
Number
4,031,490
3,164,557
3,164,557
2,770,152
1,852,210
1,582,279
1,459,460
1,325,000
1,083,100
889,080
13.63
10.70
10.70
9.37
6.26
5.35
4.94
4.48
3.66
3.01
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 24
24
CORPORATE GOVERNANCE:
Group Directors Report For the year ended 30 September 2019
There were no notified changes in these holdings in the period after year end to the date of signing the financial
statements.
Qualifying Indemnity Provision
The Group has in place insurance protection, including a Directors and Officers liability policy, to cover the risk of loss when
management deems it appropriate and cost effective; however in some cases risks cannot be effectively covered by
insurance and the cover in place may not be sufficient to cover the extent of potential liabilities.
Going Concern
After making appropriate enquires, the Directors consider that the Company and the Group has adequate resources to
continue in business for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing
the Financial Statements. As part of their enquires the Directors reviewed budgets, projected cash flows, and other relevant
information for 12 months from the date of approval of the Consolidated Financial Statements for the year ended
30 September 2019.
As disclosed in Note 2 to the financial statements, the Group’s forecasts, taking into account reasonably possible changes,
show that the Group will be able to operate with adequate financial headroom for the 12 months from the date of approval
of the Consolidated Financial Statements for the year ended 30 September 2019.
Events After the Reporting Period
Events after the reporting period are set out in note 26 to the Financial Statements. Likely future developments in the
business are discussed in the Strategic Report.
Auditors
The Board are recommending Saffery Champness LLP for re-appointment as auditor of the Company, Saffery Champness
LLP have expressed their willingness to accept this appointment and a resolution re-appointing them will be submitted to
the forthcoming Annual General Meeting.
Disclosure of Information to the Auditors
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any
information needed by the Company’s auditors for the purposes of their audit and to establish that the auditors are aware
of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.
Equality and Diversity
The Company operates an equal opportunities policy which endeavours to treat individuals fairly and not to discriminate
on the basis of gender, disability, race, national or ethnic origin, sexual orientation or marital status. Applications for
employment are fully considered on their merits, and employees are given appropriate training and equal opportunities for
career development and promotion.
Website Publication
The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a
website. Financial Statements are published on the Company’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of Financial Statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’
responsibility also extends to the on-going integrity of the Financial Statements contained therein.
i-nexus Global plc
257530 i-nexus AR pp16-pp25.qxp 19/02/2020 16:08 Page 25
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
25
Annual General Meeting
The Company will hold the 2019 AGM on Monday 23rd March 2020. The Notice of the Meeting accompanies the Annual
Report and Accounts.
By Order of the Board
Alyson Levett
Company Secretary
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp26-pp30.qxp 19/02/2020 16:08 Page 26
26
FINANCIAL STATEMENTS:
Independent Auditor’s Report For the year ended 30 September 2019
Opinion
We have audited the financial statements of i-nexus Global plc (‘the parent company’) and its subsidiaries (the ‘Group’) for
the year ended 30 September 2019 which comprise the Group Statement of Comprehensive Income, the Group Statement
of Financial Position, the Company Statement of Financial Position, the Group Statement of Changes in Equity, the
Company Statement of Changes in Equity, the Group and Company Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European
Union.
In our opinion, the financial statements:
• give a true and fair view of the state of affairs of the Group and of the parent company as at 30 September 2019 and of
the Group’s loss for the period then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to SME listed
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
•
•
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the Group’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve
months from the date when the financial statements are authorised for issue.
i-nexus Global plc
257530 i-nexus AR pp26-pp30.qxp 19/02/2020 16:08 Page 27
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
27
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Key Audit Matter How our audit addressed the key audit matter
Revenue recognition and compliance
with IFRS 15
As detailed in the notes to the financial
statements, the Group’s revenue is generated
from the development and licencing of cloud-
based software and associated maintenance,
support, software customisation and
professional consultancy services.
Revenue is recognised in accordance with the
terms of the contracts with customers which
can span a period of over twelve months in
compliance with IFRS. The Group has
adopted IFRS 15 using the full retrospective
approach based on the five-step model
prescribed within the standard.
The recognition and capitalisation of
development costs
As detailed in the notes to the financial
statements, the Group carries out research
and development of its internally generated
software. The expenditure that does not
meet the recognition criteria of IAS 38 should
be expensed to the consolidated statement
of comprehensive income. The expenditure
that meets the recognition criteria of IAS 38
should be capitalised as an intangible asset
and amortised over the period in which the
Group expects to benefit from it.
This capitalised development expenditure
must adhere to the specific recognition
criteria and disclosure requirements under
IAS 38.
Our audit procedures included the following:
• We tested a sample of contracts and corroborated the accounting
treatment including the amount of deferred income recognised at the
period end;
• We tested a sample of project income to time records and ensured
this income was recorded in line with the Group’s revenue recognition
policy; and
• We reviewed the requirements of IFRS 15, assessed management’s
basis for recognition and re-performed calculations on adoption of
the new standard.
Based on our procedures we have concluded that revenue has been
recognised in accordance with the financial reporting framework and the
Group has properly adopted IFRS 15.
Our audit procedures included the following:
• We reviewed the development criteria alongside managements
workings and justifications, ensuring these comply with the accounting
standards for capitalisation or not;
• We validated the costs to underlying records; and
• We discussed with management the stage of completion and carrying
value of the unamortised costs.
Based on our procedures we have concluded that the expenditure has
been appropriately accounted for including the capitalisation of certain
development costs.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp26-pp30.qxp 19/02/2020 16:08 Page 28
28
FINANCIAL STATEMENTS:
Independent Auditor’s Report continued
Key Audit Matter How our audit addressed the key audit matter
Recoverability of intercompany
receivables in the Company balance
sheet
The Company has a combined investment in
its subsidiary undertaking of £9.5m. The
subsidiary has net liabilities on its balance
sheet which is an indicator of impairment.
The net assets and distributable reserves of
the parent company may be overstated as
losses sustained by subsidiaries cannot be
remitted to the parent.
There is significant judgement in the
calculation of future returns on investments
driven by growth in EBITDA.
Going concern
The going concern assumption is
fundamental in the preparation of financial
statements. The Group utilised cash of £5.5m
in the year and cash reserves were at £1.5m
at year end. This raises the concern that the
business may have insufficient cash to trade
for the coming year without further placing of
shares. The Group has no banking facilities to
utilise.
Our audit procedures included the following:
• We reviewed the discounted cash flow calculations provided by
management to support the carrying value of the investment;
• We ensured that the numbers used for the calculations were based
on the Board’s plans and the forecasts were reasonable;
• We reviewed the current status of the MRR, pipeline and growth plans;
and
• We held discussions with management to challenge assumptions and
conclusions.
Based on our procedures we have concluded that the existing business
plan and forecast growth justify the carrying value of the investment. No
impairment of the investment in subsidiary or intercompany debtor has
been made.
Our audit procedures included the following:
• We reviewed the paper and financial model prepared by the
management team to support their conclusion that the business was
a going concern;
• We reviewed the sensitivities prepared by management and the MRR,
reconciling this to the historic information on MRR; and
• We spoke to management and challenged the assumptions used.
Based on our procedures we concluded that the going concern
assumption adopted by the Directors appears reasonable. The
sensitivities demonstrated that there are actions management can
implement should the plans not deliver the growth hoped without the
Group undertaking a fund raising.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. For planning we consider materiality to be the magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below
these levels will not necessarily be evaluated as immaterial as we also take into account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole.
i-nexus Global plc
257530 i-nexus AR pp26-pp30.qxp 19/02/2020 16:08 Page 29
STRATEGIC REPORT
STRATEGIC REPORT
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
29
The materiality for the Group financial statements as a whole was set at £100,000. This was determined with reference to a
benchmark of revenue which we consider to be the principal consideration in assessing the financial performance of the
Group. The Group considers monthly recurring revenue growth to be the key performance indicator.
Performance materiality was set at 80 percent of the above materiality level.
We agreed with the Audit Committee that we would report to the Committee all individual audit differences in excess of
£5,000. We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative
grounds.
An overview of the scope of our audit
The Group manages its operations from a single location in the UK and has common financial systems, processes and
controls covering all significant components. The audit of all significant components was performed by the same audit
team.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate
quantitate coverage of significant accounts in the financial statements, we determined that two components, i-nexus
Global plc and i-solutions Global Limited, represented the principal business units within the Group. A full scope audit was
undertaken on each component.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the
Annual Report, other than the financial statements and our Auditor’s Report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there is a material misstatement in the financial statements
or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information; we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
•
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we
have not identified material misstatements in the Strategic Report or the Directors’ Report.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp26-pp30.qxp 19/02/2020 16:08 Page 30
30
FINANCIAL STATEMENTS:
Independent Auditor’s Report continued
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
•
the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 21, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This Report is made solely to the Group’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Group’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Group and the Group’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Alistair Hunt (Senior Statutory Auditor)
for and on behalf of Saffery Champness LLP
Chartered Accountants
Statutory Auditors
Suite C, Unex House
Bourges Boulevard
Peterborough
PE1 1NG
4 February 2020
i-nexus Global plc
257530 i-nexus AR pp31-pp36.qxp 19/02/2020 16:08 Page 31
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
31
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2019
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Adjusted EBITDA
Depreciation and profit/loss on disposal
Share based payment expense
Non-underlying items
Finance income
Finance costs
Loss before taxation
Tax expense
Loss for the year
Other comprehensive income:
Exchange differences arising on translation of foreign operations
Loss on net investment hedge
Total comprehensive loss for the year
Note
5
6
10
7
11
Year ended
30 September
2019
£
As restated
Year ended
30 September
2018
£
4,759,072
(1,212,175)
3,546,897
(7,817,865)
(4,270,968)
(4,050,691)
(105,977)
–
(114,300)
6,904
(66,838)
(4,330,902)
401,164
(3,929,738)
4,741,915
(1,488,028)
3,253,887
(4,139,628)
(885,741)
(626,916)
(53,737)
(30,000)
(175,088)
1,847
(124,384)
(1,008,278)
186,957
(821,321)
(14,030)
(92,158)
(54)
(28,529)
(4,035,926)
(849,904)
Attributable to equity holders of company
(4,035,926)
(849,904)
Basic and diluted loss per share
The notes on pages 46 to 63 form part of these financial statements.
£
(0.14)
£
(0.05)
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp31-pp36.qxp 19/02/2020 16:08 Page 32
32
Consolidated Statement of Financial Position
For the year ended 30 September 2019
30 September
2019
£
Note
As restated
30 September
2018
£
13
14
17
17
18
20
19
19
20
21
22
618,609
339,131
957,740
1,418,293
400,000
1,533,323
3,351,616
4,309,356
159,730
942,210
1,541,109
2,643,049
243,500
80,702
324,202
2,967,251
1,342,105
55,011
199,222
254,233
1,751,956
183,162
6,940,573
8,875,691
9,129,924
298,998
904,668
2,064,295
3,267,961
403,230
80,702
483,932
3,751,893
5,378,031
2,957,161
7,256,188
–
–
(23,538)
10,653,881
(19,501,587)
2,957,161
7,256,188
–
–
(9,508)
10,653,881
(15,479,691)
1,342,105
5,378,031
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Total non-current assets
Current assets
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Borrowings
Trade and other payables
Deferred income
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Share based payment reserve
Foreign exchange reserve
Merger reserve
Accumulated losses
Total equity
Approved by the Board and authorised for issue on 4 February 2020.
Simon Crowther
Director
Company Registration No. 11321642
i-nexus Global plc
257530 i-nexus AR pp31-pp36.qxp 19/02/2020 16:08 Page 33
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
33
Company Statement of Financial Position
As at 30 September 2019
ASSETS
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Issued capital
Share premium
Accumulated losses
Total equity
30 September
2019
£
30 September
2018
£
Note
15
17
18
19
22
1,654,770
1,654,770
1,654,770
1,654,770
7,902,272
66,831
7,969,103
9,623,873
8,379,633
–
8,379,633
10,034,403
90,123
90,123
90,123
157,693
157,693
157,693
9,533,750
9,876,710
2,957,161
7,256,188
(679,599)
9,533,750
2,957,161
7,256,188
(336,639)
9,876,710
As permitted by section 408 Companies Act 2006, The Company has not presented its own profit and loss account and
related notes. The parent company’s loss for the year was £342,960.
Approved by the Board and authorised for issue on 4 February 2020.
Simon Crowther
Director
Company Registration No. 11321642
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp31-pp36.qxp 19/02/2020 16:08 Page 34
34
Consolidated Statement of Changes in Equity
For the year ended 30 September 2019
Share
Capital based Foreign Accum-
Issued Share redemption payment exchange Merger ulated Total
capital premium reserve reserve reserve reserve losses equity
As restated £ £ £ £ £ £ £ £
At 1 October 2017 1,417,216 4,086,013 6,468,287 23,578 (9,454) – (14,307,385) (2,321,745)
Effective new standards adopted
in year – – – – – – (140,106) (140,106)
Prior year adjustment – – – – – – (235,928) (235,928)
As restated at 1 October 2017 1,417,216 4,086,013 6,468,287 23,578 (9,454) – (14,683,419) (2,697,779)
Loss for year – – – – – – (821,321) (821,321)
Other comprehensive income – – – – (54) – (28,529) (28,583)
Transfer to merger reserve – (4,085,249) (6,468,287) – – 10,553,536 – –
Transfer to losses – – – (53,578) – – 53,578 –
Issue of share capital 1,539,945 8,461,426 – – – 100,345 – 10,101,716
Issue costs – (1,206,002) – – – – – (1,206,002)
Share based payment expense – – – 30,000 – – – 30,000
At 30 September 2018 2,957,161 7,256,188 – – (9,508) 10,653,881 (15,479,691) 5,378,031
Loss for the year – – – – – – (3,929,738) (3,929,738)
Other comprehensive income – – – – (14,030) – (92,158) (106,188)
Share based payments – – – – – – – –
At 30 September 2019 2,957,161 7,256,188 – – (23,538) 10,653,881 (19,501,587) 1,342,105
i-nexus Global plc
257530 i-nexus AR pp31-pp36.qxp 19/02/2020 16:08 Page 35
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
35
Company Statement of Changes in Equity
For the year ended 30 September 2019
Issued
capital
£
Incorporated on 20 April 2018 –
Loss for the period –
Issue of share capital 2,957,161
Issue costs –
Share
premium
£
–
–
8,461,426
(1,205,238)
At 30 September 2018 2,957,161
7,256,188
Loss for the year –
Other comprehensive income –
–
–
At 30 September 2019 2,957,161
7,256,188
Accumulated
losses
£
–
(336,639)
–
–
(336,639)
(342,960)
–
(679,599)
Total
equity
£
–
(336,639)
11,418,587
(1,205,238)
9,876,710
(342,960)
–
9,533,750
Reserve Description
Issued capital Nominal value of issued shares.
Share premium Includes all current and prior period premiums on shares allotted.
Capital redemption reserve This reserve relates to historic repurchases of preference shares.
Share based payment reserve This reserve relates to amounts recognised for the fair value of share options granted
in accordance with IFRS 2.
Foreign exchange reserve This reserve relates to exchange differences arising on the translation of foreign
subsidiary operations.
Merger reserve This represents the carrying value of the investment in the subsidiary undertaking at
the point of the share for share exchange.
Accumulated losses All other net gains and losses not recognised elsewhere
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp31-pp36.qxp 19/02/2020 16:08 Page 36
36
Consolidated and Company Statement of Cash Flows
For the year ended 30 September 2019
Group
Group As restated Company Company
Year ended Year ended Year ended Year ended
30 September 30 September 30 September 30 September
2019 2018 2019 2018
Notes £ £ £ £
Cash flows from operating activities
Loss before taxation (4,330,902) (1,008,278) (342,960) (336,639)
Adjustments for non-cash/non-operating
items:
Depreciation and profit on disposals 105,977 53,737 – –
IPO Costs – 175,088 – –
Share based payments – 30,000 – –
Finance income (6,904) (1,847) – –
Finance charges 66,838 124,384 26 441
(4,164,991) (626,916) (342,934) (336,198)
Changes in working capital:
Decrease/(increase) in trade and other
receivables 333,663 (250,945) 477,360 (8,379,633)
(Decrease)/increase in trade and other payables (577,802) (976,963) (67,570) 157,693
Taxation 184,326 282,671 – –
Net cash from operating activities (4,224,804) (1,572,153) (409,790) (8,558,138)
Cash flows from investing activities
Purchase of property, plant and
equipment 14 (247,040) (118,141) – –
Proceeds from sale of property, plant
and equipment 14 1,154 – –
Purchase of development costs 13 (563,598) (55,011) – –
Interest received 6,904 1,847 – –
Net cash flow from investing activities (802,580) (171,305) – –
Cash flows from financing activities
Proceeds from shares – 9,982,508 – 9,763,817
Less issue costs – (1,381,090) – (1,205,238)
Proceeds from borrowings – 1,299,863 – –
Repayment of borrowings (298,998) (1,338,486) – –
Interest paid (66,838) (124,384) (25) (441)
Net cash flow from financing activities (365,836) 8,438,411 (25) 8,558,138
Net (decrease)/increase in cash and
cash equivalents (5,393,220) 6,694,953 66,831 –
Cash and cash equivalents beginning of
period 6,940,573 245,674 – –
Effect of foreign exchange rate changes (14,030) (54) – –
Cash and cash equivalents at the
end of the period 1,533,323 6,940,573 66,831 –
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 37
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
37
Notes to the Financial Statements
For the year ended 30 September 2019
1 General information
i-nexus Global plc is a public company limited by shares incorporated in England and Wales (registration number
11321642). The registered office and principal place of business is i-nexus, i-nexus Suite, George House, Herald Avenue,
Coventry Business Park, Coventry, CV5 6UB .
The principal activity of i-nexus Global plc and its subsidiaries (the Group) is that of development and sale of Enterprise
cloud-based software on a software-as-a-service (SaaS) basis and associated maintenance, support, software customisation
and professional consultancy services.
2 Significant accounting policies
The following principal accounting policies have been used consistently in the preparation of consolidated financial
statements.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as
adopted by the European Union, in accordance with the IFRS Interpretations Committee (“IFRIC”) interpretations, and with
those parts of the Companies Act 2006 as applicable to companies reporting under IFRS. The financial statements comply
with IFRS as issued by the International Accounting Standards Board (IASB).
The financial statements are prepared in sterling, which is the presentational currency of the company. Monetary amounts
in these financial statements are rounded to the nearest £1.
On 1 October 2018 the Group adopted IFRS 9 which replaces IAS 39 ‘Financial Instruments’. The Group has applied the
simplified approach to its trade receivables and contract assets as there are no significant financing components. There
were no changes in credit risk since initial recognition and the lifetime expected credit loss rate was not considered to have
a material impact on the provisioning values included. The Group adopted the simplified approach under IFRS 9 and
current provisioning model used by the Group is deemed to be appropriate and effect of transition did not have a material
impact on the financial statements.
On transition to IFRS 9 the Group elected to continue applying the hedge accounting requirements of IAS 39.
There have been no changes in the measurement basis for the Group’s financial liabilities as a result of the adoption of
IFRS 9.
Historical cost convention
The financial statements have been prepared under the historical cost convention except for the following:
• The business combination of i-solutions Global Limited by i-nexus Global plc in the previous period was accounted for
under the merger method
• The use of fair value for financial instruments measured at fair value
Basis of consolidation
The financial statements incorporate the results of i-nexus Global plc and all of its subsidiary undertakings as at 30
September 2019.
The accounting treatment in relation to the addition in the previous period of i-nexus Global plc as a new UK holding
company of the Group fell outside the scope of IFRS 3 ‘Business Combinations’. The share scheme arrangement
constituted a common control combination of the entities. This was as a result of all the shareholders of i-nexus Global plc
being issued shares in the same proportion, and the continuity of ultimate controlling parties. The Directors believed that
this approach presents fairly the financial performance, financial position and cash flows of the Group.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 38
38
Notes to the Financial Statements continued
For the year ended 30 September 2019
2 Significant accounting policies (continued)
The reconstructed Group was consolidated using merger accounting principles, as outlined in Financial Reporting Standard
FRS 102 (“FRS”), and the reconstructed Group treated as if it had always been in existence. There was no difference
between the nominal value of the shares issued in the share exchange and the book value of the shares obtained.
Going concern
This historical financial information relating to i-nexus Global plc has been prepared on the going concern basis.
The Group prepares regular business forecasts and monitors its projected cash flows, which are reviewed by the Board.
Forecasts are adjusted for reasonable sensitivities that address the principal risks and uncertainties to which the Group is
exposed, thus creating a number of different scenarios for the Board to challenge. In those cases, where scenarios deplete
the Group’s cash resources too rapidly, consideration is given to the potential actions available to management to mitigate
the impact of one or more of these sensitivities, in particular the discretionary nature of costs incurred by the Group, in
order to ensure the continued availability of funds.
As the Group did not have access to bank debt and future funding is reliant on issues of shares in the parent Company, the
Board has derived a mitigation plan for the scenarios modelled as part of the going concern review.
On the basis of this analysis, the Board has concluded that there is a reasonable expectation that the Group will have
adequate resources to continue in operational existence for the foreseeable future being a period of at least twelve
months from the balance sheet date.
Accordingly, the Group has continued to adopt the going concern basis in preparing its financial statements for the year
ended 30 September 2019.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity.
The financial statements of trading subsidiaries are included in the consolidated financial statements under the merger
accounting method until the date that control ceases. The accounting policies of the subsidiaries have been changed when
necessary to align them with the policies adopted by the Group.
Transactions eliminated on consolidation
Intra-Group balances, and any gains and losses or income and expenses arising from intra-Group transactions, are
eliminated in preparing the historical financial information. Losses are eliminated in the same way as gains, but only to the
extent that there is no evidence of impairment.
The Group has been consolidated under merger accounting principles as described in ‘basis of consolidation’ above.
Foreign currencies
Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the
exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the
reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using
exchange rates that existed when the values were determined.
Overseas operations which have a functional currency different to the Group presentation currency have been translated
using the monthly average exchange rate for consolidation in to the statement of comprehensive income. The amounts
included in the Group statement of financial position, have been translated at the exchange rate ruling at the statement
date. All resulting exchange differences are reported in other comprehensive income.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 39
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
39
Pensions
i-nexus Global plc operates a defined contribution plan. A defined contribution plan is a pension plan under which the
Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in
the current and prior periods. The Group has no further payment obligations once the contributions have been paid. The
contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in the future payments is available.
Short term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries plus annual leave in the period
the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that
service.
Revenue recognition
Revenue represents amounts receivable for services net of VAT and trade discounts.
Revenue comprises of fair value of consideration received or receivable, net of sales taxes and discounts. Revenues are
recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. The following criteria must also be met before revenue is recognised:
•
•
•
•
the amount of revenue can be measured reliably;
is it probable that the Group will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.
The nature of revenues is license fee income (on a SaaS basis) and professional services.
License fee income
Revenue for annual licenses, support and maintenance is recognised on a straight-line basis over the duration of the
contract.
Professional services income
Configuration and software customisation revenue is recognised on a percentage completion basis over the period during
which the configuration or software customisation is completed, in line with IAS 18. Setup, deployment, migration and
report development revenue are recognised at the point of setup, deployment, migration or report development is
completed. In the circumstances where an event spans two or more accounting periods, the entire revenue is recognised
in the period when the event is completed, and the software has been accepted by the customer. Revenue for training
events is recognised at the point the training event is completed.
Internally generated intangible assets – Research and development costs
Research expenditure is recognised as an expense when it is incurred. Development expenditure is recognised as an
expense except that costs incurred on development projects are capitalised as intangible assets to the extent that such
expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if an
entity within the Group can demonstrate all of the following:
i.
its ability to measure reliably the expenditure attributable to the asset under development;
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 40
40
Notes to the Financial Statements continued
For the year ended 30 September 2019
2 Significant accounting policies (continued)
ii. the product or process is technically and commercially feasible;
iii. its future economic benefits are probable;
iv. its ability to use or sell the developed asset;
v. the availability of adequate technical, financial and other resources to complete the asset under development; and
vi. its intention to use or sell the developed asset.
Amortisation
Amortisation is charged to profit or loss on a straight-line basis to administrative costs over the estimated useful lives of
each part of an item of property, plant and equipment. The estimated useful lives are as follows:
Development costs 5 years
Property, plant and equipment
Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment
losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working
condition for its intended use. When parts of an item of property, plant and equipment have different useful lives, those
components are accounted for as separate items of property, plant and equipment. Subsequent costs are included in the
asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Gains and losses
on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income
statement.
Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. The estimated useful lives are as follows:
Land and buildings leasehold 20% straight line or lease life if shorter
Fixtures, fittings and equipment 25% reducing balance
Computer equipment 33% straight line
Motor vehicles 25% reducing balance
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, or if there is an
indication of a significant change since the last reporting date. Gains and losses on disposals are determined by comparing
the proceeds with the carrying amount and are recognised within ‘other operating income’ in the consolidated statement
of comprehensive income.
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets
to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any.
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash generating unit to which the asset belongs. An intangible asset with an indefinite useful life
is tested for impairment annually and whenever there is an indication that the asset may be impaired.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 41
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
41
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset
is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an
impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is
recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of
the impairment loss is treated as a revaluation increase.
Financial assets
Classification
The Group classifies all of its financial assets as loans and receivables. Management determines the classification of its
financial assets at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments. They are initially recognised
at fair value and are subsequently stated at amortised cost using the effective interest method.
Impairment of financial assets
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part
of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts
due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and
the present value of the future expected cash flows associated with the impaired asset.
Fixed asset investments
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not
publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment
until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are
initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
Trade receivables
Trade receivables, defined as loans and receivables in accordance with IAS 39 ‘Financial Instruments: Recognition and
Measurement’, are recorded initially at fair value and are subsequently measured at amortised cost. A provision for
impairment of trade receivables is established when there is evidence that the Group will not be able to collect all amounts
due according to the original terms of the receivables. The amount of the provision is the difference between the assets’
carrying amount and the present value of future cash flows discounted at the effective interest rate. The movement in the
provision is recognised in the consolidated statement of comprehensive income.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments
with original maturities of three months or less, and bank overdrafts.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 42
42
Notes to the Financial Statements continued
For the year ended 30 September 2019
2 Significant accounting policies (continued)
Financial liabilities – Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost. Accounts
payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-
current liabilities.
Financial liabilities – Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in
the income statement over the period of the borrowings using the effective interest method.
Borrowings are derecognised from the balance sheet when the obligation specified in the contract is discharged, is
cancelled or expires. The difference between the carrying amount of a financial liability that has been extinguished or
transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is
recognised in profit or loss as other operating income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting period.
Net finance costs
Finance costs
Finance costs comprise interest payable on borrowings, direct issue costs, dividends on preference shares and foreign
exchange losses, and are expensed in the period in which they are incurred.
Finance income
Finance income comprises interest receivable on funds invested, and foreign exchange gains. Interest income is recognised
in profit or loss as it accrues using the effective interest method.
Share capital/equity instruments
Ordinary shares are classified as equity. Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
Share based payments
Equity settled share based payments to employees and others providing similar services are measured at the fair value of
the equity instruments at the grant date. Details regarding the determination of the fair value of equity settled share based
transactions are set out in note 23.
The fair value determined at the grant date of the equity settled share based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of the number of equity instruments that will eventually vest, with a
corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of
equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the income
statement such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to other
reserves.
Warrants
Warrants are considered to be share based payments and are accounted for in accordance with IFRS 2. The fair value of
issued warrants is credited to the share based payment reserve at the time of issue of the warrants. Upon the exercise of
warrants, the fair value held in the share based payment reserve is transferred to the share premium reserve.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 43
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
43
Current and deferred income tax
Income tax comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it
relates to items recognised directly in equity, in which case it is recognised in equity.
Deferred income tax is recognised on temporary differences arsing between the tax bases of assets and liabilities and their
carrying amounts.
The following temporary differences are not recognised if they arise from a) the initial recognition of goodwill, and b) for the
initial recognition of other assets or liabilities in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred income tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the
same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be
made. If the effect is material, provisions are determined by discounting the expected future cash flows at an appropriate
pre-tax discount rate.
The provision for liabilities comprises the dilapidation provision for the lease, which is included in land and buildings in
property, plant and equipment.
Compound Financial Instruments
Compound financial instruments issued by the Group comprise venture debt which entitles the lender to warrant shares in
i-nexus Global plc at the drawdown of the loan. The liability component of compound financial instruments is initially
recognised at the fair value by discounting the cash flows to net present value. The equity component would be initially
recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of
the liability component, however the i-nexus Directors have concluded that the equity component is immaterial and
therefore not recorded separately. Any directly attributable transaction costs are allocated to the liability and equity
components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a
compound financial instrument is measured at amortised cost using the effective interest method. The equity component
of a compound financial instrument is not remeasured. Interest related to the financial liability is recognised in profit or
loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognised.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 44
44
Notes to the Financial Statements continued
For the year ended 30 September 2019
2 Significant accounting policies (continued)
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are recognised
as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined
at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease
obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately
in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance
with the Group’s general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the
periods in which they are incurred. Leases in which a significant portion of the risks and rewards of ownership are retained
by the lessor are classified as operating leases. The costs associated with operating leases are taken to the income
statement on an accruals basis over the period of the lease.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Group.
The following relevant standards, interpretations and amendments to existing standards have been published by the IASB
but are yet to be endorsed by the EU or are not effective for the period presented in the financial statements and the
Group has decided not to early adopt them.
Standard Effective date, annual period
beginning on or after
IFRIC 23 Uncertainty over Income Tax Treatments 1 January 2019
IFRS 16 Leases 1 January 2019
Management have considered the effect of the future changes in accounting standards and have surmised the impacts to
be as follows:
IFRS 16
IFRS 16 Leases requires lessees to recognise a lease liability reflecting future lease payments and a “right of use asset” for
virtually all lease contracts. The Group is currently in the process of assessing the impact of implementation of the
standard. A right of use asset and corresponding liability discounted to present value are expected to be recognised in
relation to the Group’s premises that are currently occupied under an operating lease.
IFRIC 23
This interpretation covers how the Group accounts for taxation, where there is some uncertainty over whether treatments
in the tax return will be accepted by HMRC or the relevant overseas jurisdictions. Each uncertain treatment (or combination
of treatments) is considered for whether it will be accepted, and if probable taxable profits/losses, tax bases, unused tax
losses, unused tax credits and tax rates are accounted for consistently with the tax return. Otherwise the Group accounts
for each treatment using whichever of the two allowed measurement methods is expected to best predict the final
outcome – the single most likely outcome or a probability weighted average value of a range of possible outcomes. The
new standard allows for two different transition approaches, fully retrospective and modified retrospective. The Group has
not yet concluded on a transition method and as such it is not possible to fully quantify the impact of IFRIC 23 at this stage,
though it is not expected to be material.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 45
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
45
Adjusted EBITDA
Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, share based payment expense and non-
underlying items and is set out in note 6.
Adjusted EBITDA is not a measure recognised under IFRS. The Directors consider that this measure may be helpful to
potential investors and so it is shown.
3 Critical accounting judgements and estimates
The preparation of the Group’s historical financial information under IFRS as endorsed by the EU requires the Directors to
make estimates and assumptions that affect the reported amounts of assets and liabilities at the statement of financial
position date, amounts reported for revenues and expenses during the year, and the disclosure of contingent liabilities, at
the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could
require a material adjustment to the carrying amount of the assets or liabilities affected in the future.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
In preparing the financial statements, the Group has selected and applied various accounting policies which are described
in the notes to the financial statements. In order to apply these accounting policies, the Group has made estimates and
judgements concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual
results.
Key areas of judgement and estimation uncertainty are disclosed below:
Impairment of investments and intercompany debtors
The subsidiary has sustained losses and the balance sheet is in deficit. This is a potential indicator of impairment. The
recoverability of intercompany debtor and the cost of investment is dependent on the future profitability of the entity. No
provision for impairment has been made in these accounts and this is a significant judgement.
Research and Development expenditure
Development expenditure is recognised as an expense except that costs incurred on development projects are capitalised
as intangible assets to the extent that such expenditure is expected to generate future economic benefits. Significant
judgement is applied in determining if development costs meet the criteria to be capitalised as intangible assets.
Historically, no development expenditure has been capitalised, as the amount of total research and development
expenditure deemed to meet all the criteria has been immaterial and has therefore been recognised as an expense when
it is incurred.
4 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including cash flow interest rate risk), liquidity risk,
credit risk and foreign exchange risk. Risk management is carried out by the Board of Directors. The Group uses financial
instruments to provide flexibility regarding its working capital requirements and to enable it to manage specific financial
risks to which it is exposed.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 46
46
Notes to the Financial Statements continued
For the year ended 30 September 2019
4 Financial risk management (continued)
(a) Market risk
i. Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates. Interest bearing assets including cash and cash equivalents are
considered to be short term liquid assets. It is the Group’s policy to settle trade payables within the credit terms allowed
and the Group does therefore not incur interest on overdue balances. As the interest rates on both venture debt and
shareholders loans are fixed, interest rate risk is considered to be very low and no sensitivity analysis has been prepared as
the impact on the historical financial information would not be significant.
The interest rate profile of the Group’s borrowings is shown below:
30 September
2019
Interest rate
£
Debt
£
30 September
2018
Interest rate
£
Debt
£
Fixed rate borrowings
Venture debt
Shareholder loans
Weighted average cost of fixed rate borrowing
11.5%
–
11.5%
11.5%
–
11.5%
(b) Liquidity risk
The Group seeks to maintain sufficient cash balances. Management reviews cash flow forecasts on a regular basis to
determine whether the Group has sufficient cash reserves to meet future working capital requirements and to take
advantage of business opportunities.
A maturity analysis of the Group’s borrowings is shown below:
Less than one year
One to two years
Two to five years
Capital risk management
30 September
2019
30 September
2018
159,730
179,098
64,402
403,230
298,998
159,730
243,500
702,228
The Group is both equity and debt funded and these two elements combine to make up the capital structure of the
business. Equity comprises share capital, share premium and retained losses and is equal to the amount shown as ‘Equity’
in the balance sheet. Debt comprises various items which are set out in further detail above.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 47
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
47
The Group’s current objectives when maintaining capital are to:
• Safeguard the Group’s ability as a going concern so that it can continue to pursue its growth plans;
• Provide a reasonable expectation of future returns to shareholders; and
• Maintain adequate financial flexibility to preserve its ability to meet financial obligations, both current and long term.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions and the risk characteristics of underlying assets. In order to
maintain or adjust the capital structure, the Group may issue new shares or sell assets to reduce debt.
(c) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. In order to minimise the risk, i-nexus Global plc endeavours only to deal with companies which are demonstrably
creditworthy and this, together with the aggregate financial exposure, is continuously monitored. The maximum exposure
to credit risk is the carrying value of its financial receivables, trade and other receivables and cash and cash equivalents as
disclosed in the notes.
i-nexus Global plc does not consider that there is any concentration of risk within either trade or other receivables and any
debt bad provisions in the years presented are not for significant amounts. The Group holds no collateral or other credit
enhancements. The receivables’ age analysis is also evaluated on a regular basis for potential doubtful debts. It is the i-
nexus Directors’ opinion that no further provision for doubtful debts is required. Credit risk on cash and cash equivalents is
considered to be very low as the counterparties are all substantial banks with high credit ratings.
(d) Foreign currency risk
Foreign currency risk refers to the risk that the value of a financial commitment or recognised asset or liability will fluctuate
due to changes in foreign exchange rates. The Group is also exposed to foreign exchange risk as a result of transactions
denominated in US Dollars and Euros. The Group maintains bank accounts in US Dollars and Euros in order to mitigate this
risk.
5 Revenue and segmental reporting
The Group has one single business segment and therefore all revenue is derived from the rendering of services as stated in
the principal activity. The Group operates four geographical segments, as set out below. This is consistent with the internal
reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for
allocating resources and assessing performance, has been identified as the management team comprising the Executive
Directors who make strategic decisions.
United Kingdom
Rest of Europe
United States
Rest of the World
Year ended
30 September
2019
£
928,733
1,624,195
2,029,839
176,305
4,759,072
As restated
Year ended
30 September
2018
£
805,941
1,927,849
1,917,688
90,437
4,741,915
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 48
48
Notes to the Financial Statements continued
For the year ended 30 September 2019
5 Revenue and segmental reporting (continued)
The Group has one customer that represented more than 10 percent of revenue in either 2019 or 2018 as detailed below:
Customer 1
Year ended
30 September
2019
£
Year ended
30 September
2018
£
603,755
604,906
The Group has two main revenue streams in each of the years presented, as detailed below:
Licence
Services
Year ended
30 September
2019
£
4,027,129
731,943
4,759,072
As restated
Year ended
30 September
2018
£
4,033,810
708,105
4,741,915
All revenue is recognised is in relation to contracts held with customers.
Amounts of revenue recognised in the period that was included as a contract liability balance at the beginning of the
previous period was £1,920,255.
Invoices for licence income are issued annually in advance arising to deferred income as the performance obligation has
not yet been satisfied. Services income relates to prepaid, part upfront/part upon completion & others linked to key
milestones set out in contracts. This arises to deferred income and increase in debtors for performance obligation met but
not yet invoiced.
The performance obligations of the licence revenue are satisfied on a monthly basis and as such revenue for this stream is
recognised monthly as and when the licence period is consumed. The services performance obligations vary and contract
value is recognised over the duration of each project. All warranties are included within the subscription agreements with
each client.
The transaction price is determined by the contractual value agreed with our clients. It is deemed that 60% of a
deployment is attributable to enabling the customer to use our software. This was determined by reviewing live examples
and attaching a percentage of each deployment which is required to enable the customer to use the software thus being
the one performance obligation.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 49
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
49
6 Adjusted EBITDA
Operating loss
Add back:
Depreciation and profit/loss on disposal
Share based payment expense
Non-underlying items
Adjusted EBITDA
7 Loss on ordinary activities before taxation
Profit or loss before taxation is arrived at after:
Depreciation of property, plant and equipment
Profit on disposal of fixed assets
Operating minimum lease rentals
Auditor’s remuneration (note 8)
Loss on foreign exchange transactions
Research and development expenditure
AIM IPO costs expensed
8 Auditor’s remuneration
Fee payable to the Company’s Auditors and its associates for the audit of
consolidated financial statements
Fee payable to the Company’s Auditors and its associates for other services:
Corporate finance
Taxation services
Other services
Year ended
30 September
2019
£
As restated
Year ended
30 September
2018
£
(4,270,968)
(885,741)
105,977
–
114,300
53,737
30,000
175,088
(4,050,691)
(626,916)
Year ended
30 September
2019
£
Year ended
30 September
2018
£
106,233
(256)
123,788
73,332
(175,857)
917,455
–
54,511
(774)
86,004
234,262
12,726
549,212
175,088
Year ended
30 September
2019
£
As restated
Year ended
30 September
2018
£
46,700
61,825
–
7,250
19,382
73,332
129,500
19,927
23,010
234,262
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 50
50
Notes to the Financial Statements continued
For the year ended 30 September 2019
9 Directors and employees
Wages and salaries
Social security costs
Other pension costs
Share based payment expense
The average number of employees during the year was:
Senior Management
Development global services and other
Year ended
30 September
2019
£
Year ended
30 September
2018
£
4,745,415
545,039
134,368
–
5,424,822
3,571,080
370,092
28,844
30,000
4,000,016
2019
Number
2018
Number
9
76
85
8
52
60
Details of emoluments (including pension) paid to the key management personnel are as follows:
Total emoluments paid to:
Directors
Salaries and fees
Post-employment benefits
Share based payment expense
Key management personnel including Directors
Salaries and fees
Post-employment benefits
Share based payment expense
Year ended
30 September
2019
£
Year ended
30 September
2018
£
569,914
23,196
–
593,110
1,153,030
39,424
–
1,192,454
571,009
2,931
27,860
601,800
725,771
3,463
27,860
757,094
Remuneration disclosed above include the following amounts paid to the highest paid Directors:
Remuneration for qualifying services
181,250
179,796
The number of Directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2
(2018: 3).
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 51
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
51
10 Finance costs
On loans and overdrafts
On loans repayable after five years
11 Taxation
Domestic current period tax
UK Corporation tax
Adjustment for prior years
Foreign corporation tax
Foreign corporation tax
Adjustments for prior years
Total current tax
Factors affecting the tax charge for the period
Loss before tax
Year ended
30 September
2019
£
Year ended
30 September
2018
£
66,838
–
66,838
124,384
–
124,384
Year ended
30 September
2019
£
As restated
Year ended
30 September
2018
£
(400,000)
–
(400,000)
(1,164)
–
(1,164)
(183,162)
(264)
(183,426)
(3,531)
–
(3,531)
(401,164)
(186,957)
(4,330,902)
(1,008,278)
Profit before tax multiplied by standard rate of UK Corporation tax of 19.0% (2018: 19.0%)
(822,871)
(191,573)
Effects of:
Non-deductible expenses
Adjustments to tax credit in respect of prior years
Surrender R&D for tax credit
Deferred tax asset not recognised
Restriction of R&D tax credit
Depreciation on assets not qualifying for tax allowance
Effect of change in UK corporation tax rate
Other
Current tax credit
1,648
0
(205,182)
489,784
76,854
3,327
55,086
190
(401,164)
1,094
(264)
(104,351)
90,553
0
1,780
2,262
13,542
(186,957)
Changes in the applicable tax rate arose due to the April 2016 Budget which amended the corporation tax charge to 19%.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 52
52
Notes to the Financial Statements continued
For the year ended 30 September 2019
12 Loss per share
The loss per share has been calculated using the loss for the year and the weighted average number of ordinary shares
outstanding during the year, as follows:
Loss for the period attributable to equity holders of the Company
Weighted average number of ordinary shares
Loss per share
13 Intangible assets
Group
Cost
At 1 October 2018
Additions
At 30 September 2018
Amortisation/impairment
At 1 October 2018
Charge for the year
At 30 September 2019
Net book value
At 30 September 2019
At 30 September 2018
Year ended
30 September
2019
£
Year ended
30 September
2018
£
(4,035,926)
29,571,610
(849,904)
18,495,089
(0.14)
(0.05)
Development
costs
£
55,011
563,598
618,609
–
–
–
Total
£
55,011
563,598
618,609
–
–
–
618,609
55,011
618,609
55,011
The useful economic life of each of the individual assets is deemed to be 5 years. The additions in the year of £563,598
relate to specific products being developed. These products are deemed to provide future economical benefits to i-nexus
Global plc.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 53
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
53
14 Property, plant and equipment
Group
Fixtures,
Short fittings &
Leasehold equipment
£ £
At 1 October 2018 95,328 149,493
Additions – 64,933
Disposals – –
At 30 September 2019 95,328 214,426
At 1 October 2018 32,865 128,898
Charge for the year 17,370 8,058
On disposals – –
At 30 September 2019 50,235 136,956
Carrying value
At 30 September 2019 45,093 77,470
At 30 September 2018 62,463 20,595
The figures for the previous period are as follows:
Group
Short
Leasehold
£
At 1 October 2017 68,328
Additions 40,000
Disposals (13,000)
At 30 September 2018 95,328
At 1 October 2017 36,494
Charge for the year 9,371
On disposals (13,000)
At 30 September 2018 32,865
Carrying value
At 30 September 2018 62,463
At 30 September 2017 31,834
Computer
equipment
£
374,101
173,357
(962)
546,496
257,937
80,805
(64)
338,678
207,818
116,164
Fixtures,
fittings &
equipment
£
144,335
5,158
–
149,493
123,086
5,812
–
128,898
Motor
Vehicle
£
–
8,750
–
8,750
–
–
–
–
Total
£
618,922
247,040
(962)
865,000
419,700
106,233
(64)
525,869
8,750
–
339,131
199,222
Computer
equipment
£
262,306
112,983
(1,188)
374,101
219,137
39,328
(528)
257,937
Total
£
474,969
158,141
(14,188)
618,922
378,717
54,511
(13,528)
419,700
20,595
21,249
116,164
43,169
199,222
96,252
The Company had no property, plant or equipment during the current or comparative period.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 54
54
Notes to the Financial Statements continued
For the year ended 30 September 2019
15 Non-current asset investments
Cost
At 30 September 2019
At 30 September 2018
Net book value
At 30 September 2019
At 30 September 2018
Group
£
Company
£
–
–
–
–
1,654,770
1,654,770
1,654,770
1,654,770
Non-current asset investments consist of investments in subsidiaries, measured at cost.
Details of non-current asset investments in equity
Country of
Name of entity Principal activity Incorporation
i-solutions Global Limited The development and sale of England and Wales
Enterprise cloud-based software
on a software-as-a service (SaaS)
basis and professional
consultancy services.
i-nexus (America) Inc Sale of computer software and USA
associated maintenance, support,
software customisation and
services
% of Ordinary
Shares held by
parent company
% of Ordinary
Shares held
by group
100
–
–
100
i-nexus (America) Inc is owned by i-solutions Global Limited. The Company is included in the list above according to the
control exercised over it by i-nexus Global plc. All subsidiaries have prepared their financial statements to
30 September 2019.
There are no restrictions on i-nexus Global plc’s ability to access or use the assets and settle the liabilities of subsidiary
companies.
Impairment of investments in subsidiaries
The subsidiaries have sustained losses and the balance sheets are in deficit. This is a potential indicator of impairment. The
recoverability of intercompany debtors and the cost of investment is dependent on the future profitability of those entities.
No provision for impairment has been made in these accounts and this is a significant judgement but one that only affects
the parent Company and its distributable reserves. It does not affect the Group results as the losses of the subsidiaries
have been consolidated.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 55
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
55
The aggregate amount of capital and reserves and the results of these undertakings for the last relevant financial year were
as follows:
i-Solutions Global Limited
i-nexus (America) Inc
16 Financial instruments
Financial assets held at amortised cost
Financial liabilities held at amortised cost
Financial liabilities held at fair value
Capital and Profit/(loss)
reserves for the year
2019 2019
£ £
(3,394,003)
(3,138,666)
(3,569,976)
58,676
At
30 September
2019
£
At
30 September
2018
£
1,405,318
1,461,944
56,626
1,478,754
1,457,108
21,646
The Group’s exposure to various risks associated with the financial instruments is discussed in note 4. The maximum
exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned
above.
17 Trade and other receivables
Group
Trade receivables
Corporation tax receivable
Other receivables and prepayments
At
30 September
2019
£
At
30 September
2018
£
689,710
400,000
728,583
1,818,293
1,000,144
183,162
751,812
1,935,118
Company
Other debtors and prepayments
Amounts owed by Group undertakings
At
30 September
2019
£
At
30 September
2018
£
46,478
7,855,794
7,902,272
28,139
8,351,494
8,379,633
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 56
56
Notes to the Financial Statements continued
For the year ended 30 September 2019
17 Trade and other receivables (continued)
An analysis of trade receivables is shown below:
Between
30 days Between 31 61 and Over Bad debt
or less and 60 days 90 days 90 days provision
£ £ £ £ £
Total
£
2019 635,752 6,373 13,143 48,873 (14,431)
2018 554,290 267,053 46,926 164,953 (33,078)
689,710
1,000,144
All opening and close trade debtor balances arise from contracts with customers. All other receivables outside of general
terms of business are immaterial to the Group and within the Company.
18 Cash and cash equivalents
Group
Cash at bank and in hand
At
30 September
2019
£
At
30 September
2018
£
1,533,323
1,533,323
6,940,573
6,940,573
Company
Cash at bank and in hand
At
30 September
2019
£
At
30 September
2018
£
66,831
66,831
–
–
19 Trade and other payables (current)
Group
At
30 September
2019
£
At
30 September
2018
£
444,660
155,239
342,311
942,210
443,316
121,258
340,094
904,668
Trade payables
Taxes and social security costs
Accruals
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 57
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
57
Deferred income
At
30 September
2019
£
At
30 September
2018
£
1,541,109
1,541,109
2,064,295
2,064,295
During the review of IFRS 15, it was identified that a historic error had remained uncorrected over exchange differences
between income recognised in the profit and loss account and that deferred in deferred income pre 2017. As a result,
deferred income was increased by £235,929 and opening reserves were depleted by £235,929.
All opening and closing deferred income relate to contracts with customers.
The reduction in deferred income in the period relates to multiple year contracts being recognised on an equal basis
opposed to the billing.
The closing deferred income balance will be recognised in full during the next 12 months.
Company Company
At
30 September
2018
£
At
30 September
2019
£
Trade payables
Taxes and social security costs
Accruals and other creditors
42,930
3,386
43,807
90,123
64,682
16,229
76,782
157,693
Trade payables are non-interest bearing and are normally settled on 60 day terms. The Group has a financial risk
management policy in place to ensure that all payables are paid within the pre-agreed credit terms.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 58
58
Notes to the Financial Statements continued
For the year ended 30 September 2019
20 Borrowings
Group
Current
Venture debt
Shareholder loans
Non-current
Venture debt
Shareholder loans
Total borrowings
Venture debt
At
30 September
2019
£
At
30 September
2018
£
159.730
–
159,730
243,500
–
243,500
298,998
–
298,998
403,230
–
403,230
403,230
702,228
The venture debt is secured by way of a fixed and floating charge over the title of all assets held by i-solutions Global
Limited.
The Group borrowings are repayable as follows:
Within 1 year
Between 1 year and 2 years
Between 2 years and 5 years
At
30 September
2019
£
159,730
179,098
64,402
403,230
As restated
At
30 September
2018
£
298,998
159,730
243,500
702,228
The Directors consider the value of all financial liabilities to be equivalent to their fair value.
Venture debt
The venture debt has a fixed interest rate of the higher of 11.5 per cent per annum or LIBOR plus 8 per cent per annum.
Shareholder loans
The shareholder loans have fixed interest rates of between 11 per cent and 12 per cent per annum.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 59
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
59
21 Provisions
At 1 October 2018
Capitalised in Short Leasehold assets (Note 14)
Release of provision
At 30 September 2019
Due within one year
Due after more than one year
Group
Leasehold dilapidations
£
80,702
–
–
80,702
–
80,702
80,702
The provision relates to the estimated cost of returning leasehold properties to their original state at the end of the lease in
accordance with the lease terms. The cost is recognised as depreciation of leasehold improvements over the remaining
term of the lease. There are no provisions in the company balance sheet at 30 September 2019.
22 Share capital
Authorised, allotted, called up and fully paid
29,571,605 Ordinary shares of £0.10 each
Group and
company
At
30 September
2019
£
Group and
company
At
30 September
2018
£
2,957,161
2,957,161
2,957,161
2,957,161
Fully paid shares, which have a par value of £0.10, carry one vote per share and carry rights to a dividend.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 60
60
Notes to the Financial Statements continued
For the year ended 30 September 2019
23 Share based payments
Share options
i-solutions Global Limited has granted share options at its discretion to Directors and employees. These are accounted for
as equity settled options. Details for the share options granted, exercised, lapsed and outstanding at the end of each year
are as follows:
Number of
share options
2019
Outstanding at the beginning of the year –
Granted during the year –
Forfeited/lapsed during the year –
Exercised during the year –
Outstanding at the end of the year –
Exercisable at the end of the year –
Weighted
average
exercise
price £
2019
–
–
–
–
–
–
Number of
share options
2018
262,184
27,337
(2,730)
(286,791)
–
–
Weighted
average
exercise
price £
2018
1.45
1.00
3.36
1.39
–
–
The total recognised share based payment expense during the year by the Group was £0 (2018: £30,000). All options have
been exercised or forfeited by the end of the year. The vesting conditions attached to the share options are considered to
have been met in the year so the share based payment charge has been accelerated in the Statement of Comprehensive
Income.
24 Financial commitments
The operating lease expenditure charged to the statement of comprehensive income during the year is disclosed in note 7.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows
Land and buildings
Within 1 year
Within 2 – 5 years
After 5 years
Group
At
30 September
2019
£
Group
At
30 September
2018
£
141,389
61,618
–
203,007
89,000
133,500
–
222,500
On 7 March 2016 the Group entered into a 5-year lease for the premises at Herald Avenue. The break date of this lease is
1 April 2019. (New leased entered into on 14 May 2019 until 31 January 2021)
There were no capital commitments at 30 September 2019 or 30 September 2018.
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 61
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
61
25 Related parties
At 30 September 2019, i-solutions Global Limited owed loans amounting to £403,230 to shareholders and Directors (30
September 2018: £702,228)
During the year the company was charged marketing support costs of £38,563 by Napkin Jack Limited, a company in which
James Davies, a (then) Director of i-nexus Global plc, is a Director. At the year end, £nil of this cost was unpaid.
At 30 September 2019, the Group owed the Directors £nil (2018: £26,640) of remuneration.
26 Events after the reporting period
There are no events after the reporting period to disclose.
27 Control
There is no ultimate controlling party of i-nexus Global plc.
28 IFRS 15 – Revenue from Contracts with Customers
In the current financial year, the Group adopted IFRS 15 Revenue from Contracts with Customers. The Group elected to
apply the full retrospective method and restate comparative information from prior periods upon adoption of IFRS 15.
The Group has two reportable segments upon which revenue can be categorised. Our core offering is through licence fees,
in addition to professional services. The Group has assessed the principal indicators of IFRS 15 and concluded that both
the licence fee and the professional services element associated with an initial deployment is one performance obligation.
The core principle of IFRS 15 is that an entity should recognise revenue, to depict the transfer of promised goods or
services to customers, in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. Under IFRS 15, revenue is recognised when the performance obligation on each contract has
been satisfied with the customer. At the outset of each contract, an assessment is completed to determine the relevant
performance obligations on each of the contracts. As defined in IFRS 15, performance obligations in a contract are either
goods or services that are distinct, or a series of goods or services that are substantially the same. Services which are not
distinct, which in the case of the Group relate to setup fees, are combined with other services in the contract until a
performance obligation is satisfied.
At the outset of a contract, the transaction price for that particular contract is determined, being the total value, the Group
expects to receive for the provision of the relevant goods or service. The transaction price determined is allocated to each
performance obligation based on their stand-alone selling price.
One segment of revenue is the subscription to i-nexus’ platform. This forms the basis of the monthly recurring revenue
which adopts the total contract fee and recognises this across the term of the contract. This allows clients access to i-nexus
software and is consumed on a month by month basis.
The second revenue stream relates to our professional services, which relate to configuring the i-nexus platform, writing
reports and generic training. The element of professional services which is sold to a new client relating to the configuration
of the system will sit as one performance obligation alongside the licence revenue. In essence, the system isn’t useable
without the configuration taking place and the configuration cannot take place until the licences for the software have been
purchased. Therefore, it is deemed that the configuration element of professional services should be recognised in line
with the service fee rather than previously recognising 100% of this revenue upfront.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 20/02/2020 10:35 Page 62
62
Notes to the Financial Statements continued
For the year ended 30 September 2019
28 IFRS 15 – Revenue from Contracts with Customers (continued)
In summary, on application of IFRS 15, some changes in accounting policy resulted principally in the following areas:
• Set-up fees charged on contracts, which were previously recognised upfront when the set-up was complete, are now
spread over the life of the contract under IFRS 15, impacting revenue and deferred revenue.
The impact on revenue and EBITDA on the opening retained earnings at 1 October 2018 is not material. The tables below
show the effect of IFRS 15 on the consolidated income statement for the year to 30 September 2018 and the year to 30
September 2019, the impact on the statement of financial position as at 30 September 2018 and 30 September 2019.
Year to 30/09/2019 Year to 30/09/2018
IFRS 15 Originally IFRS
Consolidated income Pre IFRS 15 impact Total reported 15 impact
statement (extract) £’000 £’000 £’000 £’000 £’000
Restated
£’000
Revenue 4,715 44 4,759 4,714 28
4,742
Year to 30/09/2019 Year to 30/09/2018
IFRS 15 Originally IFRS
Statement of financial Pre IFRS 15 impact Total reported 15 impact
position (extract) £’000 £’000 £’000 £’000 £’000
Restated
£’000
Deferred Income (1,473) (68) (1,541) (1,952) (112)
Retained earnings (19,434) (68) (19,502) (15,368) (112)
(2,064)
(15,480)
*retained earnings movement is based on the cumulative impact on adoption of IFRS 15 under the full retrospective
method. The impact on opening retained earnings at 1 October 2018 on adoption of IFRS 15 was an increase of £0.1m.
29 Prior period adjustment
Changes to the statement of financial position
At 30 September 2018
Previously
reported
£
Adjustment
at 1 Oct 2017 at 30 Sep 2018
£
Adjustment
£
As restated
£
Balances as restated before prior period adjustments:
Creditors due within one year
Deferred income (1,716,746)
Net assets 5,725,580
Capital and reserves
Profit and loss (14,307,385)
Total equity (2,321,745)
(235,927)
(235,927)
(235,927)
(235,927)
–
–
–
–
(1,952,673)
5,489,653
(14,543,312)
(2,557,672)
i-nexus Global plc
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 63
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
63
Changes to the income statement
Period ended 30 September 2018
Previously
reported
£
Adjustment
£
As restated
£
Balances as restated before prior period adjustments:
Loss for the financial period
(849,904)
–
(849,904)
Reconciliation of changes in equity
Equity as previously reported
Adjustments to prior year
Prior period adjustment
Notes
1 October
2017
£
30 September
2018
£
(2,321,745)
5,725,580
a
(235,927)
(235,927)
Equity as adjusted before effect of new standards adopted
(2,557,672)
5,489,653
Reconciliation of changes in loss for the previous financial period
Loss as previously reported
Notes to reconciliation
a) Prior period adjustment
2018
£
(849,904)
During the review of IFRS 15, it was identified that a historic error had remained uncorrected over exchange differences
between income recognised in the profit and loss account and that deferred in deferred income pre 2017. As a result
deferred income was increased by £235,929 and opening reserves were depleted by £235,929.
Consolidated Financial Statements for the year ended 30 September 2019
257530 i-nexus AR pp37-pp64.qxp 19/02/2020 16:08 Page 64
64
Company Information
Registered Office
i-nexus
i-nexus suite
George House
Coventry Business Park
Coventry
CV5 6UB
Company number
11321642
Directors
Richard Cunningham Simon Crowther Nigel Halkes Alyson
Levett
Company Secretary
Alyson Levett
Company Website
www.i-nexus.com
i-nexus Global plc
Welcome to our 2019 Annual Report
At i-nexus, we believe that by digitally transforming Strategy
Execution, our customers take control and ensure that every
action, measurement and decision contributes to achieving
organisational goals
Contents
STRATEGIC REPORT
2019 Highlights
Company Overview – what is the problem,
how we solve it, how we do it and how the platform works
Chairman’s Statement
CEO’s Statement
Chief Financial Officer’s Report
Principal Risk and Uncertainties
CORPORATE GOVERNANCE
Board of Directors
Corporate Governance Statement
Group Directors Report
FINANCIAL STATEMENTS
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated and Company Statement of Cash Flows
Notes to the Financial Statements
Company Information
01
02
03
05
08
10
15
16
21
26
31
32
33
34
35
36
37
64
i-nexus Global plc
Designed and produced by Perivan 257530
i
-
n
e
x
u
s
G
o
b
a
l
l
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
9
i-nexus Global plc
Strategy Execution Software
Annual Report and Accounts 2019
Setting the standard for Strategy Execution
Strategy Execution Solutions
i-nexus Global plc
i-nexus Suite
George House
Herald Avenue
Coventry Business Park
Coventry CV5 6UB
www.i-nexus.com