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Annual report and
accounts 2022
i-nexus Global plc
i-nexus, we believe
Welcome to our 2022 Annual Report
transforming
At
Strategy, our customers take control and ensure that every
action, measurement and decision contributes to achieving
organisational goals
that by digitally
Contents
STRATEGIC REPORT
2022 Highlights
Company Overview
Chairman’s Statement
Chief Executive Officer’s Report
Chief Financial Officer’s Report
Principal Risks and Uncertainties
Stakeholder Engagement
CORPORATE GOVERNANCE
Board of Directors
Corporate Governance Statement
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 Statement of Cash Flows
Note to the Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Information
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76
i-nexus Global plc
2022 Highlights:
Growing sales momentum through FY22 into FY23
• Secured record number of new
customers in year, winning nine new
logos (FY22: four) and delivering £30k
of additional MRR. Three further
logos secured this financial year.
New MRR (£000)
01
Renewals %
• New
deals
business
were
deliberately positioned with the
expectation of future growth through
FY23, several account expansions
have already been delivered in Q1 of
this year totalling £8k MRR with a
number of other well progressed
opportunities being explored
Continued development of our Go to Market strategy
• Growing pipeline generation with marketing providing record levels of prospect engagement, reach and
therefore leads. Predictable and repeatable conversion rates of leads into deals
• Successfully delivered on our managed trials product roadmap, a key to securing a reliable number of deals,
with over 50% of our current pipeline in active trials
Deepening relationships with our customers
• Renewed over 90% of our customers, a considerable improvement on the prior year, and expanded the use of
our software within four existing accounts (FY21: two)
A solid foundation for further growth
• Strategic expansion of our product development, customer engagement and marketing teams to ensure we
have sufficient depth to properly service both our existing customer base and future prospects
Our expanding global customer base
New customers
United States (4)
Germany (2)
Belgium
Finland
Jamaica
Expansions
Germany (2)
United States
Norway
Consolidated Financial Statements for the year ended 30 September 2022
02
STRATEGIC REPORT:
Company Overview
i-nexus provides strategy software to the world’s largest organisations who want to achieve more
of their goals with less effort, using i-nexus as the place to plan, execute, and track their strategic,
transformational, and operational efforts so that they can deliver the change they want to see.
Our purpose
We’re driven by our passion to help
organisations thrive and deliver the
change they want to see.
Through our intuitive, powerful strategy
software, we align everyone and
everything in an organisation to help
our customers achieve more of their
goals with less effort.
Who we are
Founded in 2001, i-nexus was created
from a vision that a learning culture is
for organisational
the
success.
foundation
Beginning with operational excellence
at the core of the software, industry-
leading practitioners drove adoption in
global organisations, soon leading to
key Hoshin Kanri functionality – the
x-matrix and bowling chart.
In 2018 the company was admitted to
AIM, marking a key milestone in its
mission to help organisations thrive
and deliver change.
Today, i-nexus is a G2 award-winning
software provider, powering strategies
around the world across manufacturing,
industrial engineering, life sciences, and
automotives.
What we value
To ensure we live and breathe our
purpose, i-nexus believes that everyone
has their PLACE.
Every i-nexus employee represents
these values, and it’s what helps us to
support our customers in delivering the
change they want to see:
• Partnership
We work with the spirit of partnership,
seeing our colleagues, customers, and
vendors as part of i- nexus, working
with a common cause to learn and
succeed.
• Leadership
We act with courage to lead by example
to shape a better future.
• Agility
We strive for early and continuous
delivery, breaking the complex down to
the simple so that we can change with
our customers.
• Curiosity
We are open minded and actively
understand, explore, and try new
approaches, with data and learning at
the heart of our efforts.
• Empathy
We appreciate that there is a person
behind every organisation, so we take
extra effort to understand and support
customers, and
our
vendors.
colleagues,
The problem we solve
A survey of more than 400 global CEOs
found that the ability to execute their
goals – both strategic and operational –
is the number one challenge facing
leaders.
This reality is crystallized with Gartner’s
estimates that two thirds of well
formulated strategies
in their
delivery phase.
fail
At the heart of the problem is a lack of
a single source of truth.
i-nexus Global plc
i-nexus Global plc
Organisations don’t have a place where
the entire business can plan goals,
execute portfolios of projects tightly
aligned to these goals, and not only
track, but measure,
report, and
replicate this across the organisation to
create a culture of achievement.
Getting everyone and everything focused
and collaborating on goals isn’t easy.
This iceberg exists for leaders in every
business. Underneath the surface are
issues in building shared purpose,
aligning operational work to strategic
portfolios, replicating best practices,
bringing business and operating
systems to life, over-engineering, and
proving the impact and benefits of
programs and projects.
The misalignment, planning silos,
disconnected delivery of work, and
is
manual tracking and reporting
worsened with the use of a patchwork
of tools not fit for purpose.
Taking a strategy-to-action is hard.
How we solve it
for
from
solutions
With
the whole
organisation,
to
i-nexus helps customers
c-suite,
embrace the challenges of strategy
execution and operational excellence.
shopfloor
• Strategy execution
i-nexus helps everyone focus and
collaborate on delivering the strategy.
Designed for strategy offices and
transformation teams, i-nexus links
plans, portfolios, and performance
metrics for a simpler strategy execution
experience whether using Hoshin
Kanri, Balanced Scorecard, or a custom
business system.
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
03
value
• Operational excellence
i-nexus helps businesses unlock
repeatable
from
strategic
operations. Built for PMOs and Lean,
Six Sigma, and process professionals,
i-nexus ensures goals across portfolios,
programs, and projects are executed
according to their approach, powering
Kaizen, Lean, Six Sigma, project
management, process
risk
governance, and custom operating
systems.
and
• Strategic portfolio management
i-nexus strategic portfolio management
tools help leaders group and deliver
projects and programs in portfolios
across
growth, CAPEX,
transformation, Mergers & Acquisitions,
Environmental- Social-Governance, and
operational excellence.
revenue
How our tools help
i-nexus gives its users a canvas for
planning, executing, and tracking goals
across the entire organisation in an
aligned and transparent manner.
• Plan
Wherever in the organisation, our x-
matrix, balanced scorecard, and
portfolio tools support well-balanced,
transparent plans.
• We wrap around customers
i-nexus wraps around how an
organisation wants to deliver their
goals. From bringing to life a business
or operating system, to adapting to
their different locations, languages,
products, and processes, i-nexus gives
customers exactly what they want, how
they want it, all inside one solution.
• We support
i-nexus customers rely on a G2 award-
winning team with over fifteen years of
experience
in strategy execution,
Hoshin Kanri, Lean, and project
management to overcome challenges,
spot gaps, and accelerate success.
• We integrate
i-nexus is the single source of truth,
project management
connecting
software, ERP, CRM, and other critical
systems to give organisations a total
view of what matters to delivering
results, moving
from
patchwork technology slowing success.
them away
• Execute
Whether controlling the portfolio, or
contributing to a project, i-nexus gives
user vast tools to align everyone
to plans, ward off non-strategic
disruptions, and build a stronger
execution culture.
• Track
Whatever metric, goal, countermeasure,
or
team-focusing scorecards are
needed, i- nexus makes it easy to enter
data and build a crisp picture of
performance, enabling the businesses
to readily change direction.
Why i-nexus?
Every day, manufacturers, industrial
engineers, automotives, FMCGs and
beyond use i-nexus for their strategic,
transformational, and operational goals
so that they can deliver the change they
want to see in the world.
With 200,000+ strategic goals being
delivered inside i-nexus, our customers
choose us to help align their goals,
engage
in strategy
teams
execution, power their systems, and
drastically reduce the time once spent
on manual reporting.
their
Consolidated Financial Statements for the year ended 30 September 2022
04
STRATEGIC REPORT:
Chairman’s Statement
“We are back winning new customers and, although
initial engagements are smaller, the opportunities to
grow these accounts following successful initial
deployments is, in many cases, contractually assured.
New customers, growth from existing customers and
improving partner sales all underpin our forecast for
2022/23. In challenging market conditions we have
broadly achieved our aims for 2021/22 and look
forward with optimism for the current year.”
to
the
global
pandemic.
In my 2020/21 Chairman’s Report I
commented on
immediate
challenges that i-nexus faced delivering
its Business Improvement and Strategy
Deployment
large
software
enterprises beginning to recover from
the
Few
commentators predicted that 2021/22
would be characterised by even greater
economic and political uncertainty.
Businesses such as ours benefit from
our customers looking forward with
optimism and
implementing clear
long-term strategies across complex
organisations. To do so successfully
requires certainty and stability which
are not conditions which currently
prevail across the global economy.
Nonetheless, against this challenging
sales environment, the team delivered
a record number of new logo wins and
closed this year with a clear cash
runway.
While creating a challenging sales
environment in the short-term, these
have
macro-economic
highlighted the need for global strategy
solutions across
large enterprises.
Issues such as faltering supply chains,
changes
i-nexus Global plc
changing distribution models, price
inflation, social and environmental
factors, and changing working practices
are just a few examples of factors
influencing large enterprise strategies.
Enterprises have learnt quickly that
uncertainty is the new norm and that to
succeed their strategies must be
deployed faster, with more agility and
that tools such as i-nexus can help
them to do so.
Last year our three strategic objectives
were to manage our cash resources as
effectively as possible, while continuing
to develop our i-nexus platform and
drive our developing sales pipeline as
hard as possible with our limited
resources. We have not needed further
working capital support from our
shareholders and, although cash is
tighter than we originally forecast, we
remain confident given our current
projections for FY23 that we will not
require further working capital to
deliver on our growth plans. If our
ambitions change through accelerating
sales or unequivocal demand for new
product the Board will of course
consider all options to fund such
growth. It is the Board’s responsibility to
ensure that i-nexus takes full advantage
of the opportunities available to it. It is
also incumbent upon the Board to
ensure that i-nexus remains at the
forefront of its chosen market. We will
find the necessary resources, within our
limited overhead, to ensure we are
looking forward with our customers
and market analysts to ensure we can
provide broader capability, unlocking a
larger and potentially more dynamic
market.
Net retention is of course central to the
success of any subscription business
and we are pleased that this has seen
a marked improvement in the year to
98% (FY21: 74%) (measured by the total
of on-going MRR at the year-end from
clients in place at the start of the year
as a percentage of the opening MRR
from those clients). We are confident
that the positive increase we have seen
is sustainable over the next 12 months.
Importantly we are back winning new
customers
initial
engagements are deliberately smaller,
these
the opportunities
to grow
although
and,
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
05
is,
accounts following successful initial
deployments
in many cases,
contractually assured. New customers,
growth from existing customers and
improving partner sales all underpin
our growth aspirations for 2022/23. In
challenging market conditions we have
broadly achieved our aims for 2021/22
and look forward with optimism for the
current year.
As we look forward it is clear that our
current market capitalisation has little
or no relationship to the underlying
value of the business, its customer
base, its well established technology or
its financial position. It is a reflection of
the challenges
that many small
businesses quoted on AIM currently
have. The Board will seek ways to
reengage with the market to help
awaken a greater appreciation of the
value of the business, while considering
all options in the best interest of all
stakeholders.
The management team has faced
tough times over the last few years and
have remained at the helm throughout,
never faltering in the most harsh
circumstances. During the year, Alyson
Levett, our CFO, decided to step down
to pursue her career as a pluralist non-
executive director. She has been an
outstandingly committed executive
director, steering the business through
its IPO and subsequent challenging
economic times. I would like to thank
Alyson for her contribution to the
business and wish her well with her
future endeavors.
We are delighted to have found an
exceptional CFO to take up the role,
Drew Whibley, joining us from his role
as Group Finance Manager at LSE listed
software business Aptitude Software
Group plc. Drew has fitted into the
management team with ease and has
already proven a fantastic asset to us
and we are delighted to have him on
board. In addition I’d like to thank all
our employees for their continued
commitment to the business, their hard
work and dedication.
Without downplaying
the obvious
challenges ahead in any way, I look
forward to the coming years with
increased optimism underpinned by a
small but exquisitely formed team, a
growing market, a sound product, blue
chip customers and “baked in” account
growth.
Richard Cunningham
Chairman
6 January 2023
Consolidated Financial Statements for the year ended 30 September 2022
06
STRATEGIC REPORT:
Chief Executive Officer’s Report
“I am pleased to report on a year of solid progress at i-
nexus, in which we delivered on all three areas of our
strategic plan, resulting in growth in new business wins,
a more stable cash runway, and greater clarity on our
future direction. The sales successes in the year
combined with the significant improvement in customer
renewals, enabled us to achieve our target of double-
digit underlying MRR growth in the year.”
Overview
I am pleased to report on a year of solid
progress at
in which we
i-nexus,
delivered on all three areas of our
strategic plan, resulting in growth in
new business wins, a more stable cash
runway, and greater clarity on our
future direction. The sales successes in
the year combined with the significant
improvement in customer renewals,
enabled us to achieve our target of
double-digit Underlying MRR growth in
the year.
The successful reignition of our
marketing activities was key to building
a strong sales pipe which we are
confident will continue to deliver. We
proved during the year we could
convert these deals into new wins, and
quickly demonstrate value to our
customers, ensuring higher levels of
renewals and expansion deals. The
efforts we made to re-build our sales
momentum mean we are continuing to
deliver a consistent volume of well
verified leads each month and currently
have
trial
implementations in progress, providing
visibility on the pipeline into the new
year.
further
fifteen
a
For the i-nexus workbench product, we
invested heavily in those areas that
simplify use for quicker and easier
adoption which has provided much
deeper engagement during both the
customer
sales
deployment.
journey
and
Trading
We secured a record number of new
customers in the year, winning nine
new logos (FY21: four), which along with
the existing account upsells and lower
levels of churn, delivered an exit
Underlying MRR for the year uplift of
12% to £250k (FY21: £223k, Reported
MRR £235k). As is typical with our new
customers, each of these wins services
limited business areas or teams within
the customer and so each carry
substantial expansion opportunities.
We renewed over 90% of our customers,
a considerable improvement on the
prior year, and expanded the use of our
software within four existing accounts
(FY21: two). The improvement in renewal
rates reflects the rigour and routine we
have brought to the review of accounts
with our customer stakeholders, and the
release of enterprise software budgets
following the freeze experienced during
Covid times.
Fundamental to these successes has
been our increased understanding of
where we sit within the competitive
market landscape. We are now clearer
on our differentiators and confident
our platform is the best in class to
level strategy
support enterprise
execution – a view confirmed to us by
our prospects.
We continue to refine our sales
approach to ensure we are best placed
to capture this growing market. Areas of
improvement include streamlining the
onboarding process to under 30 days,
ensuring ROI and customer value are
front and centre of the sales discussion
and simplification of our initial product
demonstrations, particularly around
our key differentiator: our ability to
deliver Hoshin Kanri methodology.
We continue to be approached by a
range of potential partners and will
consider ways to capitalise on this
interest in the year ahead.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
07
Market opportunity
All businesses set goals, plan how to
deliver them and track performance.
The challenge is if they can do this at
pace, with insight and high levels of
visibility
complex
ecosystems where i-nexus’ software
delivers considerable value.
across
their
and
Our software category – Strategy
(SEM) –
Execution Management
continues
gain
to evolve
momentum as companies accelerate
digitalising mission-critical processes in
this post pandemic world. Faced with
market uncertainty, this “new normal”
future requires companies to increase
dynamically
responsiveness
managing
plan;
something that we believe simply
cannot be achieved on spreadsheets
and other conventional productivity
tools.
strategic
their
by
The growing importance of the SEM
market has been acknowledged by
leading analysts
including Gartner
Research, with SEM now considered an
integral part of the new Strategy
Portfolio Management (SPM) software
category. We have seen greater
demand for strategy execution post-
Covid, in response to the “no normal”
business environment. And while we
have seen a higher level of smaller
software providers entering the market,
targeted offerings, we
with SME
continue to dominate the enterprise
level part of the market.
Our competitive strength
an
seeing
increased
We
are
sophistication
in our market, with
prospects frequently now coming to us
through
with very well
capability requirements, having pre-
evaluated
the
i-nexus
competition on a matrix of criteria.
thought
against
our
Hoshin
leading
We continue to see that i-nexus has
several clear advantages in strategy
execution against SPM vendors: the
Kanri
market
capabilities built into our platform,
including
the
configurability and flexibility of the
platform; the depth of functionality
including powerful strategic planning
and
performance management
capabilities that complement portfolio
management features; and proven
enterprise readiness.
X-Matrix;
In addition to the above, i-nexus’
customers benefit from insight gained
from over fifteen years of market
experience in strategy execution. Our
experience and long-standing in the
industry also mean our software is
calibrated to integrate smoothly into an
enterprise’s existing strategy processes.
People
We have a talented, committed team at
i-nexus, all pulling in the same direction
and now delivering better results. The
results this year are even more
impressive when taking into account
the considerably reduced size of the
team. Each person has gone above and
beyond to grow sales momentum,
develop our products and deepen
customer relationships, and the Board
would like to once again thank them all
for their commitment.
and
During the year we spent time on
various activities to help strengthen our
team and ensure we have the right
qualities and shared purpose to take us
forward. These included defining our
Vision
introducing
Values,
improvements to our employment
packages, even more rigorous hiring
processes and the select expansion of
our teams to ensure we had sufficient
depth to properly service our existing
customer base. As a result of these
measures, we have a strong, cohesive
team, working together to deliver on
our growth plan.
Consolidated Financial Statements for the year ended 30 September 2022
08
STRATEGIC REPORT:
Chief Executive Officer’s Report continued
Being a software/product company, we
continually look at product innovations
in our space. This last year and next
year are no different. We have a
number
product
candidates, currently being assessed
for customer validation, that we hope
to take through to a minimal viable
product in the year ahead.
potential
of
Current Trading and Outlook
Following the growth in MRR and our
careful management of the impacts of
cost inflation on the business, we
continue to have clear visibility of our
cash runway.
The growing
in strategy
interest
software, the relaxation of enterprise
software budgets, the enhancements
we have made to our products and our
increased sales and marketing skills, all
combine to provide us with confidence
in our outlook and ability to deliver
another year of double digit MRR
growth.
Simon Crowther
Chief Executive Officer
6 January 2023
Strategic focus for the year
ahead
Our strategy for the current year is
focused on three main programs of
work:
1. To accelerate the landing of new
logos – which we will achieve though
continuing to reduce friction in
buying i-nexus and enhancing the
trial experience.
2. Prove our ability to expand within
accounts – with nine new logos
secured in FY22, proving we can
grow these accounts is key. We are
launching an updated set of value
measures and increased customer
marketing and forums.
3. Improve the customer experience
within our Workbench product –
developing key insights and output
screens as requested by customers.
We believe through continued focus on
these programs, we will drive the
success of the business.
Innovation
This year and next year we will continue
to focus our innovation efforts on
increasing the usability of our platform
and the delivery of valuable insights.
Through this we intend to increase
growth from existing customers which
is a key component to our land and
expand sales model; providing focus on
giving
the best user experience,
eliminating waste and delivering
valuable insight.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
09
STRATEGIC REPORT:
Chief Financial Officer’s Report
“During the year, we delivered on a key financial
objective, to become self-sufficient in working capital
terms. This enabled us to complete a select number
of additional one-off strategic investments from
within our own cash resources, strengthening our
team as we head into FY23.”
Revenue
Licence revenues
Monthly recurring revenue (‘MRR’), the
key financial metric for the Group, grew
by 12% in the year to £250k at 30
September 2022 (30 September 2021:
£223k after adjusting
foreign
for
exchange and
IFRS adjustments,
Reported MRR £235k) as the business
secured a record nine new logos (FY21:
four) alongside continuing to expand
the use of our software in a growing
number of accounts. These results
represent a significant turnaround from
both 2021 and 2020 (reduction in MRR
of 23% and 10% respectively) as the
Group’s key markets were disrupted by
the onset of the pandemic.
the
Highlighting both
increasing
strength of our client relationships and
the release of enterprise software
budgets
freeze
experienced during the last two years,
net retention in the year was 98%
(FY21: 74%).
following
the
As expected,
revenues
recognised in 2022 reduced to £2,857k
software
(FY21: £3,333k) due to the lagged
impact of the exceptional levels of non-
renewing contracts
the business
experienced in the prior year.
As a consequence of our subscription
revenue model however, the new
customer successes achieved in the
year
expansion
growing
opportunities in our base set the
business up well to return to software
revenue growth in FY23.
and
This view is further supported by the
business securing three new logos and
one account expansion in Q1 2023,
delivering net MRR growth of £12k.
Services revenues
Revenue from associated professional
services was broadly in line with prior
year levels at £270k (FY21: £306k)
despite the 40% reduction cited at the
half year against H1 2021. The uplift in
H2 reflects the timing of delivering new
customer deployments and existing
change orders, a trend expected to
continue into H1 2023 underpinned
by the deferred revenue balance
related to services at 30 September
2022 being three times higher than at
30 September 2021.
Gross Margin
Gross margin in the year remained
stable at 79% (FY21: 83%) with the
reduction in revenue driving the fall
from £3,004k to £2,461k.
Reported Gross Margin
the
combined Gross Margin over both
recurring software subscriptions and
professional services.
is
Adjusted EBITDA
Adjusted EBITDA (EBITDA excluding the
impact of impairment, loss on disposal
of assets, share-based payments and
non-underlying items) totalled a loss of
£552k for the period (FY21: £257k), with
the fall in gross margin of £542k being
constrained by a drop in overhead
costs of £247k reflecting the full impact
of
initiatives
undertaken last year.
control
cost
the
Whilst the Group’s continuing focus is
to return to EBITDA breakeven, during
the second half of 2022 the business
decided to accelerate a select number
Consolidated Financial Statements for the year ended 30 September 2022
10
of investments both in its existing
employee base to preserve retention
and in additional resource needed for
operational delivery. The strengthening
of
considered
fundamental to the Group realising the
market opportunity and delivering on
the next stage of its growth strategy.
team was
the
There are currently no plans to make
further investments in FY23 until such
time as revenue growth is delivering a
positive Adjusted EBITDA.
Depreciation, amortisation and
impairment
Total costs in respect of depreciation,
amortisation, and impairment were
£385k in FY22 (FY21: £552k). With the
business having low capital expenditure
requirements, the value is principally
made up of amortisation on intangible
assets, being capitalised development
costs, (£165k, FY21: £79k) and any
subsequent
charges
(£155k, FY21: £294k).
impairment
These costs are reflective of the
continual evolution of the market in
which the Group operates, the needs of
its customers, both present and
prospective, and the Group’s agile
approach to continually developing and
improving its offering.
Non-underlying items
Non-underlying items in the prior year
totalling £144k comprise redundancy
costs and professional and consultancy
fees relating to the raising of finance.
No such costs were incurred in FY22.
Statutory results
The Group reported a loss before
taxation for the year of £1,105k (FY21:
£1,133k).
i-nexus Global plc
Cash and cash equivalents
The Group had cash & cash equivalents
at 30 September 2022 of £99k (FY21:
redemption date from 4 November
2023 to 4 November 2024, see note 22
for further details.
The Group prepares budgets, cashflow
forecasts and undertakes scenario
planning to ensure that the Group can
meet its liabilities as they fall due.
The Board’s assessment in relation to
going concern is included on page 32
of the financial statements.
Balance sheet
Trade receivables (net) have increased
to £604k due to the timing of receipt of
annual licence fee and subscription
invoices issued in the final months of
the year (FY21: £557k).
The growth in the Group’s MRR and
accompanying services resulted
in
deferred revenue increasing to £1,320k
at 30 September 2022 (FY21: £1,030k).
The Group’s cash collection disciplines
remain strong with DSO (debtor days)
at 30 September 2022 of 60 (2021: 70).
Principal risks and
uncertainties
The Group’s principal
risks and
uncertainties are set out on pages 11
to 16.
Drew Whibley
Chief Financial Officer
6 January 2023
£575k), with the end of the financial
year representing a cash low point for
the business given the seasonality in
cash flows arising from the timing of the
invoicing and collection of the Group's
recurring revenue, the majority of which
is billed during Q1 and Q2.
to
objective,
During the year, we delivered on a key
financial
become
self-sufficient in working capital terms.
This enabled us to complete a select
number of additional one-off strategic
investments from within our own cash
resources, strengthening our team as
we head into FY23.
Driving this outcome was a £725k
reduction in the net outflow of funds
from operating activities (FY22: (£237k,
FY21: £962k) reflecting the impact of
new business successes, improved
service billing and a strong renewal
performance.
Careful cash management will continue
to be a priority focus for the Board. As
previously outlined, there are currently
no plans to increase the existing cost
base in the coming year until such time
as revenue growth delivers a position of
at least Adjusted EBITDA breakeven.
The Group also continues to apply
treasury and foreign currency exposure
management policies where possible to
minimise both the cost of finance and
our exposure to foreign currency
exchange rate fluctuations.
(FY21:
Net debt at 30 September 2022 was
On
£1,710k
30 September 2022, the Company
agreed with the holders of the £1,325k
Convertible Loan Notes to extend the
£1,321k).
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
11
STRATEGIC REPORT:
Principal Risks and Uncertainties
The Board of the Company regularly reviews business risk and the Group’s appetite for risk relative to its goals. There are a
number of potential risks and uncertainties, some of which could have a material impact on the Group’s performance, and
therefore could cause actual results to differ materially from those expected.
Set out below are the significant business risk areas identified, together with an overview of the mitigating factors considered
by the Board. This is not an exhaustive list of the risks faced by the Group and is not necessarily presented in order of priority.
Mitigation
Trend: Level risk
The Group prepares regular business
forecasts and monitors its projected cash
flows, which are reviewed by the Board.
and
scenarios
The
sensitivities
demonstrate that there are mitigating
actions management can
implement
should the plans not deliver the expected
sales growth.
Risk
Description
Working capital
of
Vulnerability
Group’s
working capital.
long
the
term
Whilst the Directors believe that the
improvement in sales conversion seen in
FY22 is sustainable, the Group’s working
capital position is still exposed should this
weaken and /or its expected growth with
existing accounts be lower than planned in
FY23.
The Group’s continuing viability in the
longer term remains critically dependent
on its ability to secure new sales and
expand the use of the software in existing
accounts.
It is possible that the Group will experience
a slower and/or lower sales conversion
rate than the Directors have modelled
within their base case financial projections.
This could in turn have a material adverse
effect on the Group’s business, results of
condition and
operations, financial
prospects.
Consolidated Financial Statements for the year ended 30 September 2022
12
STRATEGIC REPORT:
Principal Risks and Uncertainties continued
Risk
Description
Market & product
development
The strategy market may
not evolve as expected or
our products fail to meet
the expectations of the
market.
Whilst the Board believes that there is
strong evidence of an increasing trend to
digitalise strategy by its target customers,
a large proportion of the Group’s target
market continues to use traditional
methods and
in-house developed
systems.
that
Although the Group has achieved its
through a deep
market position
understanding of the market, and the 10
years of development of its i-nexus
software, there is no guarantee that either
our product continues to meet customer
expectations or
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
the
enhancement, promotion and sale of
their products, which could have a
negative impact on the Group’s business.
resources
to
Mitigation
Trend: Level risk
The Group has
internal sales and
marketing functions, which are also
supported by a network of consulting
that work with potential
partners,
customers to educate them on the
benefits of digitising strategy and the
associated benefits the product can offer
an organisation.
The rate of incoming enquiries supports
the view that recent events appear to
have made the need to digitise strategy
more widely accepted.
that
Board
The
recent
feels
enhancements along with the Group’s
product strategy and R&D focus mitigates
this risk. The Board monitors user
satisfaction and the extent to which the
software continues to meet customer
expectation through various channels,
including on the G2 platform.
Account Proliferation
Failure of our existing
to grow as
accounts
from
planned, resulting
dissatisfaction with
the
product and/or deployment
issues.
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
this anticipated account
failure of
proliferation occurring will impact the
Group’s future success and adversely
affect its business, prospects and financial
position.
i-nexus Global plc
Trend: Reducing risk
future
deployment
Many of the new logos signed in FY22 were
“Land and Expand” opportunities with clear
intent, whereby a smaller subset of a much
have
larger
commenced using the product first. The
Board expect to see the beneficial impact
of this strategy in FY23 and have taken
measures to increase the number of
Success Managers in the year. This team’s
efforts at growing our existing accounts
has been assisted by the recent product
enhancements aimed at improving user
experience.
The Board continue to monitor the efficacy
and outcomes of the Group’s efforts in
growing existing accounts.
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
13
Risk
Description
Dependence on key
Customers
Failure to retain our larger
key customers.
Security Breaches and
Cyber Attacks
of
the
Vulnerability
Group’s
to
security breaches or cyber
attacks.
systems
A small group of key customers provide
approximately half of the Group’s MRR,
with one representing nearly 20 per cent
of closing MRR. The Group’s financial
performance
partly
dependent on the continued business
relationship with these key customers.
therefore
is
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.
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 Group or its
customers’ business. Given the reliance of
information
the business on
technology systems, the 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.
its
Mitigation
Trend: Level risk
The majority of this small group of
customers are
in contracts with a
remaining term of more than one year
and all bar one of them have been
longstanding clients for a period of at
least five years and, in the case of two of
them, ten years.
of
team
As previously reported, the Group has a
dedicated
long-standing
experienced professionals acting as
Success Managers. They have well-
established processes and reporting that
allow them to get early warning of any
issues.
Whilst this cannot guarantee renewal of all
in the face of disruptive
customers
external factors that we cannot reasonably
foresee or manage, the overall risk level is
aligned with FY22 where the business
achieved its highest retention rates.
Trend: Level risk
The Group takes its Information Security
very seriously as demonstrated by its
ISO27001 accreditation. Employees are
trained in this area to ensure best practice
measures are followed for Information
Security.
The Group utilises the latest security
products such as end point security
systems, with staff receiving regular security
awareness training and testing. The security
regime is regularly reviewed, and the Group
invests in state-of-the-art systems to keep
both its cloud platform and office networks
protected against cyber-attack.
In addition, our systems are subjected to
frequent
third-party
penetration testing to help ensure our
system integrity.
rigorous
and
The Group has cyber security insurance in
place and the Group endeavors to secure
its
limitations of
customer contracts.
liability clauses
in
Consolidated Financial Statements for the year ended 30 September 2022
14
STRATEGIC REPORT:
Principal Risks and Uncertainties continued
Mitigation
Trend: Level risk
The Group works closely with external
parties to ensure competitive pay and
benefits are being offered to both attract
and retain people.
to
invest
opportunities
We continue
in people
development and training initiatives to
career
provide
fulfillment and progression. Wherever
appropriate we seek to develop and
promote from within the existing staff
pool.
for
The Group has invested heavily in this
area in FY22 and is a continuing area of
focus for FY23.
Executive and staff remuneration plans,
incorporating long-term incentives, have
been implemented to mitigate this risk.
Trend: Level risk
in relation to the
Renewed efforts
evolution of this strategic theme will take
place in FY23 as investment in resource is
unlocked by growth. The Board will closely
monitor progress.
Risk
Description
Recruitment &
retention
Risk of failing to attract
and/or
key
personnel.
retain
As the Group grows it has a dependence
on the recruitment and retention of highly
skilled employees and an ongoing reliance
on a limited number of key personnel,
including
the Directors and senior
management, who have significant sector
experience.
The job market is increasingly competitive
in the cloud technology sector, particularly
following the pandemic and subsequent
acceleration of cloud adoptions and digital
transformation trends.
The business requires specialist technical
skills that can be scarce.
If members of the Group’s key senior team
depart, the Group may not be able to find
effective replacements in a timely manner,
or at all, and its business may be disrupted.
Part of the Group’s strategy
is to
increasingly sell its software through
There are no
channel partners.
guarantees
channel
partners will be found to sell the Group’s
software at the rates planned.
sufficient
that
confident
The Directors are
that
engagements to date by existing and
prospective channel partners provide
strong evidence of the opportunity
this
available. However, unlocking
potential has proven to be difficult in
recent years and
to have
productive channel partners in the future
could affect the Group’s future success.
failing
Dependence on
Channel Partners
Failure to develop this
additional route to market
effectively.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
15
Risk
Financial risk
management
The principal financial
instruments used by the
which
from
Group,
financial risk arises, are
trade receivables, cash at
bank, trade and other
payables.
Description
Credit risk
Mitigation
Trend: Level risk
Credit risk is the risk of financial loss to the
Group if a partner or customer fails to
meet its contractual obligations.
The Group is principally exposed to credit
risk from credit sales and/or bank default.
It is Group policy to assess the credit risk
of new customers and partners before
entering new contracts and it has a
frequent and proactive collections
process.
Under the terms of our contracts many
services are charged for in advance of
delivery, thus mitigating the risk further.
Liquidity risk
Trend: Level risk
Liquidity risk arises from the Group’s
management of working capital. It is the
risk that the Group will encounter
its financial
difficulty
obligations as they fall due.
in meeting
On a monthly basis, the Directors review
the Group’s trading to date, the Group’s
full year financial projections as well as
information regarding cash balances,
debtors, trading and prospects. This
allows the Directors to form an opinion as
to the working capital of the Group and its
likely future requirements in order to plan
accordingly.
Currency risk
Trend: Level risk
As a consequence of
the Group’s
exposure transacting in foreign currencies
there are risks associated with changes in
foreign currency exchange rates.
is based
The Group
in the United
Kingdom and presents its consolidated
financial statements in pounds Sterling.
The Group’s current revenues are
generated primarily in Sterling, US dollar
and Euros. The Group also has some
are
obligations
contractual
denominated in US Dollars.
that
to
rate
All geographies addressed by the Group
can be readily serviced from the UK. The
Group applies treasury and
foreign
currency exposure management policies
to minimise both the cost of finance and
foreign currency
our exposure
fluctuations.
exchange
hedging
Notwithstanding
arrangements, the Group does have
exposure to translation effects arising
from movements in the relevant currency
sterling.
exchange
Therefore, there can be no assurance that
its future results or resources will not be
significantly affected by fluctuations in
exchange rates.
against
these
rates
Consolidated Financial Statements for the year ended 30 September 2022
16
STRATEGIC REPORT:
Principal Risks and Uncertainties continued
Risk
Description
Inflation risk
Mitigation
Trend: Increasing risk
Inflation risk has been very limited for
most of the last decade. However, as with
many technology businesses, the Group is
inflationary
increased
experiencing
pressures within its cost base. The timing
of a customer’s invoice for their typically
annually in advance software fee can also
inflationary
contribute to a delay
pressures being passed to customers.
in
The Board acknowledge that inflationary
pressure is now mounting with certain
vendors already applying increases as a
result. The Board have agreed that a review
the Group’s vendor base and
of
accompanying
be
undertaken as a potential countermeasure
to ensure margins are preserved.
pricing model
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
17
STRATEGIC REPORT:
Stakeholder Engagement
During the year, the Board and its directors confirm they have acted in a way that promotes the success of i-nexus Global plc
for the benefit of its members as a whole, and in doing so have had regard to the stakeholders and key matters set out in
Section 172 of the Companies Act 2006.
This duty underpins the Board’s decision-making processes and the Group’s strategic direction, with due consideration given
to the long-term impact of its decisions on shareholders, employees, customers and wider stakeholders. Practical measures
that the Board takes to ensure the interests of these stakeholders are reflected in the Board’s decision making process are
as follows:
Stakeholder Group
Principal Methods of Engagement
Shareholders
Employees
Customers
The Board engages with shareholders throughout the year. During FY22, engagements
with major shareholders and investors were as and when required which also included
detailed feedback reports via our various advisors. This feedback is factored into the
Board’s decision-making process and to ensure that the Group’s market communications
meet investor needs.
All shareholders are encouraged to submit questions prior to the Annual General Meeting
and to lodge their votes ahead of the meeting to ensure that these are counted. The
Annual Report is sent to shareholders at least 20 working days before the Annual General
Meeting and each issue for consideration at the Annual General Meeting is proposed as
a separate resolution. All Directors generally attend the Annual General Meeting.
The Board is fully committed to ensuring that the opinions of employees across all
business areas are regularly sought and factored into its decision-making process.
Through these engagement activities, the Board is able to gather opinions and ideas from
the wider workforce, identify any communication gaps or common areas of concern and
address these through the Group’s activities.
The Board engages with employees by maintaining a rotational schedule which sees
department heads present at Board meetings, weekly Management Updates with the CEO
and CFO along with monthly All Hands briefing emails and meetings, currently being run
virtually. We also hold an annual “Launch Event” whereby we review the year just gone
and consider the targets and aspirations for the year ahead.
The Group is proactive in engaging directly with its clients to monitor and continually
improve its service delivery and client satisfaction levels. The Board receives monthly
reports on client-related matters, including support ticket levels, service delivery and
project status reports, which enable it to identify any trends or any areas requiring specific
oversight or investment. In the event that any concerns are raised by clients, the Group
ensures that these are addressed swiftly and that proactive engagement occurs to ensure
ongoing high standards of service delivery.
The Group seeks direct engagement with clients throughout their customer journey,
providing opportunities to speak to their support team, account manager or a member
of senior management.
Consolidated Financial Statements for the year ended 30 September 2022
18
STRATEGIC REPORT:
Stakeholder Engagement continued
Stakeholder Group
Principal Methods of Engagement
Suppliers
Environment
The Group engages closely with its suppliers and has internal procedures to ensure that
appropriate due diligence is undertaken on these vendors. Engagement with any new
supplier is subject to a formal process and requires final approval from an Executive
Director. Significant supplier contracts of a recurring nature require approval from the
Board as a whole. Suppliers are chosen according to their ability to meet the Group’s own
high standards and to demonstrate values that are consistent with those of the Group.
Regular engagement takes place with key suppliers, monitoring their performance against
contractual obligations and providing regular feedback in order to foster and support
long-term relationships for the benefit of the Group. In the event that delivery standards
do not meet the Group’s expectations, proactive steps will be taken to communicate and
address these directly with the supplier to ensure that there is no detrimental impact
upon the Group’s activities.
As a provider of software solutions, the Group’s operations have a relatively limited impact
on the environment. However, the Board is committed to implementing measures that
will result in incremental improvements to the Group’s environmental impact, such as
avoiding unnecessary travel and using video-based meeting facilities where appropriate.
The entire workforce is also provided the technology and flexibility to work remotely to
minimise travel.
Environmental impact is also included in the decision-making process for new and existing
suppliers, for example, Amazon Web Services, the provider of our hosting services are
committed to running their business in the most environmentally friendly way possible
and achieving 100% renewable energy usage for their global infrastructure.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
19
The Board held twelve board meetings in the year to address and meet its obligations under Section 172 of the Companies
Act 2006. The following table covers the key decisions made during the year and the stakeholder group(s) impacted by these
decisions
Key Impact
Key Decisions Made Key Stakeholder
Group’s impacted
Long Term Strategy
At the end of each financial year, the Board approves the
annual budget, strategy and growth plans of the Group for the
year ahead.
Shareholders,
Employees,
Customers, Suppliers
Performance of the
Group
Shareholders,
Employees,
Customers, Suppliers,
Environment
In October 2022, the Board approved the Budget for FY23
which incorporated a number of revenue growth and cost
targets. It is felt that these are reasonable and achievable.
On a monthly basis, the Board reviews the trading performance
of the Group with detailed Board reports,
including
management accounts, provided by the Executive team
covering trading in the month and year to date, with operational
and financial performance monitored against budget and the
previous financial year. These reports cover sales and forecast
pipeline, customers and suppliers, data centre activity and
various aspects of operational performance along with
compliance with ISO requirements as applicable.
During the year, the Board spent significant time reviewing and
agreeing the Group’s sales and product strategy alongside
making a number of tactical decisions, for example on the timing
and quantum of investment into the product development,
customer engagement and marketing teams and the decision
to seek approval from the holders of the Convertible Loan Notes
to extend the final redemption date by 12 months to
4 November 2024.
Consolidated Financial Statements for the year ended 30 September 2022
20
STRATEGIC REPORT:
Stakeholder Engagement continued
Key Impact
Key Decisions Made Key Stakeholder
Group’s impacted
Employees and Culture
The Board seeks to ensure that the Group’s staff policies and
processes are aligned with the Group’s core values and
promote the long-term strategy of the Group.
Shareholders,
Employees
The Board continues to make decisions that encourage
improvements in systems, processes and benefits which
impact the wellbeing of our employees. By way of example, at
the Group’s recent employee wide annual “Launch Event” it
included a dedicated Mental Health Workshop.
The Remuneration Committee makes recommendations to
the Board on the remuneration packages for the Executive
Directors, including annual salary increase, performance
related bonuses and options under our long term incentive
plans. In June 2022, this process resulted in annual salary
increases and improved pension packages for both Executive
Directors and the wider employee base.
Following the year-end, the Board issued 2,255,343 options to
Directors and employees, see page 73 for details.
Governance,
Regulatory
Requirements and Risk
The Board reviews and approves the results announcements
and trading updates, the half year and annual reports and the
AGM statement. The Board receives regular briefings from the
Chief Executive Officer and Chief Financial Officer and the
Group’s brokers and public relations advisers.
Shareholders,
Employees,
Customers, Suppliers,
Environment
investor roadshows, the Board are
Through the half-year and annual year-end results process
alongside any
in
communication with analysts and advisors to help understand
shareholder views which contributes to the Group’s strategy
and decision-making. The executive team presents investor
feedback to the Board. A range of corporate information
(including Group announcements) are available to all
shareholders, investors and the public on the Group’s website
www.i-nexus.com/investor-center.
The Board takes regulatory responsibilities seriously and is
committed to ensuring that it is open and transparent with
regulators. In the current year, the Board received advice from
our nominated adviser to obtain an update on changes to AIM
rules and market abuse regulations to ensure compliance with
requirements.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
21
Maintaining a reputation for high standards of business conduct
The Board is mindful that the continued growth and success of the Group is dependent upon maintaining high standards of
business conduct, including:
•
•
•
•
the ability to successfully compete within the market, to attract and retain clients, and to service these clients to a high
standard;
the ability to attract and retain high quality employees;
the ability to attract investors and to meet their expectations of good governance and sound business conduct; and
the ability to meet the Group’s regulatory obligations, and to meet the expectations of relevant regulatory bodies.
This awareness underpins the formulation of the Group’s strategy and is evident throughout the Board’s decision-making
process.
Ensuring that members of the Company are treated fairly
The Board ensures that the Group’s shareholders are treated equally and fairly, regardless of the size of their shareholding
or their status as a private or institutional shareholder. The Group provides clear and timely communications to all
shareholders in their chosen communication medium, as well as via the Group’s website and via a Regulatory News Service.
All holders of Ordinary shares are eligible to receive dividend payments and to vote at general meetings of the Company.
By Order of the Board
Drew Whibley
Director
6 January 2023
Consolidated Financial Statements for the year ended 30 September 2022
22
CORPORATE GOVERNANCE:
Board of Directors
Richard Cunningham, 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 Group 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.
Drew Whibley, Chief Financial Officer
Drew Whibley joined the Group as Finance Director in 2022, assuming a strategic role and day-to-
day responsibility for planning, implementing, managing, and controlling all finance-related activities.
A Chartered Accountant, most recently Drew spent five years with LSE listed software business
Aptitude Software Group plc, during which he, as Group Finance Manager, oversaw both the
internal and external reporting and budgetary requirements while playing a key role in delivering
on the Group’s strategy.
David Firth, Independent Non-Executive Director
David is a Fellow of the Institute of Chartered Accountants in England and Wales and is a highly
experienced PLC board member with a strong understanding of the software industry. His current
directorships include Parity Group plc, an IT services and data consultancy business, Best of the
Best plc, an organiser of weekly competitions on-line to win cars and other luxury prizes and
Celadon Pharmaceuticals plc, a UK based pharmaceutical company focused on the research,
cultivation, manufacturing, and supply of cannabis-based medicines. He is chairman of the
remuneration and audit committees at all three companies. David was previously Finance Director
of Penna Consulting plc from 1999 to 2016 and has held a number of board positions in public
companies over the past 30 years across various sectors including HR consultancy and
recruitment, IT services, financial markets, motor retailing and advertising.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
23
CORPORATE GOVERNANCE:
Corporate Governance Statement
Chairman’s Introductory Statement on Corporate Governance
As the Chairman of the Board I must ensure its effectiveness and that it has Directors with the right balance of skills, diversity
and experience. The Board is collectively responsible for the long-term success of the Group and for setting and approving
the business strategy and its subsequent execution.
I believe our culture is consistent with the Group’s objectives, strategy and business model and supports the requirement to
minimise our principal risks and uncertainties.
Good corporate governance forms a key part of our business ethos and eventual success and we have in place a strong and
effective governance framework and associated practices to ensure that the highest standards are applied throughout the
Group in a consistent manner leading to the right behaviours across it. All of these 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. All AIM companies are
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 Chief
Executive Officer’s Report and Stakeholder Engagement section of the Strategic Report.
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 as required, 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 whilst the AGM provides an opportunity for all shareholders to engage and to
ask questions of the Board. The Group also engages with its shareholders through its 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 Group focuses on building strong and sustainable relationships with a range of different stakeholders in order to
support the long-term success of the Group. Details on this are included in the Stakeholder Engagement section of the
Strategic report on pages 17 to 18.
Consolidated Financial Statements for the year ended 30 September 2022
24
CORPORATE GOVERNANCE:
Corporate Governance Statement continued
4. Risk Management
The Group 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 11 to 16. The Board
has overall responsibility for the Group’s system of internal control and for reviewing its effectiveness. The processes to identify
and manage the key risks of the Group 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 22. The Board has determined David Firth 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 Group. 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 regularly. 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 22.
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
During the year, the Group formally communicated its company values to all employees after seeking input from several areas
of the business. These include but are not limited to the following behaviours and attitudes; ego-less, customer centric, high
integrity, respectful, supportive, caring, professional, quality driven, passionate, think for themselves.
i-nexus Global plc
STRATEGIC REPORT
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FINANCIAL STATEMENTS
25
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 Group’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
implementing appropriate systems and controls 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 Group have been assessed by the Board and
are considered appropriate for the size, complexity and risk profile of the Group, these will continue to be reviewed by the
Board to ensure they remain appropriate as the business changes over time. There is a formal schedule of matters reserved
for the decision of the Board that covers the key areas of the Group’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.
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 alongside each receiving 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 2022, 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 Group 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 Group,
with the Non-Executive Directors providing independent thought and judgement.
The Non-Executive Directors are considered by the Board to be independent of management and freely able to exercise their
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.
Attendance at Meetings
Since the issue of the last Annual Report there were 12 Board Meetings. The details of attendees are shown below:
BOARD REMUNERATION AUDIT NOMINATION
MEETINGS COMMITTEE COMMITTEE COMMITTEE
Richard Cunningham 12/12 2/2 3/3 1/1
David Firth 12/12 2/2 3/3 1/1
Simon Crowther 12/12 – 3/3 1/1
Alyson Levett (resigned 1 August 2022) 10/10 – 2/2 1/1
Drew Whibley (appointed 1 August 2022) 2/2 – 1/1 1/1
Roles and Responsibilities
The roles of the Chairman and Chief Executive Officer are separated and clearly defined.
Consolidated Financial Statements for the year ended 30 September 2022
26
CORPORATE GOVERNANCE:
Corporate Governance Statement continued
The Chairman provides leadership to the Board by ensuring that there is sufficient time to discuss issues on the agenda and
facilitates 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 Group’s business. 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 Group 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, 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. David Firth, a Chartered Accountant who brings a high level of
financial and corporate governance experience, chairs 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
three 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 management of
compliance with accounting standards on software revenue recognition, capitalisation of software development costs and
other key management estimates, compound instruments and the Group’s going concern assumption and related disclosures.
These significant issues were discussed by the Committee taking guidance from the findings reported by the Independent
Auditor and discussions with the Chief Financial Officer.
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.
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FINANCIAL STATEMENTS
27
Independence and objectivity
The Committee has a policy that aligns with current ethical standards in prohibiting 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, and the production of the Financial Statements. The Board and Committee are satisfied by these safeguards.
The Committee also received confirmation from Saffery Champness LLP that there are no relationships between the Group
and Saffery Champness LLP or its associates that may have a bearing on its independence.
Further details of the audit fees paid, to Saffery Champness LLP for the 2022 and 2021 financial years can be found in note
8 to the financial statements. To comply with the FRC Revised Ethical Standards 2019 Saffery Champness LLP did not undertake
any non-audit services in FY22. Those relating to the Group's Tax services, specifically those relating to the 2022 Tax compliance
and advisory services were provided by Azets.
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) and David Firth. 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. During the year
the Committee met and approved the appointment of Drew Whibley as a Director from 1 August 2022 following Alyson Levett’s
decision to step down from the Board in order to pursue her career as a pluralist non-executive director.
Consolidated Financial Statements for the year ended 30 September 2022
28
CORPORATE GOVERNANCE:
Directors’ Report For the year ended 30 September 2022
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 2022.
Directors
The Directors who served on the Board during the year and to the date of this report are as follows:
Richard Cunningham
David Firth
Simon Crowther
Drew Whibley (appointed 1 August 2022)
Alyson Levett (resigned 1 August 2022)
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 Group and Company financial statements for each financial year. The Directors
have elected under company law and are required under the Listing Rules of the Financial Conduct Authority to prepare the
Group financial statements in accordance with UK-adopted International Accounting Standards.
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.
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 UK-adopted International Accounting Standards, 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 Group’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 Companies Act 2006. They are also responsible for safeguarding
the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
Matters covered in the Strategic Report
Details of the likely future developments and activities in the field of research and development are not disclosed in the
Directors' Report, as under s414C(11) they are instead considered to be of strategic importance and are covered in the
Strategic Report.
Further details on the Group's policies on financial risk management are disclosed in note 23 to the financial statements.
i-nexus Global plc
STRATEGIC REPORT
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FINANCIAL STATEMENTS
29
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 Group without
paying more than necessary. The remuneration policy bears in mind the Group’s appetite for risk and is aligned to the Group’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 Group.
Base Salary Review
Having taken external advice the Remuneration Committee developed its 2022 remuneration proposals based on what the
Remuneration Committee believe to be appropriate remuneration levels for the Group at its current stage of development.
During the year the salaries of the Directors were increased from 1 June 2022 in conjunction with the review of salaries for
the wider workforce. Simon Crowthers’ salary was increased by 8% with effect from 1 June 2022, taking this from £175,800 to
£190,071. This salary increase is aligned with the increases that were received by the Group’s wider workforce.
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 being to deliver on the annual budget targets which are
approved at the start of each financial year.
In 2022, 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. 2,668,738 options were granted
under the plans in January 2021, 50% of which were due to vest at the end of FY21 and the other 50% at the end of FY22
based on continued employment and certain performance conditions surrounding revenue growth being met. These amounts
included 1,270,578 to Directors at the time of grant.
Whilst none of the LTIP awards granted to Directors vested in respect of the performance in 2021, the Remuneration
Committee concluded on an overall vesting level of 50% on the awards held by Simon Crowther and Alyson Levett based on
the Groups performance in 2022.
Shares
subject to Vesting Vested
award percentage shares
Director
Mr S Crowther 266,144 50% 133,072
Ms A Levett (resigned 1 August 2022) 251,359 50% 125,680
Total 517,503 50% 258,752
Value
£
–
–
–
The value included in the single total figure of remuneration is based on the estimated vesting outturn and the estimated
value of a share at vesting calculated by reference to the three-month average share price up to 30 September 2022 less the
per share exercise price (10 pence).
Consolidated Financial Statements for the year ended 30 September 2022
30
CORPORATE GOVERNANCE:
Directors’ Report continued
Following the year end, on 3 October 2022 and 11 November 2022, the Group granted 2,255,343 share options of which
1,044,883 were awarded to Directors. Each award was granted in the form of an option with an exercise price of 10p per
share. The vesting of these options to Directors is subject to the satisfaction of the performance conditions based on
continued employment and a revenue growth target. 396,260 of these awards are subject to vest at the end of 2023 with the
remainder at the end of 2024.
Director
Mr S Crowther
Mr D Whibley
Total
Shares subject to award
702,075
342,808
1,044,883
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
The remuneration of Directors for the year ended 30 September 2022 and 2021 was as follows
2021
2022
Total cash
Total cash
& cash
& cash
Benefits equivalent
equivalent
Salary in Kind Pension remuneration remuneration
£
Director £ £ £ £
Mr S Crowther 180,140 – 15,674 195,814
Ms A Levett (resigned 1 August 2022) 106,813 – 9,734 116,547
Mr R Cunningham 48,000 – 1,253 49,253
Mr D Firth 30,000 – – 30,000
Mr D Whibley (appointed 1 August 2022) 21,671 – 2,167 23,838
Mr N Halkes (resigned 31 March 2021) – – – –
Total 386,624 – 28,828 415,452
181,033
143,876
49,148
18,308
–
20,125
412,490
In addition to the above remuneration, the directors have been granted share options with fair value as shown in the below
table below. These options are presently out of the money but are ascribed a fair value and included as a component of
directors’ remuneration in line with the requirements of IFRS 2.
2021
2022
Fair value of Total
Total
share options remuneration remuneration
£‘000’s
Director £‘000’s £‘000’s
Mr S Crowther 2,706 198,520
Ms A Levett (resigned 1 August 2022) 1,951 118,498
Mr R Cunningham – 49,253
Mr D Firth – 30,000
Mr D Whibley (appointed 1 August 2022) – 23,838
Mr N Halkes (resigned 31 March 2021) – –
Total 4,657 420,109
185,638
147,196
49,148
18,308
–
20,125
420,415
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
31
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
Richard Cunningham
David Firth
30 September 30 September
2022
%
2022
Number
868,475
1,083,100
180,000
2.94
3.66
0.61
In addition to the interest in shares directly owned, Richard Cunningham also has an interest resulting from his participation
in the issue of the 2020 and 2021 Fixed Rate Unsecured Convertible Redeemable Loan Notes. His participation represents a
maximum interest of 3,765,000 in new Ordinary Shares that could be issued pursuant to the 2020 and 2021 Convertible
Loan Note Instruments.
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. Simon
Crowther and Drew Whibley held no external Non-Executive Directorships in the period. Richard Cunningham, David Firth
and Alyson Levett prior to her resignation from the Board held external Non-Executive Directorships in the period.
Results and Dividends
The results for the year are set out on page 40 and are also discussed in the Strategic Report. The Directors do not recommend
payment of a dividend (FY21: nil).
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. There were no share
issues and changes to the capital structure during the year.
Consolidated Financial Statements for the year ended 30 September 2022
32
CORPORATE GOVERNANCE:
Directors’ Report continued
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 Hargreaves Lansdown Asset Mgt (Bristol)
2 Herald Investment Mgt (London)
3 Abrdn plc
4 Antrak Limited (UK)
5 Gresham House (London)
6 Bury Fitzwilliam-Lay and Partners LLP (UK)
7 Private Stakeholders (UK)
8 BPCE (Paris)
9 Eiffel Investment Group
10 Richard Cunningham
30 September 30 September
2022
%
2022
Number
4,227,771
4,031,490
3,110,492
1,852,210
1,582,279
1,459,460
1,389,965
1,250,000
1,150,000
1,083,100
14.30
13.63
10.52
6.26
5.35
4.94
4.70
4.23
3.89
3.66
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 reviewing the Group’s forecasts and projections, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months
from the date of approval of these financial statements. The Group therefore continues to adopt the going concern basis in
preparing its financial statements. Information used to make this decision is detailed below.
A scenario testing exercise, in which the Directors prepared detailed cash flow forecasts for the period covered by the going
concern forecast, was performed. The forecasts take into account the Directors’ views of current and future economic
conditions that are expected to prevail over the period including assumptions regarding the sales pipeline, future revenues
and costs with various scenarios which reflect growth plans, opportunities, risks and mitigating actions. Alongside
managements base case forecast, the Group prepared an extreme downside scenario where, outside of the deals secured
in Q1 2023, any growth in MRR across the period would be offset by non-renewals, reducing total billing across recurring and
services revenue by £510k. Under this extreme scenario, the Group has given consideration to the potential actions available
to management to mitigate the impact of these sensitivities, in particular the discretionary nature of costs incurred by the
Group, in order to ensure the continued availability of funds. Financial performance in 2023 is not expected to be materially
impacted from current year levels due to the long-range revenue visibility achieved through the recurring revenue business
model. These recurring revenues, representing 90% of total revenue, are considered resilient given the majority are on multi-
year terms. The forecast also assumed that the Group does not have access to any further external funding. Based on current
trading, the stress test scenario is considered very unlikely.
The Group continues to monitor the collection of monies from clients with no material delays in payment being cited. The
business benefits from an Annual Licence Fee Model in which software licence fees are received annually in advance.
i-nexus Global plc
STRATEGIC REPORT
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FINANCIAL STATEMENTS
33
Events After the Reporting Period
Details of events after the reporting period for the Group are detailed within note 33 to the financial statements.
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 Group’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 Group 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 Group’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 Group’s website is the responsibility of the Directors. The Directors’ responsibility also extends
to the on-going integrity of the Financial Statements contained therein.
Annual General Meeting
The Company will hold the 2022 AGM on Monday 27 February 2023. The Notice of the Meeting accompanies the Annual
Report and Accounts.
By Order of the Board
Drew Whibley
Director
6 January 2023
Consolidated Financial Statements for the year ended 30 September 2022
34
FINANCIAL STATEMENTS:
Independent Auditor’s Report For the year ended 30 September 2022
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 2022 which comprise the consolidated statement of comprehensive income, the consolidated
statement of financial position, the company statement of financial position, the consolidated statement of changes in equity,
the company statement of changes in equity, the consolidated statement of cash flows and notes to the financial statements,
including significant accounting policies. The financial reporting framework that has been applied in their preparation is
applicable law and UK-adopted international accounting standards.
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 2022 and of the
group’s loss for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards; 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 and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our approach to the audit
We tailored the scope of our audit to ensure that we obtained sufficient evidence to support our opinion on the financial
statements as a whole, taking into account the structure of the group, the accounting processes and controls and the industry
in which the group and company operates.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and
effort, are discussed under “Key audit matters” within this report.
Our group audit scope included an audit of the group and parent company financial statements. Based on our risk assessment,
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. The group manages its operations centrally and
has common financial systems, processes and controls covering all significant components. The audit of both significant
components was performed by the same audit team. The extent to which our audit work on the components was based on
our assessment of the risk of material misstatement and of the materiality of that components. The components within the
scope of our audit work therefore covered more than 90% of group revenue, group profit before tax and group net assets.
At group level we also tested the consolidation process to confirm our conclusion that there were no significant risks of
material misstatement in the consolidated financial information
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
35
Key Audit Matter How our scope addressed this matter
Revenue recognition
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 of £3,126,804 and
deferred revenue of £1,319,674 have been
recognised during the year.
Revenue is recognised in accordance with
IFRS 15 ‘Revenue from contracts with customers’
and through application of the 5-step model,
there is significant judgement as to:
•
Identifying performance obligations;
• Allocating transaction price to performance
obligations; and
• Determining when performance obligations
are satisfied.
The significance of revenue and deferred
revenue to the group and the judgements
involved regarding recognition have led us to
identify this as a key audit matter.
Going concern
is a
The going concern assumption
fundamental and pervasive principle in the
preparation of financial statements.
The requirement to extend the redemption
date on certain loan notes as disclosed in
note 22, together with the trading result and
cash utilisation in the year give rise to greater
inherent risk and raise the concern as to
whether the group has sufficient resources to
continue to meet its liabilities as they fall due
for a period of at least 12 months from the
date of approval of the financial statements.
As such, significant audit time was devoted to
testing of the going concern assessment and
the going concern assumption is considered to
be a key audit matter.
Our audit procedures included the following:
• We reviewed the revenue recognition policy to ensure it is appropriate
and compliant with IFRS 15;
• We substantively tested revenue streams on a sample basis by reference
to purchase orders, customer contracts and time records for accuracy;
• We checked performance obligations within contracts had been
satisfied and re-performed the arithmetical calculations that allocate
price to performance obligations satisfied to ensure the accuracy and
completeness of revenue recognised and the contract liability in each
instance;
Based on the procedures performed, we have not identified any material
misstatement arising from revenue recognition.
Our audit procedures included the following:
• We obtained and reviewed the working capital presentation, financial
models and forecast scenarios prepared by the management team to
support their conclusion that the business is a going concern for a
period in excess of twelve months from the date of approval of these
financial statements
• We reviewed the sensitivities adopted by management, challenging the
feasibility and likelihood of each scenario, including that deemed to be
the ‘worst case’ as set out in note 1.4;
• We considered the feasibility and reviewed the mathematical accuracy
of the modelled impact of proposed mitigating actions;
• We assessed the historic accuracy of management’s forecasting process
and reconciled the opening forecast cash and monthly recurring
revenue to the historic information and underlying records;
• We evaluated management’s plans for future actions and assessed that
management’s assessment included all relevant information, including
that concerning the future;
• We considered how the impact of the current economic climate has
been factored into the forecasts including mitigating actions taken to
reduce the impact and the timing of such measures; and
• We reviewed the disclosures in the annual report, specifically in note
1.4, to assess that these disclosures are appropriate.
Based on our procedures performed, we concluded that there is no
materiality uncertainty relating to going concern and that the continued
adoption of the going concern basis in these financial statements remains
appropriate.
Consolidated Financial Statements for the year ended 30 September 2022
36
FINANCIAL STATEMENTS:
Independent Auditor’s Report continued
Key Audit Matter How our scope addressed this matter
The recognition and capitalisation of
development costs, and review of the
carrying value for impairment
The group carries out research and development
of its internally generated software. At the
balance sheet date, the carrying value of
capitalised development was £802,803. An
impairment charge of £154,689 was also
recorded during the year.
There is significant judgement as to:
• Whether costs meet the recognition criteria
of development assets under IAS 38;
• The recoverable amount of the software being
developed; and
• The asset life once complete.
The significance of capitalised development costs
to the group and the judgements involved
regarding the recognition of development assets
and impairment assessments have led us to
determine that this is a key audit matter.
Impairment of intercompany receivables
The assessment of expected credit losses in
relation to intercompany receivables requires
assumptions and judgements concerning the
future and is therefore subject to estimation
uncertainty.
The impairment charge recorded during the
year
in the parent company’s financial
statements amounts to £1,792,684 and is
therefore significant to the parent company’s
balance sheet. This had led us to identify this
as a key audit matter.
Our audit procedures included the following:
• We considered and challenged management’s assessment of how the
criteria for capitalisation set out in IAS 38 had been met; and
• We tested a sample of amounts capitalised during the period to payroll
records and reviewed the assumptions applied for evidence of
management bias; and
• We considered and challenged
the
determination that certain assets were not available for use at the
reporting date; and
the appropriateness of
• We critically appraised management’s assessment of recoverable
amount, comprising incremental trading forecasts for the individual
assets concerned. This included challenging management regarding
critical assumptions as disclosed in note 3, critically assessing
corroborative evidence and considering the likelihood of meeting
forecasts based upon our understanding of the business, the trading
history of the group and the current prospects.
Based on our procedures performed we have not identified any material
misstatement arising
impairment of
development costs.
the recognition and
from
Our audit procedures included the following:
• We considered the appropriateness of the methodology and approach
applied by management in determining the impairment charge with
reference to the requirements of IFRS 9; and
• We critically appraised management’s assessment of recoverable
amount, comprising 5 year trading forecasts for the subsidiary from
which this receivable is due. This included challenging management
regarding critical assumptions as disclosed in note 3, obtaining
corroborative evidence and considering the likelihood of meeting
forecasts based upon our understanding of the business, the trading
history of the group and the current prospects.
Based on our procedures performed we have not identified any material
misstatement arising from the impairment of intercompany receivables.
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any identified misstatements
and in forming our opinion. Our overall objective as auditor is to obtain reasonable assurance that the financial statements as
a whole are free from material misstatement, whether due to fraud or error. We consider a misstatement to be material where
it could reasonably be expected to influence the economic decisions of the users of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceeds materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below this
level will not necessarily be evaluated as immaterial as we also take into accounts of the qualitative nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial.
Based on our professional judgment and taking into account the possible metrics used by investors and other readers of the
accounts, we have determined an overall group materiality of £85,000 based on 2.75% of revenue. Materiality of £77,000 was
used for the parent company based on 1% of gross assets.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
37
Group performance materiality was set at £77,000 representing 90% of overall materiality. The parent company performance
materiality was set at £69,000.
We agreed with the Audit Committee to report all individual audit differences in excess of £4,000 in relation to the group and
£4,000 for the parent company, being the level below which misstatements are considered to be clearly trivial. We also agreed
to report any other identified misstatements that warranted reporting on qualitative grounds.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and the parent
company’s ability to continue to adopt the going concern basis of accounting is set out in the ‘Key audit matters’ section above.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group or the parent company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
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.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; 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 the parent company and their environment obtained in
the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
•
the parent company 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.
Consolidated Financial Statements for the year ended 30 September 2022
38
FINANCIAL STATEMENTS:
Independent Auditor’s Report continued
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 28, 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 and the parent company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the group and parent company financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific
procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are
detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how
fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting,
updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives
and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of
significance in the context of the group and parent company by discussions with directors and by updating our understanding
of the sector in which the group and parent company operate.
Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006,
the AIM Rules for Companies and UK Tax legislation.
In addition, the group is subject to other laws and regulations that do not have a direct effect on the financial statements but
compliance with which may be fundamental to its ability to operate or to avoid a material penalty. These include ISO 27001
regulations and employment law.
Audit response to risks identified:
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related
financial statement items including a review of group and parent company financial statement disclosures. We reviewed the
parent company’s records of breaches of laws and regulations, minutes of meetings and correspondence with relevant
authorities to identify potential material misstatements arising. We discussed the parent company’s policies and procedures
for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve
non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances
of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk
of fraud through management override of controls by testing the appropriateness of journal entries and identifying any
significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made
in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit,
the engagement partner’s review included ensuring that the team had approached their work with appropriate professional
scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
39
As group auditors, our assessment of matters relating to non-compliance with laws or regulations and fraud differed at group
and component level according to their particular circumstances. Our communications included a request to identify instances
of non-compliance with laws and regulations and fraud that could give rise to a material misstatement of the group financial
statements in addition to our risk assessment.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws
and regulations is from the events and transactions reflected in the financial statements, the less likely we would become
aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion.
further description of our responsibilities
A
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
is available on the Financial Reporting Council’s website at:
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the parent company and the parent company’s members
as a body, for our audit work, for this report, or for the opinions we have formed.
Michael Strong (Senior Statutory Auditor)
for and on behalf of Saffery Champness LLP
Chartered Accountants
Statutory Auditors
St Catherine’s Court
Berkeley Place
Clifton
Bristol
BS8 1BQ
6 January 2023
Consolidated Financial Statements for the year ended 30 September 2022
40
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2022
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Operating loss
Adjusted EBITDA
Depreciation, amortisation, impairment and profit/loss on disposal
Share based payment expense
Non-underlying items
Investment revenues
Finance costs
Other gains and losses
Loss before taxation
Income tax income
Loss for the year
Other comprehensive income:
Items that will not be reclassified to profit or loss
Currency translation differences
Total items that will not be reclassified to profit or loss
Total other comprehensive income for the year
Total comprehensive income for the year
Earnings per share
Basic
Diluted
Notes
4
4
6
5
11
12
13
14
Notes
15
2022
£
3,126,804
(666,280)
2,460,524
–
(3,408,424)
2021
£
3,639,111
(635,532)
3,003,579
88,316
(4,062,295)
(947,900)
(970,400)
(552,357)
(384,975)
(10,568)
–
68
(231,288)
73,845
(256,873)
(551,862)
(17,181)
(144,484)
65
(162,855)
–
(1,105,275)
(1,133,190)
234,391
398,258
(870,884)
(734,932)
(486)
(486)
17,346
17,346
(486)
17,346
(871,370)
(717,586)
2022
£
2021
£
(0.03) (0.02)
(0.03) (0.02)
Profit and total comprehensive income for the financial year is all attributable to the owners of the parent company.
All results are derived from continuing operations.
The notes on pages 47 to 76 form part of these Group financial statements.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
41
Consolidated Statement of Financial Position
As at 30 September 2022
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Trade and other receivables
Current tax recoverable
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Borrowings
Deferred revenue
Net current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Convertible loan notes
Total liabilities
Net liabilities
Equity
Called up share capital
Share premium account
Foreign exchange reserve
Share option reserve
Equity reserve
Merger reserve
Retained earnings
Total equity
Notes
16
17
19
24
21
26
24
21
22
29
30
32
28
31
32
2022
£
915,696
26,413
942,109
781,838
224,000
98,987
1,104,825
2,046,934
682,840
9,707
1,319,674
2,012,221
(907,396)
254,407
32,387
1,766,925
2,053,719
4,065,940
(2,019,006)
2021
£
1,099,313
67,111
1,166,424
791,948
275,000
575,203
1,642,151
2,808,575
952,157
71,425
1,030,315
2,053,897
(411,746)
88,330
42,094
1,782,458
1,912,882
3,966,779
(1,158,204)
2,957,161
7,256,188
1,390
20,062
231,851
10,653,881
(23,139,539)
(2,019,006)
2,957,161
7,256,188
1,876
12,989
231,851
10,653,881
(22,272,150)
(1,158,204)
The financial statements were approved by the board of directors and authorised for issue on 6 January 2023 and are signed on
its behalf by:
Mr S P Crowther
Director
The notes on pages 47 to 76 form part of these Group financial statements.
Consolidated Financial Statements for the year ended 30 September 2022
42
Company Statement of Financial Position
As at 30 September 2022
2022 2021
Notes £ £ £ £
Non-current assets
Investments 37 1,682,519 1,671,951
Current assets
Trade and other receivables 38 5,437,142 6,888,516
Cash and cash equivalents 545 426,487
5,437,687 7,315,003
Current liabilities
Trade and other payables 40 101,746 205,883
Net current assets 5,335,941 7,109,120
Total assets less current liabilities 7,018,460 8,781,071
Non-current liabilities 39 2,021,332 1,870,788
Net assets 4,997,128 6,910,283
Equity
Called up share capital 29 2,957,161 2,957,161
Share premium account 30 7,256,188 7,256,188
Equity reserve 31 231,851 231,851
Share option reserve 28 20,062 12,989
Retained earnings (5,468,134) (3,547,906)
Total equity 4,997,128 6,910,283
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes.
The company’s loss for the year was £1,923,723 (2021 - £2,872,499).
The financial statements were approved by the board of directors and authorised for issue on 6 January 2023 and are
signed on its behalf by:
Mr S P Crowther
Director
Company Registration No. 11321642
The notes on pages 47 to 76 form part of these Group financial statements.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
43
Consolidated Statement of Changes In Equity
For the year ended 30 September 2022
Share Foreign Share
Share premium Equity Merger exchange option Retained
capital account reserve reserve reserve reserve earnings Total
Notes £ £ £ £ £ £ £ £
Balance at
1 October 2020 2,957,161 7,256,188 – 10,653,881 (15,470) – (21,541,410) (689,650)
Year ended
30 September 2021:
Loss for the year – – – – – – (734,932) (734,932)
Other comprehensive
income:
Exchange differences
on foreign operations – – – – 17,346 – – 17,346
Total comprehensive
income for the year – – – – 17,346 – (734,932) (717,586)
Transactions with owners
in their capacity as owners
Issue of convertible
loan 22 – – 231,851 – – – – 231,851
Share option expense
in the year 28 – – – – – 17,181 – 17,181
Share options cancelled 28 – – – – – (4,192) 4,192 –
Total contributions by and
distributions to owners
of the Company
recognised directly in equity – – 231,851 – – 12,989 4,192 249,032
Balance at
30 September 2021 2,957,161 7,256,188 231,851 10,653,881 1,876 12,989 (22,272,150) (1,158,204)
Year ended
30 September 2022:
Loss for the year – – – – – – (870,884) (870,884)
Other comprehensive
income:
Exchange differences
on foreign operations – – – – (486) – – (486)
Total comprehensive
income for the year – – – – (486) – (870,884) (871,370)
Transactions with owners
in their capacity as owners
Share option expense
in the year 28 – – – – – 10,568 – 10,568
Share options cancelled 28 – – – – – (3,495) 3,495 –
Total contributions by and
distributions to owners
of the Company
recognised directly in equity – – – – – 7,073 3,495 10,568
Balance at
30 September 2022 2,957,161 7,256,188 231,851 10,653,881 1,390 20,062 (23,139,539) (2,019,006)
The notes on pages 47 to 76 form part of these Group financial statements.
Consolidated Financial Statements for the year ended 30 September 2022
44
Company Statement of Changes in Equity
For the year ended 30 September 2022
Share Share
Share premium Equity option Retained
capital account reserve reserve earnings Total
Notes £ £ £ £ £ £
Balance at 1 October 2020 2,957,161 7,256,188 – – (679,599) 9,533,750
Year ended 30 September 2021:
Loss and total comprehensive
income for the year – – – – (2,872,499) (2,872,499)
Transactions with owners
in their capacity as owners
Issue of convertible loan – – 231,851 – – 231,851
Share option expense in the year 28 – – – 17,181 – 17,181
Share options cancelled 28 – – – (4,192) 4,192 –
Total contributions by and
distributions to owners
of the Company
recognised directly in equity – – 231,851 12,989 4,192 249,032
Balance at 30 September 2021 2,957,161 7,256,188 231,851 12,989 (3,547,906) 6,910,283
Year ended 30 September 2022:
Loss and total comprehensive
income for the year – – – – (1,923,723) (1,923,723)
Transactions with owners
in their capacity as owners
Share option expense in the year 41 – – – 10,568 – 10,568
Share options cancelled 41 – – – (3,495) 3,495 –
Total contributions by and
distributions to owners
of the Company
recognised directly in equity – – – 7,073 3,495 10,568
Balance at 30 September 2022 2,957,161 7,256,188 231,851 20,062 (5,468,134) 4,997,128
The notes on pages 47 to 76 form part of these Group financial statements.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
45
Consolidated Statement of Cash Flows
For the year ended 30 September 2022
2022 2021
Notes £ £ £ £
Operating activities
Loss after tax (870,884) (734,932)
Adjusted for non-cash items:
Taxation credit 14 (234,391) (398,258)
Amortisation, depreciation,
and adjustments on disposal 6 384,975 551,862
Share-based payment expense 28 10,568 17,181
Finance income 11 (68) (65)
Finance charges 12 231,288 162,855
Decrease in provisions – (80,702)
Other gains 13 (73,845) –
(552,357) (482,059)
Decrease in trade and other
receivables 19 10,126 78,059
Increase/(decrease) in trade
and other payables 24 20,043 (980,799)
Cash used in operations (522,188) (1,384,799)
Income tax refunded 285,391 423,258
Net cash outflow from operating
activities (236,797) (961,541)
Investing activities
Purchase of intangible assets -
internally generated 16 (136,234) (335,446)
Purchase of property, plant and
equipment 17 (24,443) (1,171)
Proceeds on disposal of property,
plant and equipment – 1,180
Interest received 68 65
Net cash used in investing activities (160,609) (335,372)
Financing activities
Issue of convertible loans 22 – 1,937,500
Repayment of borrowings 21 (71,425) (179,981)
Proceeds of new bank loans 21 – 50,000
Payment of lease liabilities – (37,467)
Interest paid (6,899) (35,216)
Net cash (used in)/generated from
financing activities (78,324) 1,734,836
Net (decrease)/increase in cash and
cash equivalents (475,730) 437,923
Cash and cash equivalents at
beginning of year 575,203 120,011
Effect of foreign exchange rates (486) 17,269
Cash and cash equivalents at
end of year 98,987 575,203
The notes on pages 47 to 76 form part of these Group financial statements.
Consolidated Financial Statements for the year ended 30 September 2022
46
Note to the Consolidated Statement of Cash Flows
For the year ended 30 September 2022
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified
in the Group's Consolidated Statement of Cash Flows as cash flows from financing activities.
At
At 1 October Financing Convertible Other 30 September
2021 cash flows element movements* 2022
£ £ £ £ £
Bank loans 50,000 (7,906) – – 42,094
Convertible loan notes 1,782,458 – – (15,533) 1,766,925
Other loans 63,519 (63,519) – – –
1,895,977 (71,425) – (15,533) 1,809,019
At
At 1 October Financing Convertible Other 30 September
2020 cash flows element movements* 2021
£ £ £ £ £
Bank loans – 50,000 – – 50,000
Convertible loan notes – 1,937,500 (231,851) 76,809 1,782,458
Other loans 243,500 (179,981) – – 63,519
Leases 37,467 (37,467) – – –
280,967 1,770,052 (231,851) 76,809 1,895,977
*Other movements in the year ended 30 September 2022 includes;
(1) Interest charged to the statement of comprehensive income of £224,389;
(2) Accrued interest payable of £166,077 based on the convertible loan coupon rate of 8%; and
(3) Gain on modification of tranche one of the convertible loan note liability, credited to the statement of comprehensive
income of £73,845.
*Other movements in the year ended 30 September 2021 includes;
(1) Accrued proceeds of £37,500 which was contractually agreed but unpaid at the year end;
(2) Interest charged to the statement of comprehensive income of £127,639; and
(3) Accrued interest payable of £88,330 based on the convertible loan coupon rate of 8%.
The notes on pages 47 to 76 form part of these Group financial statements.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
47
Notes to the Consolidated Financial Statements
For the year ended 30 September 2022
1 Accounting policies
Company information
i-nexus Global Plc is a public company limited by shares incorporated in England and Wales. The registered office is
27-28 Eastcastle Street, London, W1W 8DH. The Group’s principal activities and nature of its operations are disclosed in the
Strategic Report.
The Group consists of i-nexus Global Plc and all of its subsidiaries as listed in note 18.
1.1 Accounting convention
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted
for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements are prepared in sterling, which is the functional currency of the Group. Monetary amounts in these
financial statements are rounded to the nearest £1.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain
financial instruments at fair value. The principal accounting policies adopted are set out below.
The individual parent company meets the definition of a qualifying entity under FRS 101 Reduced Disclosure Framework.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements
of IFRS:
(a) the requirements of IFRS 7 ‘Financial Instruments: Disclosure’;
(b) the requirements within IAS 1 relating to the presentation of certain comparative information;
(c) the requirements of IAS 7 ‘Statement of Cash Flows’ to present a statement of cash flows;
(d) paragraphs 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the
disclosure of information when an entity has not applied a new IFRS that has been issued but it not yet effective); and
(e) the requirements of IAS 24 ‘Related Party Disclosures’ to disclose related party transactions and balances between two or
more members of a Group.
(f) disclosure of key management personnel compensation
As permitted by S408 Companies Act 2006, the Company had not presented its own Statement of Comprehensive Income.
The company’s loss for the period was £1,923,723.
1.2 Business combinations
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and
liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business
combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured
reliably, and is adjusted for changes in contingent consideration after the acquisition date.
Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values
determined in the 12 months following the acquisition date.
The accounting treatment in relation to the additions 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 2022
48
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
1 Accounting policies (continued)
The reconstructed group was consolidated using merger accounting principles, as outlined in the 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.
1.3 Basis of consolidation
The consolidated Group financial statements consist of the financial statements of the parent company i-nexus Global plc
together with all entities controlled by the parent company (its subsidiaries) and the Group’s share of its interests in joint ventures
and associates.
All financial statements are made up to 30 September 2022. Where necessary, adjustments are made to the financial statements
of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.
All intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated on
consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred.
Subsidiaries are consolidated in the Group’s financial statements from the date that control commences until the date that
control ceases. The Group’s interest in i-solutions Global Limited has been consolidated as set out in the ‘Business combinations’
policy above.
1.4 Going concern
After reviewing the Group’s forecasts and projections, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future, being a period of at least twelve months from the
date of approval of these financial statements. The Group therefore continues to adopt the going concern basis in preparing its
financial statements. Information used to make this decision is detailed below.
A scenario testing exercise, in which the Directors prepared detailed cash flow forecasts for the period covered by the going
concern forecast, was performed. The forecasts take into account the Directors’ views of current and future economic conditions
that are expected to prevail over the period including assumptions regarding the sales pipeline, future revenues and costs with
various scenarios which reflect growth plans, opportunities, risks and mitigating actions. Alongside managements base case
forecast, the Group prepared an extreme downside scenario where, outside of the deals secured in Q1 2023, any growth in
MRR across the period would be offset by non-renewals, reducing total billing across recurring and services revenue by £510k.
Under this extreme scenario, the Group has given consideration to the potential actions available to management to mitigate
the impact of these sensitivities, in particular the discretionary nature of costs incurred by the Group, in order to ensure the
continued availability of funds. Financial performance in 2023 is not expected to be materially impacted from current year levels
due to the long-range revenue visibility achieved through the recurring revenue business model. These recurring revenues,
representing 90% of total revenue, are considered resilient given the majority are on multi-year terms. The forecast also assumed
that the Group does not have access to any further external funding. Based on current trading, the stress test scenario is
considered very unlikely.
The Group continues to monitor the collection of monies from clients with no material delays in payment being cited. The
business benefits from an Annual Licence Fee Model in which software Licence fees are received annually in advance.
1.5 Revenue
The Group applies IFRS 15 ‘Revenue from contracts with customers’. Under IFRS 15, the Group applies the 5-step method to
identify contracts with its customers, determine performance obligations arising under those contracts, set an expected
transaction price, allocate that price to the performance obligations, and then recognises revenues as and when those obligations
are satisfied.
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Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on
behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value
of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised
as interest income.
The nature of revenues is licence fee income on a software-as-a-service (SaaS) basis and professional services.
Licence fee
Revenue for annual licences, support and maintenance is recognised on a straight-line basis over the duration of the contract.
Professional services
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 IFRS 15. 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 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.
1.6 Intangible assets other than goodwill
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 benefit. Development expenditure is capitalised if, and only if, an entity within the Group
can demonstrate all of the following:
(a) its ability to measure reliably the expenditure attributable to the asset under development;
(b) the product or process is technically and commercially feasible;
(c) its future economic benefits are probable;
(d) its ability to use or sell the developed asset;
(e) the availability of adequate technical, financial and other resources to complete the asset under development; and
(f) its intention to use of sell the developed asset.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the
following bases:
Development costs 5 years straight line
1.7 Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of
depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on
the following bases:
Fixtures and fittings 25% straight line
Computers 33% straight line
Consolidated Financial Statements for the year ended 30 September 2022
50
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
1 Accounting policies (continued)
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying
value of the asset, and is recognised in the income statement.
1.8 Non-current investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment
losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of
impairment losses are recognised immediately in the income statement.
A subsidiary is an entity controlled by the parent company. Control is the power to govern the financial and operating policies of
the entity so as to obtain benefits from its activities.
1.9 Impairment of tangible and intangible assets
At each reporting end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which
the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually,
and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset 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 immediately in profit or loss, unless the relevant asset is carried at
a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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
immediately in profit or loss, 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.
1.10 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.11 Financial assets
Financial assets are recognised in the Group’s statement of financial position when the Group becomes party to the contractual
provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of
the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction
costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at
fair value plus transaction costs.
i-nexus Global plc
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Financial assets at fair value through profit or loss
Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are
recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is
recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting
period in which it arises.
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets
in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise
principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value
plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using
the effective interest rate method, less provision for impairment where necessary.
Financial assets at fair value through other comprehensive income
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the
financial assets are held within the Group’s business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction
costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value
included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are
directly transferred to profit or loss when the debt instrument is derecognised.
Impairment of financial assets
Financial assets, other than those measured at fair value through profit or loss, are assessed for indicators of impairment at
each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of ownership to another entity.
1.12 Financial liabilities
The Group recognises financial debt when the Group becomes a party to the contractual provisions of the instruments. Financial
liabilities are classified as either ‘financial liabilities at fair value through profit or loss’ or ‘other financial liabilities’.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading.
A financial liability is classified as held for trading if:
•
it has been incurred principally for the purpose of selling or repurchasing it in the near term, or
• on initial recognition it is part of a portfolio of identified financial instruments that are managed together and has a recent
actual pattern of short-term profit taking, or
•
it is a derivative that is not a financial guarantee contract or a designated and effective hedging instrument.
Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement
recognised in profit or loss.
Consolidated Financial Statements for the year ended 30 September 2022
52
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
1 Accounting policies (continued)
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured
at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured
at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial
transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is
outstanding.
Convertible loan notes are measured at amortised cost using the effective interest method at initial inception and subsequent
measurement (note 22).
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the Group’s obligations are discharged, cancelled, or they expire.
1.13 Compound instruments
The component parts of compound instruments issued are classified separately as financial liabilities and equity in accordance
with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated
using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an
amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument’s maturity
date. The equity component is determined by deducting the amount of the liability component from the fair value of the
compound instrument as a whole. This is recognised and included in equity net of income tax effects and is not subsequently
remeasured.
1.14 Equity instruments
Equity instruments issued by the parent company are recorded at the proceeds received, net of direct issue costs. Dividends
payable on equity instruments are recognised as liabilities once they are no longer payable at the discretion of the company.
Share capital represents the nominal value of shares that have been issued.
Share premium includes all current and prior period premiums on shares allotted.
Equity reserve represents the equity element of the unsecured convertible redeemable loan stock issued.
Merger reserve represents the carrying value of the investment in the subsidiary undertaking at the point of the share for share
exchange.
Foreign exchange reserve relates to the exchange differences arises on the translation of the foreign subsidiary.
Share based payment reserve relates to amounts recognised for the fair value of share options granted in accordance with IFRS 2.
Retained earnings include all current and prior period retained earnings.
1.15 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the reporting end date.
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Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted
for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor
the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated
at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged
or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the Group has a legally enforceable
right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax
authority.
1.16 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be
recognised as part of the cost of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate
the employment of an employee or to provide termination benefits.
1.17 Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.18 Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity
instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line
basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to
equity. Full disclosure of the calculation model is given in note 28.
1.19 Leases
At inception, the Group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Where a tangible asset is acquired through a lease, the Group recognises a right-of-use asset and a lease liability at the lease
commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the
definition of investment property.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a
lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these
leases are recognised in profit or loss on a straight-line basis over the lease term.
1.20 Grants
Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will
be received. Grant income recognised in the prior year comprises the Covid-19 job retention scheme grant and is recorded in
other operating income.
Consolidated Financial Statements for the year ended 30 September 2022
54
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
1 Accounting policies (continued)
1.21 Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the
transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included
in profit or loss.
Overseas operations which have a functional currency different to the Group presentation currency have been translated using
the monthly average exchange rate for consolidation into 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.
2 Adoption of new and revised standards and changes in accounting policies
The current standards, amendments and interpretations have been adopted in the year and have not had a material impact on
the reported results in the Group’s financial statements:
• Covid-19 related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
•
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
• Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)
Standards, amendments and interpretations in issue but not yet effective
At the authorisation of these financial statements, the Group has not applied the following new and revised standards that have
been issued but are not effective yet:
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) and
Deferral of Effective Date Amendment
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
Definition of Accounting Estimates (Amendments to IAS 8)
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12 Income Taxes)
IFRS 17 Insurance Contracts
Amendments to IFRS 17
Initial Application of IFRS 17 and IFRS 9 – Comparative information
Amendments to IFRS 1 First-time Adoption of International Financial Reporting
Standards – Subsidiary as First-time Adopter
Amendment to IFRS 9 Financial Instruments—Fees in the ‘10 percent’ Test for
Derecognition of Financial Liabilities.
Onerous Contracts—Cost of Fulfilling a Contract (Amendments to IAS37)
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
Reference to the Conceptual Framework (Amendments to IFRS 3)
Effective date – period
beginning on or after
1 January 2024 *
1 January 2023 *
1 January 2023 *
1 January 2023 *
1 January 2023 *
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2022
* These standards, amendments and interpretations have not yet been endorsed by the UK and the dates shown are the expected dates.
The adoption of all above standards is not expected to have any material impact on the Group’s financial statements.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
55
3 Critical accounting estimates and judgements
In the application of the Group’s accounting policies, the directors are required to make judgements, estimates and assumptions
about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets
and liabilities are outlined below.
Key sources of estimation uncertainty
Impairment of investments and intercompany debtors
A subsidiary of the parent company has sustained losses and the balance sheet is in deficit. This is a indicator of potential
impairment. The recoverability of the intercompany debtor and the cost of investment is dependent on the future profitability
of the entity, as whilst the debtor is repayable on demand the directors are intending to allow the subsidiary to continue to trade
in order to generate sufficient profits and cash to render this balance recoverable. Management have made assumptions
concerning future trading performance and EBITDA, the anticipated period of recovery and the appropriate level of discount
rate to be applied. A provision for impairment of £1,724,886 (2021 - £2,895,000) has been recognised in the parent company
and is a significant judgement (note 36). The impairment has been eliminated on consolidation in the Group accounts.
Impairment
During the year, the directors considered the recoverability of the capitalised development costs, which are included in its balance
sheet at £915,696 (2021 - £1,099,313) after impairment. For individual assets net yet available for use or where indicators of
impairment existed, the directors carried out a detailed net present value assessment of the future expected revenue and net
profit stream over a five year period. The discount rate used in calculating the recoverable amount of each project using present
value techniques was 11%. Following the assessment two projects were held at higher than their recoverable amount and hence
an impairment of £154,689 (2021 - £293,878) has been recognised. The directors came to this conclusion as a consequence of
the pace of change inherent in technology businesses which has been enhanced since the onset of the pandemic, shifting focus
away from these projects. The recoverable amounts in both cases are calculated as the value in use.
Critical judgments
Capitalised development costs
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. IAS 36 also requires that
an assessment of recoverable amount is prepared for all intangible assets not available for use at the reporting date, and for
any intangible asset where there is an indicator of impairment.
Useful lives
Amortisation is provided so as to write down the development costs capitalised to their residual values over their estimated
useful lives as set out in the Group’s accounting policy. The selection of estimated life requires the exercise of management
judgement. Useful lives are regularly reviewed and should management’s assessment of useful lives shorten/increase then
amortisation charges in the financial statements would increase/decrease and carrying amounts of intangible assets would
change accordingly.
Consolidated Financial Statements for the year ended 30 September 2022
56
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
4 Revenue
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 in six 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.
Revenue analysed by class of business
Licence
Services
Revenue analysed by geographical market
United Kingdom
USA
Switzerland
Germany
Rest of Europe
Rest of the World
Other income
Grants received
2022
£
2021
£
2,856,720
270,084
3,126,804
2022
£
716,295
882,707
639,380
538,561
190,976
158,885
3,126,804
2022
£
3,333,407
305,704
3,639,111
2021
£
853,663
1,211,192
629,921
329,959
476,513
137,863
3,639,111
2021
£
–
88,316
During the year there were two key customers (2021 - two key customers) that accounted for over 10% of revenue each.
Revenue for each of these customers is £639,380 and £324,936 respectively (2021 - £629,921 and £451,702 respectively).
All revenue 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 £1,030,315 (2021 - £1,723,661), see note
26. The total amount of revenue deferred and recognised as a contract liability at the year end is £1,319,674 (2021 -
£1,030,315) as shown in note 26.
Invoices for licence revenue are issued annually in advance and recognised as deferred revenue as the performance obligation
has not yet been satisfied at that point in time. Services income relates to prepaid, part upfront/part upon completion and
other amounts linked to key milestones as set out in the contract. This is recognised as deferred revenue and increase in
debtors where the performance obligation has been 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 satisfied. The service performance obligations vary and the contract
value is recognised over the duration of each project. All warranties are included within the subscription agreements with
each client and are therefore not a separate performance obligation.
i-nexus Global plc
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
57
The transaction price is determined by the contractual value agreed with the client. It is deemed that all professional services,
including those in respect of deployment, represent a distinct performance obligation from the software licence.
Grants of £nil (2021 - £88,316) were received as part of the Government’s initiatives to provide immediate financial support
as a result of the COVID-19 pandemic. There are no future related costs associated with these grants which were received
solely as compensation for costs incurred in the year.
5 Adjusted EBITDA
Operating loss
Add back:
Depreciation, amortisation, impairment and profit/loss on disposal
Share based payment expense
Non-underlying items
Adjusted EBITDA
2022
£
2021
£
(947,900)
(970,400)
384,975
10,568
–
551,862
17,181
144,484
(552,357)
(256,873)
The calculation of Adjusted Earnings is consistent with the presentation of Adjusted Earnings before Interest, Tax, Depreciation,
and Amortisation, as presented on the face of the Group Statement of Comprehensive Income. This adjusted element also
removes non-underlying items which, in the prior year, comprise Covid-19 related redundancy costs and professional and
consultancy fees relating to the raising of finance during the year. There were no such costs in the current year.
The Directors have presented this Alternative Performance Measure (“APM”) because they feel it most suitably represents
the underlying performance and cash generation of the business, and allows comparability between the current and
comparative period in light of the rapid changes in the business, and will allow an ongoing trend analysis of this performance
based on current plans for the business.
6 Operating loss
Operating loss for the year is stated after charging/(crediting):
Exchange losses
Research and development costs
Government grants
Fees payable to the Company’s auditors for the audit of the Parent Company,
consolidated financial statements and audit of the Company’s subsidiaries
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Amortisation of intangible assets
Impairment of intangible assets
Share-based payments
2022
£
15,697
676,504
–
54,550
43,239
21,885
165,162
154,689
10,568
2021
£
93,995
523,653
(88,316)
49,550
141,827
37,094
79,063
293,878
17,181
Consolidated Financial Statements for the year ended 30 September 2022
58
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
7 Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in
profit or loss:
In respect of:
Intangible assets
Recognised in:
Administrative costs
8 Auditor’s remuneration
Fees payable to the company’s auditor and associates:
For audit services
Audit of the financial statements of the company’s subsidiaries
2022
£
2021
£
154,689
293,878
154,689
293,878
2022
£
2021
£
54,550
49,550
The audit fee for the parent company, i-nexus Global plc, is borne by its subsidiary, i-solutions Global Limited.
9 Employees
The average monthly number of persons (including directors) employed by the Group during the year was:
Senior management and directors
Development global services and other
Total
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Pension costs
2022
Number
2021
Number
9
21
30
12
27
39
2022
£
1,942,085
251,229
104,623
2,297,937
2021
£
2,504,068
286,670
84,550
2,875,288
Included within wages and salaries is £10,568 (2021 - £17,181) relating to equity settled share based payment expense, as
explained further in note 28.
Included in the above is aggregate remuneration relating to capitalised development costs (note 16) amounting to £136,234
(2021 - £335,446).
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
59
10 Directors’ remuneration
Remuneration for qualifying services
Company pension contributions to defined contribution schemes
2022
£
391,281
28,828
420,109
2021
£
403,933
16,482
420,415
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2021
- 3).
The number of directors who are entitled to receive shares under long term incentive schemes during the year was 2 (2021 -
2).
Remuneration disclosed above includes the following amounts paid to the highest paid director:
Remuneration for qualifying services
Company pension contributions to defined contribution schemes
During the year to 30 September 2022 the Directors received remuneration as follows:
Salary
Director £
Mr S Crowther 180,140
Ms A Levett (resigned 1 August 2022) 106,813
Mr R Cunningham 48,000
Mr D Firth 30,000
Mr D Whibley (appointed 1 August 2022) 21,671
Total 386,624
No share options were exercised in the year.
Benefits
in kind
£
–
–
–
–
–
–
2022
£
182,846
15,674
Pension
£
15,674
9,734
1,253
–
2,167
28,828
2021
£
177,155
8,483
Total
£
195,814
116,547
49,253
30,000
23,838
415,452
In addition to the above remuneration, the ascribed fair value of the share options, granted to the directors during the prior
year, is shown in the following table as a component of directors’ remuneration in line with the requirements of IFRS 2. These
options are presently out of the money and the associated growth based vesting conditions have not been met. However,
the remuneration committee have decided a percentage will vest, even though certain performance conditions were not met,
in recognition of the directors’ performance throughout the period, see page 29 for details.
Consolidated Financial Statements for the year ended 30 September 2022
60
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
10 Directors’ remuneration (continued)
Director
Mr S Crowther
Ms A Levett (resigned 1 August 2022)
Mr R Cunningham
Mr D Firth
Mr D Whibley (appointed 1 August 2022)
Total
During the year to 30 September 2021 the Directors received remuneration as follows:
Salary Benefits in kind
£
Director £
Mr S Crowther 172,550
Ms A Levett 137,025
Mr R Cunningham 48,000
Mr D Firth (appointment 18 February 2021) 18,308
Mr N Halkes (resigned 31 March 2021) 20,125
Total 396,008
–
–
–
–
–
–
No share options were exercised in the year.
Fair value of
Total
share options remuneration
£
£
2,706
1,951
–
–
–
4,657
Pension
£
8,483
6,851
1,148
–
–
16,482
198,520
118,498
49,253
30,000
23,838
420,109
Total
£
181,033
143,876
49,148
18,308
20,125
412,490
In addition to the above remuneration, the directors have been granted share options with fair value as shown in the below
table for the year ended 30 September 2021. These options were out of the money as at 30 September 2021 and the
associated growth based vesting conditions have not been met. These are however ascribed a fair value and included as a
component of directors’ remuneration in line with the requirements of IFRS 2, in spite of the inherent uncertainty as to whether
they will eventually vest.
Director
Mr S Crowther
Ms A Levett
Mr R Cunningham
Mr D Firth (appointment 18 February 2021)
Mr N Halkes (resigned 31 March 2021)
Total
Fair value of
share options
£
Total
remuneration
£
4,605
3,320
–
–
–
7,925
185,638
147,196
49,148
18,308
20,125
420,415
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
61
11 Investment income
Interest income
Financial instruments measured at amortised cost:
Bank deposits
12 Finance costs
Interest on lease liabilities
Other interest payable
Interest on convertible loan notes
Total interest expense
13 Other gains and losses
Other gains
2022
£
2021
£
68
65
2022
£
–
6,899
224,389
231,288
2022
£
73,845
2021
£
6,887
28,329
127,639
162,855
2021
£
–
On 30 September 2022, the redemption date of the first tranche of convertible loan notes was extended by a further year
(note 22). At this date, the existing liability has been re-calculated as the present value of the revised future cash flows
discounted at the original effective interest rate and a gain of £73,845 has been recognised.
14 Taxation
Current tax
UK corporation tax on profits for the current period
Adjustments in respect of prior periods
Total UK current tax
Foreign taxes and reliefs
2022
£
2021
£
(224,000)
(10,391)
(234,391)
–
(234,391)
(275,000)
(122,815)
(397,815)
(443)
(398,258)
Consolidated Financial Statements for the year ended 30 September 2022
62
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
14 Taxation (continued)
The credit for the year can be reconciled to the loss per the income statement as follows:
Loss before taxation
Expected tax credit based on a corporation tax rate of 19% (2021: 19%)
Effect of expenses not deductible in determining taxable profit
Income not taxable
Deferred tax not recognised on unutilised tax losses carried forward
Adjustment in respect of prior years
Enhanced relief on research and development tax credit
Other
Taxation credit for the year
The UK corporation tax rate was 19% throughout the year.
2022
£
2021
£
(1,105,275)
(1,133,190)
(210,002)
11,079
(14,031)
203,705
(10,391)
(224,000)
9,249
(234,391)
(215,306)
6,277
–
129,903
(122,815)
(206,382)
10,065
(398,258)
The adjustment in respect of prior periods relates to enhanced relief on the Group’s research and development activity, where
the actual R&D claim exceeded management’s estimate in the prior year.
In the March 2021 Budget, a change to the future UK corporation tax rate was announced, indicating that the rate will increase
to 25% from April 2023. Deferred tax balances at the reporting date are therefore measured at 25% (2022 - 19%), being the
substantively enacted rate at the balance sheet date.
15 Earnings per share
Number of shares
Weighted average number of ordinary shares for basic earnings per share
2022
2021
29,571,605
29,571,605
Weighted average number of ordinary shares for diluted earnings per share
29,571,605
29,571,605
Earnings (all attributable to equity shareholders of the company)
Loss for the period
Basic earnings per share
From continuing operations
Diluted earnings per share
From continuing operations
2022
£
2021
£
(870,884)
(734,932)
(0.03)
(0.02)
(0.03)
(0.02)
The Diluted EPS is the same as the Basic EPS in the current and comparative year as the Group has incurred losses in each
of the periods concerned. The Group has a number of potentially dilutive share options (note 28) and convertible redeemable
loan stock (note 22) that could dilute the earnings per share should the Group become profitable. As at 30 September 2022
both the share options and the convertible loan stock are out of the money.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
63
16 Intangible assets
Cost
At 1 October 2020
Additions - internally generated
At 30 September 2021
Additions - internally generated
At 30 September 2022
Amortisation and impairment
At 1 October 2020
Charge for the year
Impairment loss
At 30 September 2021
Charge for the year
Impairment loss
At 30 September 2022
Carrying amount
At 30 September 2022
At 30 September 2021
At 30 September 2020
Development
costs
£
1,246,819
335,446
1,582,265
136,234
1,718,499
110,011
79,063
293,878
482,952
165,162
154,689
802,803
915,696
1,099,313
1,136,808
The useful economic life of each of the individual assets is deemed to be 5 years. The additions in the year of £136,234 relate
to specific products being developed. These products are deemed to provide future economic benefits to the Group.
The impairment of £154,689 was as a result of an impairment review carried out by the directors at the balance sheet date.
Amortisation and impairment charges are recognised within administrative expenses.
Consolidated Financial Statements for the year ended 30 September 2022
64
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
17 Property, plant and equipment
Leasehold land
and buildings
£
Fixtures
and fittings
£
Computers
£
Total
£
Cost
At 1 October 2020 215,880
Additions –
Disposals (215,880)
At 30 September 2021 –
Additions –
Disposals –
At 30 September 2022 –
Accumulated depreciation and impairment
At 1 October 2020 147,973
Charge for the year 44,028
Eliminated on disposal (192,001)
Foreign currency adjustments –
At 30 September 2021 –
Charge for the year –
Eliminated on disposal –
At 30 September 2022 –
Carrying amount
At 30 September 2022 –
At 30 September 2021 –
At 30 September 2020 67,907
Leasehold land and buildings includes right-of-use assets, as follows:
214,661
–
(150,490)
64,171
648
(54,044)
10,775
156,054
12,365
(137,099)
–
31,320
8,300
(32,159)
7,461
3,314
32,851
58,607
Right-of-use assets
Cost of disposals
Property
Depreciation charge for the year
Property
563,203
1,171
(273,356)
291,018
23,795
(235,194)
79,619
443,754
85,434
(272,352)
(78)
256,758
34,939
(235,177)
56,520
23,099
34,260
119,449
2022
£
–
–
993,744
1,171
(639,726)
355,189
24,443
(289,238)
90,394
747,781
141,827
(601,452)
(78)
288,078
43,239
(267,336)
63,981
26,413
67,111
245,963
2021
£
(120,552)
40,184
The Group vacated the office premises in March 2021 when the lease term ended and therefore disposed of the leasehold
land and buildings, including the right-of-use asset and the lease liability, in the prior year.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
65
18 Subsidiaries
Details of the company’s subsidiaries at 30 September 2022 are as follows:
Class of % Held
Name of undertaking Registered office Principal activities shares held Direct
Indirect
i-solutions Global Limited England and Wales (1) The development and sale Ordinary 100.00
of Enterprise cloud based
software on a
software-as-service (SaaS)
basis and professional
consultancy services
i-nexus (America) Inc USA (2) Dormant Ordinary –
–
100.00
(1) The registered office address of i-solutions Global Limited is: 27-28 Eastcastle Street, London, W1W 8DH.
(2) The registered office address of i-nexus (America) Inc is: i-nexus, 245 First Street, Suite 1800, Cambridge, MA 02142, USA.
19 Trade and other receivables
Trade receivables
Provision for bad and doubtful debts
VAT recoverable
Other receivables
Prepayments
20 Trade receivables - credit risk
Ageing of past due but not impaired receivables
30 days or less
Between 31 and 60 days
Between 61 and 90 days
Over 90 days
2022
£
608,560
(4,390)
604,170
50,440
2,390
124,838
781,838
2022
£
538,320
18,362
–
51,878
608,560
2021
£
557,220
–
557,220
35,486
40,528
158,714
791,948
2021
£
529,510
8,286
6,037
13,387
557,220
Consolidated Financial Statements for the year ended 30 September 2022
66
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
20 Trade receivables - credit risk (continued)
All opening and closing trade receivables balances arise from contracts with customer. All other receivables outside of general
terms of business are immaterial to the Group and are within the parent company.
No significant receivable balances are impaired at the reporting end date.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables.
The ageing analysis of the trade receivables and expected credit loss provision rates as at 30 September 2022 are as follows:
Less than 30 days 31 - 60 days
£ £
61 - 90 days Over 90 days
£
£
Expected credit loss percentage 0.10% 0.25%
Gross receivable subject to ECL 538,320 18,362
Expected credit loss 538 46
0.50%
–
–
0.75%
51,878
389
Total
£
608,560
973
Based on the above, the directors have not recognised the expected credit loss on grounds of triviality to the Group. The
directors consider the credit quality of trade and other receivables that are neither past due nor impaired to be good.
The Group has however recognised a specific provision as follows:
Movement in the allowances for doubtful debts
Balance at 1 October
Additional allowance recognised
Balance at 30 September
21 Borrowings
2022
£
–
4,390
4,390
2021
£
–
–
–
Current Non-current
2022
£
2022
£
2021
£
2021
£
Borrowings held at amortised cost:
Bank loans 9,707
Other loans –
9,707
7,906
63,519
71,425
32,387
–
32,387
42,094
–
42,094
The Group had the following borrowings at 30 September 2022:
• A Bounce Back Loan Scheme loan within bank loans which has an interest rate of 2.5% payable from November 2021 when
the government grant incentive period expires. The loan is carried at £42,094 in the financial statements. This loan
is unsecured.
• Venture debt, within other loans in the prior year, has a fixed interest rate of the higher of 11.5% per annum or LIBOR plus
8% per annum and is measured at amortised cost. The venture debt is secured by way of fixed and floating charges over
the title of all assets held by the Group. The venture debt has been repaid in full during the current year.
The directors consider the value of all financial liabilities to be equivalent to their fair value.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
67
22 Convertible loan notes
The convertible loan notes consist of two tranches issued during the prior year. The first tranche was issued on 4 November
2020 with total proceeds of £1,325,000 and the second tranche was issued on 29 September 2021 with total proceeds of
£650,000.
When issued, both tranches had a redemption date 3 years following their date of issue. The loan note holders are entitled,
before the redemption date, to convert all or part of their holding of loan notes into fully paid Ordinary Shares on the basis
of 1 Ordinary Share for every 10p of principal nominal amount of loan notes held, or, convert all or part of their holding of
loan notes into fully paid Ordinary Shares at the conversion rate; and/or redeem all or part of their holding of loan notes.
At the issue date the net proceeds received were split between the financial liability element of £1,743,149 and an equity
component of £231,851, representing the fair value of the embedded option to convert the financial liability into equity.
The equity component of the convertible loan notes has been credited to the equity reserve (note 31).
On 30 September 2022, the redemption date of the first tranche was extended by a further year, to give a revised redemption
date of four years following the original date of issue, being November 2024. This modification was not considered to be
substantial, as defined in IFRS 9, therefore the existing liability was re-calculated as the present value of the revised future
cash flows discounted at the original effective interest rate. A gain of £73,845 on the modification of the liability has been
recognised in other gains and losses (note 13).
The extension to the redemption date is a modification only of the existing convertible loan notes and therefore has no impact
on the equity element.
The liability component is measured at amortised cost, and the difference between the carrying amount of the liability at the
date of issue and the amount reported in the statement of financial position represents the effective interest rate less interest
paid to that date.
The convertible loan notes carry a coupon rate of 8% and are recognised at their net present value using a discount rate of 12%.
Movements and balance at the period end
Issue of convertible loan notes
Interest charged
Interest accrued
Liability component at 30 September 2021
Interest charged
Interest accrued
Gain on modification
Liability component at 30 September 2022
Liability component due within 12 months
Liability component due after 12 months
Liability
£
1,743,149
127,639
(88,330)
1,782,458
224,389
(166,077)
(73,845)
1,766,925
–
1,766,925
Consolidated Financial Statements for the year ended 30 September 2022
68
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
23 Financial risk management
Market risk management
The Group’s activities expose it to a variety of financial risks: foreign exchange risk, interest rate risk, liquidity risk and credit
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.
Foreign exchange risk
The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities at the reporting date are
as follows:
Trade and other receivables
Cash and cash equivalents
Trade and other payables
As at 30 September 2022
Trade and other receivables
Cash and cash equivalents
Trade and other payables
As at 30 September 2021
US Dollars
£
224,217
733
(53,086)
171,864
US Dollars
£
185,662
665
(33,871)
152,456
Euros
£
338,752
–
(2,632)
336,120
Euros
£
262,354
–
–
262,354
Total
£
562,969
733
(55,718)
507,984
Total
£
448,016
665
(33,871)
414,810
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.
If Sterling had depreciated by 10% against US Dollars and Euros as at 30 September 2022, the Group would have recognised
an increase in its reported profits and net assets of approximately £50,798 (2021 - £41,481). If Sterling had appreciated by
10% against US Dollars and Euros as at 30 September 2022, the Group would have recognised an equivalent decrease in its
reported profits and net assets across both periods.
Interest rate risk
The carrying amounts of financial liabilities which expose the Group to cash flow interest rate risk are as follows:
Venture debt
2022
£
–
2021
£
63,519
The venture debt has been repaid in full during the year. The weighted average cost of fixed rate borrowing for venture debt
in the prior year was 11.5%.
The convertible loan notes (note 22) carry a coupon rate of 8% and are recognised at their net present value using a discount
rate of 12%. The 8% interest is fixed for the life of the loan and therefore does not convey interest rate risk for the Group.
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
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
69
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.
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, being a Bounce Back Loan Scheme loan and the liability element of the
convertible loan notes, is shown below:
Less than one year
One to two years
Two to five years
Capital risk management
2022
£
9,707
9,950
1,789,362
1,809,019
2021
£
19,522
21,297
5,373,099
5,413,918
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, convertible loan notes 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.
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 plan;
• 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.
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
bad debt 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.
Consolidated Financial Statements for the year ended 30 September 2022
70
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
Further disclosures for credit risk are shown in note 20.
23 Financial risk management (continued)
The carrying amount of financial instruments is shown below:
Financial assets held at amortised cost
Financial liabilities held at amortised cost
24 Trade and other payables
2022
£
2021
£
606,560
(2,576,928)
597,748
(2,609,435)
(1,970,368)
(2,011,687)
Current Non-current
2022
£
2022
£
2021
£
2021
£
Trade payables 255,570
Accruals 186,504
Social security and other taxation 169,495
Other payables 71,271
682,840
300,797
235,631
274,989
140,740
952,157
25 Deferred taxation
Deferred tax liabilities
Deferred tax assets
–
254,407
–
–
254,407
2022
£
231,700
(231,700)
–
–
88,330
–
–
88,330
2021
£
407,176
(407,176)
–
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the
current and prior reporting period.
ACAs Tax losses
£ £
Deferred tax liability/(asset) at
1 October 2020 258,152 (349,705)
Deferred tax movements in prior year
Charge/(credit) to profit or loss (40,025) 549,171
Effect of change in tax rate - profit or loss 68,873 (600,442)
Deferred tax liability/(asset) at
1 October 2021 287,000 (400,976)
Deferred tax movements in current year
Charge/(credit) to profit or loss (284,300) 178,676
Retirement
benefit
obligations
£
Capitalised
R&D
£
(6,905)
98,458
Total
£
–
2,195
(1,490)
(7,124)
28,842
504,217
(504,217)
(6,200)
120,176
(3,200)
108,824
–
–
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
71
Deferred tax liability/(asset) at
30 September 2022 2,700 (222,300)
(9,400)
229,000
–
The Group has estimated tax losses of £10,700,000 (2021 - £10,000,000) of which approximately £9,800,000 (2021 - £8,900,000)
have not been recognised as a deferred tax asset due to uncertainty over the timing and extent of the company’s ability to utilise
these against future taxable profits. Recognised deferred tax assets have been included only to the extent that these offset other
temporary timing differences which will unwind against the losses. If a deferred tax asset was recognised in full in respect of this,
the Group’s net assets would increase by approximately £2,400,000 (2021 - £2,200,000).
26 Deferred revenue
Arising from contracts with customers
All deferred revenues are expected to be settled within 12 months from the reporting date.
27 Retirement benefit schemes
Defined contribution schemes
Charge to profit or loss in respect of defined contribution schemes
Capitalised as intangible asset
2022
£
2021
£
1,319,674
1,030,315
2022
£
75,150
29,473
104,623
2021
£
61,669
22,881
84,550
The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held
separately from those of the Group in an independently administered fund.
The liability at the year end is £38,113 (2021 - £25,559).
28 Share-based payment transactions
Number of share Weighted average
options exercise price
2022
2021
2022
£
2021
£
Outstanding at 1 October 2,390,060
Granted in the period –
Forfeited in the period (99,820)
Lapsed in the period (1,588,444)
Outstanding at 30 September 701,796
Exercisable at 30 September 701,796
–
2,668,738
(278,678)
–
2,390,060
1,334,369
0.10
–
0.10
0.10
0.10
0.10
–
0.10
0.10
–
0.10
0.10
The options outstanding at 30 September 2022 had an exercise price of £0.10 and have reached the end of their remaining
contractual life by the year end. The options can be exercised at certain dates proportionately to the Monthly Recurring
Revenues ("MRR") which are achieved over a fixed period, at fixed amounts and growth rates.
The options were granted, during the prior year, on 13 January 2021. The weighted average fair value of the options on the
measurement date was £37,530. Fair value was measured using Black-Scholes Option-pricing model. Fair value was measured
using Black-Scholes, with the volatility input being based solely on the Group’s average historical volatility over equivalent
recent periods. The risk-free rate is negative, being the rate of comparable government bonds available as at the grant date.
Consolidated Financial Statements for the year ended 30 September 2022
72
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
28 Share-based payment transactions (continued)
Inputs were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk free rate
Expected dividends yields
2021
0.06
0.10
59.41%
1
(0.01)%
–
2021
£
2022
£
Expenses
Related to equity settled share based payments
10,568
17,181
During the year a transfer of £3,495 (2021 - £4,192) was made from the share option reserve to retained earnings in relation
to share options cancelled.
29 Share capital
2022
Ordinary share capital Number
2021
Number
2022
£
2021
£
Issued and fully paid
Ordinary shares of 10p each 29,571,605
29,571,605
2,957,161
2,957,161
Fully paid shares carry one vote per share and carry rights to a dividend.
30 Share premium account
At the beginning and end of the year
2022
£
2021
£
7,256,188
7,256,188
The share premium represents the excess of the subscription price over the par value of shares issued.
31 Equity reserve
At the beginning of the year
Arising in the year
At the end of the year
2022
£
231,851
–
231,851
2021
£
–
231,851
231,851
During the prior year i-nexus Global Plc issued two instruments constituting;
• £1,325,000 fixed rate unsecured convertible redeemable loan stock on 4 November 2020; and
• £650,000 fixed rate unsecured convertible redeemable loan stock on 29 September 2021.
The equity reserve solely represents the equity element of the above instruments at their respective issue dates. The fair
value of the liability can be seen in note 22.
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
73
32 Other reserves
Merger reserve
2022
£
2021
£
10,653,881
10,653,881
The merger reserve represents the carrying value of the investment in the subsidiary undertaking at the point of the share
for share exchange.
Foreign exchange reserve
2022
£
1,390
2021
£
1,876
The foreign exchange reserve relates to the exchange differences arises on the translation of the foreign subsidiary.
The retained earnings reserve represents all current and prior period retained profits and losses.
33 Events after the reporting date
On 3 October 2022 and 11 November 2022 the Company granted share options to a number of its key employees and
directors. This gave rights over 2,420,939 Ordinary shares. The vesting period of the options ranges between 11 months and
2 years. At grant date the options are significantly out of the money, and as such the total fair value of share options issued
is £4,458, with these values having been determined using a Black-Scholes valuation.
34 Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures.
Salary and short-term employee benefits
Post-employment benefits
Share-based payments
Other information
2022
£
897,333
54,317
7,242
958,892
2021
£
887,767
34,015
12,672
934,454
During the year directors provided unsecured short term loans to the Group amounting to £nil (2021 - £35,000). These were
fully repaid at the balance sheet date. Interest was charged at a rate of 0%.
No guarantees have been given or received.
Mr R Cunningham, a director of the company, subscribed for convertible loan notes from the company and proceeds of £nil
(2021 - £287,500) were received and shown within note 22.
The interest charge attributable to these loan notes amounted to £31,879 (2021 - £22,838) and is payable on redemption.
The cumulative value of unpaid interest included within creditors amounted to £54,716 (2021 - £22,838).
35 Controlling party
There is no ultimate controlling party of i-nexus Global Plc.
Consolidated Financial Statements for the year ended 30 September 2022
74
Notes to the Consolidated Financial Statements continued
For the year ended 30 September 2022
36 Impairments
Company
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in
profit or loss:
In respect of:
Intercompany receivable
Recognised in:
Exceptional items
37 Investments
2022
£
2021
£
1,724,886
2,895,000
1,724,886
2,895,000
Current Non-current
2022
Company £
2022
£
2021
£
2021
£
Investments in subsidiaries –
Capital contribution –
–
–
–
–
1,654,770
27,749
1,682,519
1,654,770
17,181
1,671,951
Fair value of financial assets carried at amortised cost
Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the
financial statements approximate to their fair values.
Investment in subsidiary undertakings
Details of the company’s principal operating subsidiaries are included in note 18.
Movements in non-current investments
Cost or valuation
At 1 October 2021
Additions regarding share based payment
At 30 September 2022
Shares in
subsidiaries
£
Capital
contribution
£
Total
£
1,654,770
–
1,654,770
17,181
10,568
27,749
1,671,951
10,568
1,682,519
Carrying amount
At 30 September 2022
At 30 September 2021
1,654,770
1,654,770
27,749
17,181
1,682,519
1,671,951
i-nexus Global plc
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
75
38 Trade and other receivables
Company
Amounts owed by subsidiary undertakings
Other receivables
Prepayments
2022
£
5,377,765
–
59,377
5,437,142
2021
£
6,774,358
37,501
76,657
6,888,516
Amounts owed by subsidiary undertakings are non-interest bearing, unsecured and repayable on demand. This balance is
stated after a provision for bad and doubtful debts amounting to 4,565,859 (2021 - £2,773,175).
39 Convertible loan notes
Company
The company information for convertible loan notes is the same as the group information and is shown in note 22.
Carrying value of convertible loan note
Accrued interest on convertible loan note
40 Trade and other payables
2022
£
1,766,925
254,407
2,021,332
2021
£
1,782,458
88,330
1,870,788
Current Non-current
2022
Company £
2021
£
2022
£
2021
£
Trade payables 84,419
Accruals 10,644
Social security and other taxation 6,196
Other payables 487
101,746
170,623
30,600
3,738
922
205,883
–
254,407
–
–
254,407
–
88,330
–
–
88,330
41 Share-based payment transactions
Company
The company information for share-based payments is the same as the Group information and is shown in note 28.
Consolidated Financial Statements for the year ended 30 September 2022
76
Company Information
Directors Mr D D Whibley (Appointed 1 August 2022)
Mr S P Crowther
Mr R H Cunningham
Mr D S P Firth
Secretary Mr D D Whibley
Company number 11321642
Registered Office 27-28 Eastcastle Street
London
W1W 8DH
Auditor Saffery Champness LLP
St Catherine’s Court
Berkeley Place
Clifton
Bristol
BS8 1BQ
i-nexus Global plc
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