ANNUAL REPORT
2 0 2 2
EXPANDING HORIZONS
UK | USA | Singapore | Russia
India | Philippines | Brazil
Company Information
Harry Berry (Chairman – non-executive)
Nic Hellyer (CFO)
Subash Menon (Managing Director and CEO)
Pieter Verkade (non-executive)
Sudeesh Yezhuvath (COO)
Dowgate Capital Limited
15 Fetter Lane
London EC4A 1BW
Directors
Registrars
Joint broker
Bankers
ICICI Bank UK PLC
One Thomas More Street
London E1W 1YN
Bank of America, N.A.
P.O. Box 25118
Tampa, FL 33622-5118
DBS Bank Ltd
12 Marina Boulevard, Marina Bay Financial
Centre, Tower 3, Singapore 018982
Kotak Mahindra Bank
4m-411 – S.K.L.N.S Complex, 3rd
Block, Kammanahalli
Bangalore 560043, India
ICICI Bank Ltd
Kalyan Nagar, No.4 M-417, 80 Feet Road
HRBR 3rd Block, Kammanahalli,
Kalyan Nagar, Bangalore 560043, India
Equiniti Limited
Aspect House , Spencer Road
Lancing
West Sussex
BN99 6DA
Shareholder enquiries:
Tel. 0371 384 2030* (from UK); +44 121 415 7047 (from
overseas)
* lines are open from 8.30am to 5.30pm Monday to Friday
Nominated Adviser and joint broker
finnCap Limited
One Bartholomew Close
London
EC1A 7BL
Crowe U.K. LLP
55 Ludgate Hill
London EC4M 7JW
Auditor
Memery Crystal
165 Fleet Street
London EC4A 2DY
Solicitors
Share Capital
The ordinary share capital of Pelatro Plc is admitted to
trading on AIM, a market operated by London Stock Exchange
Group plc. The shares are quoted under the trading ticker
PTRO.
The ISIN number is GB00BYXH8F66 and the SEDOL number
is BYXH8F6.
http://www.pelatro.com/investors/
Website
02
ANNUAL REPORT 2022
Five Year Track Record
Year to/as at 31st December
Revenue
Revenue Growth
Adjusted EBITDA (see Note 7)
Adjusted EBITDA margin
Adjusted operating profit/(loss)
(see Note 7)
Adjusted earnings/(loss) per
share (basic and diluted)
Statutory earnings/(loss) per
share (basic and diluted)
Net cash flow from operating
activities
Net cash used in investing
activities
Net cash used generated
by/(used in) financing activities
Net cash at year end
2022
2021
2020
2019
2018
$'000
%
$'000
%
$'000
¢
¢
$'000
$'000
$'000
$'000
5,382
(26%)
607
11%
(2,468)
(27.3¢)
(31.5¢)
1,175
(2,845)
(508)
428
7,266
81%
2,808
39%
(489)
(0.4¢)
(2.1¢)
1,004
(2,670)
3,255
2,587
4,020
(40%)
441
11%
(1,337)
(5.5¢)
(7.2¢)
2,262
(4,569)
3,071
365
6,667
9%
2,893
43%
1,620
4.2¢
2.5¢
1,412
(2,393)
(289)
484
6,123
95%
3,776
61%
3,147
10.2¢
8.0¢
881
(9,092)
6,814
1,823
03
ANNUAL REPORT 2022
Report and Financial Statements
for the year ended 31 December
2022
Registration Number: 10630166
04
ANNUAL REPORT 2022
01
Table of Contents
Strategic Report
Director's Report
Financial Statements
Independent auditor’s report
Group statement of comprehensive income
Group statement of financial position
Group statement of cash flow
Group statement of changes in equity
Notes to the Group financial statements
Company statement of financial position
Company statement of changes in equity
Notes to the Company financial statements
About Pelatro
Chairman's statement
Managing Director’s statement
Key Performance Indicators
Principal risks and uncertainties
Financial review
Corporate Governance Review
Board of Directors
Statement of compliance with the 2018 QCA
Corporate Governance Code
Audit Committee Report
Remuneration Committee Report
Companies Act 2006 s. 172 statement
04
02
03
06
08
09
11
12
16
20
21
28
31
32
39
45
46
47
48
49
86
88
89
05
Strategic Report - About Pelatro
For the year ended 31 December 2022
Our solutions employ Big Data technology to collect and process data in real time. Our technologically advanced products
are telco-grade with significant scalability, security and high availability. As data is processed in real time, the output from
our solutions is also in real time and is relevant and contextual, leading to similarly relevant, contextual and personalised
interventions in real time, in the form of marketing campaigns and promotions to subscribers, resulting in improved results
as compared to legacy solutions. In order to provide high quality marketing campaigns and promotions, our solutions
employ AI/ML techniques coupled with various algorithms, models etc. This results in a high level of predictive, descriptive
and prescriptive analytics in our solutions.
Pelatro is a focused and specialised solution provider predominantly in the telecom marketing space but with an increasing
presence in non-telco sectors where “Big Data” is increasingly seen as an under-exploited resource. We enable data-rich
companies across the globe to increase revenue and reduce customer churn through our enterprise grade software
solutions. Telecom operators, for example, can analyse the behaviour of the subscribers within their network, create
individual profiles to suggest appropriate products and promotions in a segment of one manner to enable higher
consumption and an increased level of customer satisfaction.
Technology
The mViva Customer Engagement Hub is a suite of solutions designed for deep engagement between telcos and its
customers to increase revenue and reduce churn. The mViva suite offers solutions for Contextual Campaign Management,
Loyalty Management, and Data Monetisation in a single integrated tool that enables teams to deliver effective customer
interactions that maximize value, at high work velocity. Its ready-to-use propensity models and data analytics functionality
is optimised for Campaign Analysts to anatomise customer data, to launch precisely targeted campaigns not just to micro-
segments but to segments-of-one. The seamless, intuitive, and concise campaign management workflow enables teams to
easily extend campaign management services to enterprise customers and monetize subscriber data.
Products
The mViva suite empowers Customer Value Management (“CVM”) teams to rapidly design and deploy campaigns, launch
loyalty programs to reduce churn of customers and provide omni-channel communication. The mViva Customer
Engagement Hub offers three key solutions tailor-made for CVM Teams:
mViva Contextual Campaign Management Solution - a comprehensive tool to design, configure and run
campaigns to manage the entire lifecycle for subscribers, retailers and enterprises
mViva Loyalty Management Solution - enables design and launch of loyalty programs to reward and retain
customers
mViva Data Monetisation Platform Solution - enables teams to easily extend campaign management services to
other B2C enterprises and brands in order for the telco to monetise subscriber data
06
ANNUAL REPORT 2022
Strategic Report - About Pelatro
For the year ended 31 December 2022
We have offices in five countries and serve large telco groups (including Telenor, Vodafone, SingTel, Axiata, and Ooredoo) in
over 25 countries. The largest single network that we serve has about 400 million subscribers, one of the largest globally. As
all telcos have some solution for campaign management, our aim is to replace the incumbents to win customers. Given the
advanced nature and uniqueness of our products and the fact that we have successfully replaced legacy solutions from
IBM, SAS, Oracle, FlyTxt, Evolving Systems etc. in multiple telcos, our market opportunity is huge with over 300 telcos to be
addressed around the world.
Presence
07
ANNUAL REPORT 2022
Also unusually for the Group, we recognised two write offs of trade
receivables or contract assets, the former a long-standing debtor of around
$0.2m where a change of ownership of the customer meant that the new
management refused to recognise the validity of certain products and
services provided by Pelatro on its usual commercial terms. Despite
protracted negotiations the Directors are now of the view that this debt is
unlikely to be recovered and hence we have written it off. Contract assets of
around $0.3m arising from the sale of a license (and where there is no trade
receivable as the revenue was recognised on an IFRS 15 basis on transfer of
the license) have also been written off where it has not been possible to
agree the detailed technical terms of implementation with the customer
concerned.
Chairman's Statement
I joined the Group in December 2022 at the end of a mixed year in which we had consolidated our position with
existing customers and continued to win new ones, in particular in the non-telco space. However, a number of
these wins will only produce revenue in 2023 or later and hence did not contribute to the 2022 results. Unusually,
we also renegotiated contracts with a small number of customers, in particular a Middle East telco (part of a wider
international group) with which we had originally agreed a license contract (worth around $1m in total). The value
of this contract was recognised in the interim results for the 6 months to 30 June 2022; however, based on
mutually beneficial discussions, we agreed to convert this to a managed services contract which, whilst overall
better for the Group in economic terms, resulted in a deferral of the revenue to following years.
Dear Shareholder
Outlook
More positively our mViva product was selected by Orea Money and Banque Nationale d'investissement in Africa
to provide its Contextual Campaign Management in a SaaS model to analyse user behaviour, generate predictions
using AI/ML based models and increase revenue, with a contract value of around US$ 1.5 million for an initial
period of three years.
Also we were engaged by a large global telco to provide it mViva Campaign Management Solution for a Proof of
Concept (POC) prior to the telco choosing a service provider. We have done well at this POC stage; however, the
telco finally progressed with two telcos and so the opportunity is smaller than initially thought, however, this is
likely to produce an attractive revenue stream from 2023 onwards and leaves us well positioned to expand within
the customer group in due course.
Since the year end we have continued to add new customers and additional product contracts, with significant
wins across the range of licenses, managed services and change requests. We therefore have confidence in 2023
being a better year for the Group overall.
Harry Berry
Chairman
08
ANNUAL REPORT 2022
Existing customer relationships continue to be “sticky” - given that our
first customer was secured in 2016, a number of our typically three to five
year contracts have been coming up for renewal in the last 12-18 months,
and it is extremely pleasing to note that not one of our existing customers
has sought to replace us, although we have chosen to terminate two
relatively small contracts as the economic return did not match the effort
involved. Most customers have sought to strengthen their relationship
with us by requesting upgrades and change requests and/or additional
software modules or services. All of these activities produce valuable
income for us and embed Pelatro at the very heart of the customers’
operations. The success of our mViva software in enabling users to
increase their revenue; this is further demonstrated by the consistency of
income from contracts where we take a share of the resulting gain by the
customer. Additionally, we regularly see mViva enabling significant
reductions in subscriber churn.
CEO's Statement
Our results for 2022 reflect a year of both progress and some setbacks. We added 5 new customers, including an
entry into the financial services sector with a significant win. We therefore closed the year with 26 customers, of
which 9 are on contracts which produce mostly recurring revenue. However, the global macro-economic
environment has not left our customer base (both current and prospective) untouched, and certain customers
have cut back on their demand for our services, in one case significantly, although it is pleasing to note that there
has been no indication that they would consider alternative suppliers. Similarly, depending on their particular (and
often changing) circumstances, certain customers may lean more towards license contracts or recurring revenue
contracts, reflecting changing "capex v. opex" budget requirements. Over the past few years we have worked hard
to enhance the quality of our earnings such that the significant majority of our revenue is now recurring in nature;
however, we will always seek to accommodate the wishes of customers, even to the extent of renegotiating the
terms of existing, signed contracts. This was particularly relevant this year where one customer in particular
agreed to transition from a license contract to a managed service contract, which is more beneficial for both the
customer and Pelatro, as we will benefit from an addition to recurring revenue and the termination of the contract
(in this case after 3 years) and prospective renewal on revised terms thereafter, rather than a perpetual license.
Dear Shareholder
Existing Customers
We have also been expanding the range of industries we cover: having started serving solely the
telecommunications sector, we have now secured contracts in the financial services sector and are closely
tracking opportunities in banking, all data rich sectors where our powerful data analytics capabilities with
advanced features like AI/Machine Learning technologies and real-time engagement enable our customers to
enhance, enrich and extend their relationships with their consumers. By analysing customer behaviour data, such
as purchase history, spending patterns, and product feedback, fintech companies for example, can identify trends
and preferences that can help them tailor their services and offerings to meet their customers' needs.
New Sectors
09
ANNUAL REPORT 2022
We of course continue to closely monitor the situation in Ukraine: Pelatro has a small development and support
team in Russia, representing around 10% of the Group’s cash cost base. This team can and does operate remotely
with no requirement for travel, and remains currently fully operational, with support services and similar being
reallocated to other jurisdictions where appropriate for the relevant customer. The Group has no revenue from
Russia or any other related sanctioned jurisdiction.
Ukraine
Subash Menon
Managing Director, CEO and Co-Founder
This can lead to increased customer loyalty, retention, and engagement. Data analytics is also crucial for the
efficient and effective management of operations - by analysing operational data, such as transaction processing
times, customer support response times, and system performance metrics, fintech firms can identify areas for
improvement and optimize their processes. This can help to reduce costs, improve operational efficiency, and
increase customer satisfaction.
We continue to focus on recurring revenue while building a strong pipeline in the telecom space. Entering the
banking sector is also a key area of focus.
Conclusion
10
ANNUAL REPORT 2022
The Directors consider that revenue, recurring revenue, adjusted EBITDA (Earnings Before Interest, Depreciation
and Amortisation as adjusted for certain non-operational and/or exceptional transactions) and profit before tax,
and the related margins as a percentage of revenue, are key performance indicators ("KPIs") in measuring Group
financial performance.
Strategic Report - Key Performance Indicators
For the year ended 31 December 2022
We track revenue as it is an indicator of the Group’s overall size and complexity; we track contractually recurring
revenue as this KPI provides a forward-looking view of the minimum expected revenues in the next twelve months,
which gives confidence to business planning and investment decisions. Adjusted EBITDA is a key measure of the
Group’s effectiveness in converting revenue to earnings.
In addition, the Directors believe that further important KPIs are the Group’s cash flows, including operating cash flow and
expenditure on investing activities (principally on software development and where relevant, third-party hardware
installations).
Revenue
Recurring revenue
Recurring revenue as percentage of total
Adjusted EBITDA (see Note 7)
Adjusted EBITDA margin
(Loss) before tax (before exceptional items)
Cash generated from operating activities
Contracted customers (at year end)
2022
$5.38m
$4.27m
79%
$0.61m
11%
$(12.71)m
$1.18m
26
2021
$7.27m
$4.79m
66%
$2.81m
39%
$(0.67)m
$1.01m
23
Growth
(26%)
(11%)
(78%)
22%
13%
Non-financial performance indicators
The Group monitors certain non-financial performance indicators at an operational level, including the number of new
customers in the year, Requests for Proposal received, movement of sales pipeline and Change Requests. However, none of
these are currently considered to be individually appropriate as a measure of overall strategy execution success. All KPIs
are reviewed annually, including consideration of appropriate non-financial KPIs.
In a growing business with a high proportion of well qualified and experienced staff the rate of staff retention is seen as an
important KPI: in 2022 we recruited 99 new members of staff and 60 left the business (2021: 108 joined and 83 left).
11
ANNUAL REPORT 2022
Principal Risk
Strategic Report - Principal Risk and Uncertianities
For the year ended 31 December 2022
Introduction
Our aim is to recognise and address the key risks and uncertainties facing the Group at all levels of our business.
There are a number of risk factors that could adversely affect the Group’s execution of its strategic plan and, more
generally, the Group’s operations, business model, financial results, future performance, solvency, or the value or liquidity
of its equity. The Board is committed to addressing these risks by implementing systems for effective risk management and
internal control.
The Board continually assesses the principal risks and uncertainties that could threaten Pelatro's business, business model,
strategies, financial results, future performance, solvency or liquidity. The items listed below represent the known principal
risks and uncertainties but does not list all known or potential risks and uncertainties exhaustively. Where possible, steps
are taken to mitigate risks.
Mitigation
Technology
The industry in which Pelatro operates is in the process
of continual change reflecting technical developments
as industry and government standards and practices
change and emerge.
The markets in which Pelatro operates are competitive
and rapidly evolving. The Group’s existing products may
become
less
competitive
or
even
obsolete
if
competitors introduce new products and/or customer
behaviour or requirements change.
The Group employs highly qualified software engineers
and
senior
management
who
monitor
closely
developments in technology that might affect its
research capability and product evolution.
New products and features are assessed against their
target markets and in response to customer feedback
prior to development. As Pelatro engages with more
customers with an increased product portfolio, a broader
spread of feedback is obtained enabling the business to
engage with customers more quickly and effectively.
The Group continually scans the market for potential
technology threats and has a development process in
place to ensure its own technology continues to evolve
to meet client needs. We are seeking to develop
technology that cannot be easily disrupted, and which
can be protected by patents where practical.
12
ANNUAL REPORT 2022
Principal Risk
Mitigation
Global Economy
This is a new risk after many years of low inflation, and
the full effects are not yet known. Inflation could have an
impact on the Group’s cost base resulting in lower
profitability. The Group will monitor the market for price
sensitivity amongst prospective customers and engage
more closely with existing customers to demonstrate
value for their spend on our products.
The Group is additionally exposed to economic, trade
and market risk factors, such as global or localised
economic downturn, changing international trade
relationships, consolidation or insolvency of existing or
prospective customers or competitor products, all of
which
could
significantly
threaten
Pelatro’s
performance and prospects. Pelatro's current focus on
emerging markets customers may increase such risks.
Mitigation against the short-term impact of such risks is
provided through an increasing spread of geographies
and customers. Pelatro monitors political developments
and will seek to mitigate emerging risks where possible.
Misdirected product, operational or strategic
investments
Strong
communication
lines
between
relevant
stakeholders
are
ensured
through
regular
formal
meetings and monthly reporting. The Board reviews and
challenges all strategic investments.
We are continually investing in product development
and operational requirements to support mViva-led
growth. Failure to achieve meaningful returns on
investments would hinder the Group’s strategic growth
plan and potentially jeopardise the Group’s position in
the market and its prospects.
IP, data and cyber risks
We implement robust processes across IP and IT
systems, which are overseen by the Head of Engineering.
A significant IP loss, third party IP challenge, data loss,
security breach or cyber-attack could significantly
threaten Pelatro's ability to do business, particularly in
the short term, and could result in significant financial
loss.
Reputational risk
Strong corporate governance and dedicated senior
management remain the key elements of effective
reputational management. Senior management provide a
model of best practice and guidance to ensure the
Group's values and expected behaviours are clear and
understood by everyone.
Maintaining a strong reputation is vital to the Group's
success as a business. A loss of confidence in the
Group's ability to undertake new client opportunities
may be caused by an adverse impact to the Group's
reputation which may, in turn significantly affect our
financial performance and growth prospects.
Changes in the global economy can have an impact on
the business. The rate of inflation has increased around
the world, and this has implications for costs in our
customers’ and prospective customers’ businesses.
Consequently, they might be slower to commit to new
projects or renew existing projects.
13
ANNUAL REPORT 2022
Principal Risk
Mitigation
As our business continues to grow and develop, we will
remain strongly focused on protecting the strength of
the Group's reputation through effective governance,
leadership, and through cultivating open and transparent
relationships with all stakeholders.
Significant impact to the Group's reputation could be
caused by an incident involving major harm to one of
our people or customers, inadequate financial control
processes
or
failure
to
comply
with
regulatory
requirements. Impact of this type would potentially
result in financial penalties, losses of key contracts, an
inability to win new business and challenges in retaining
key staff and recruiting new staff.
Product and service delivery failures
Pelatro mitigates inherent product and service risks
through
robust
quality
assurance
and
project
governance processes. Product releases are unit tested
prior to delivery and subjected to further customer
testing prior to first use. Customer testing and
acceptance sign-offs are required prior to go-live.
Issues or failures with our software products or services
could lead to failed implementations, project delays,
cost overruns, data loss, security issues, customer
dissatisfaction,
early
termination,
service
level
breaches and contractual claims, all of which could
adversely impact the Group’s revenues, earnings and
reputation.
The risks of servicing large telcos are significant but
generally stable and well understood, and the Group
has not suffered any material product or service
failures since inception. Risks are generally greater with
new clients, but formal RFP processes are routinely
carried out by telcos, which provides clarity as to
requirements and expectations.
This is an increased risk due to the global shortage of
talent. This might make it more difficult to recruit and
retain talent to support our growth plans. The Group's
focus on competency at all levels of the business
continues to ensure that we develop the Group's people
and enable them to successfully manage the changing
profile of the Group's business. Incentive programmes
are also in place to ensure that key individuals are
retained.
Attracting and retaining the best skilled people at all
levels of the business is critical. This is particularly the
case in ensuring we have access to a diverse range of
views and experience and in attracting specific
expertise at both managerial and operational levels
where the market may be highly competitive.
Attracting and retaining skilled people
Failure to attract new talent, or to develop and retain
the Group's existing employees, could impact the
Group's ability to achieve the Group's strategic growth
objectives. As we continue to grow and diversify into
new areas, this risk will continue to be a focus for the
Board.
Our staff are engaged, motivated and enjoy working with
market leading software, and having responsibility they
might not get in larger companies. We have also enlarged
our benefits package during the year and will continue to
do so to ensure we remain competitive on remuneration.
14
ANNUAL REPORT 2022
Principal Risk
Mitigation
As an international business the Group operates in and
across a number of jurisdictions where relevant laws
and regulations may not yet be developed or tested in
dealing with the range and nature of transactions which
the Group undertakes. This may apply, inter alia, to
inter-company trading arrangements, the Group’s
operating presence in a given jurisdiction, financing or
tax domicile arrangements. There are risks that tax or
other regulatory authorities could challenge and
investigate the Group's historical trading, operating,
financing or tax domicile arrangements and the
resulting transactions.
The Group has taken, and continues to take, third-party
advice from appropriately qualified professional advisers
with regard to such exposures; however, given the
continually evolving framework of laws and regulations,
relevant precedents and case law, there is a risk of
deemed non-compliance which may give rise to financial
or other penalties. The Group considers the risk of any
material penalties arising is low.
Credit risks
The Group’s principal financial assets comprise cash and
cash equivalents, deposits, trade and other receivables
and contract assets. As these instruments are exposed to
conventional risks, they are managed on the simple basis
of credit terms, credit worthiness and cash collection or
settlement. The Group only contracts with major (often
regional or global) telcos who have sound credit ratings.
The Group is exposed to the credit risk of an increasing
range of counterparties with whom it does business,
often in respect of considerable amounts. Extended
delivery, installation and sales cycles may cause the
Group to be so exposed for considerable periods of
time.
Liquidity risks
Group cash balances are monitored on a weekly basis to
ensure that the Group has sufficient funds to meet its
needs. Cash flow forecasts are generated and reviewed
regularly by management.
Fluctuations in working capital may leave the Group
with inadequate cash resources to fund its operations.
International trade
Increasingly the Group is entering into longer-term
managed service/recurring revenue contracts, where
billing is monthly or quarterly, thus shortening the billing
cycle and reducing the overall credit risk per customer.
The Group did not enter into derivative transactions
during the year. It is the Group’s policy that no
speculative trading in financial instruments will be
undertaken.
The Directors have prepared projected cash flow
information for the coming year. The projections take
into account the new business opportunities highlighted
in the Managing Director’s Statement, the timing and
quantum of which will affect the Group’s cash
requirements, which are continually monitored by the
Board. On the basis of these projections, the Group has
sufficient working capital facilities for the foreseeable
future.
15
ANNUAL REPORT 2022
Overview
The financial results for the year reflect a consolidation
of our existing customer base and the loss of some
business from long-standing customers as a result of
underlying economic pressures. Limited revenue was
recognised from new customers; those customers won in
the year will generate revenue in 2023 onwards (as noted
above certain prospective customers were slower than
expected to commit to contracts and/or renegotiated
their terms from license to recurring revenue, with the
result that income originally expected in 2022 will now be
recognised later). Currency headwinds due to the
strength of the dollar (USD) against the Indian Rupee
(INR) also contributed to the reduction in total revenue
from $7.27m in 2021 to $5.38m in 2022.
On the cost side, in addition to the operating cost base,
the Group also incurred a number of exceptional costs,
including a retention payment made to a small number of
key staff, in shares in lieu of cash but with the same
effect on the profit and loss account. Highly unusually
for the Group, we also provided an amount against a
trade receivable which, due to a very specific set of
circumstances (largely deriving from the change of
ownership of the customer) is now considered unlikely to
be received. Similarly we wrote off a contract asset
initially recognised on the sale of a low value license
where, following the sale, we could not agree on the
detailed technical terms of installation and operation
and hence, by mutual agreement, took the decision to
withdraw.
Income Statement
Revenue
With a significant proportion of the Group's revenue
denominated in Indian Rupees ("INR") rather than US
Dollars ("USD"), and a small but significant amount in
other currencies, the Group is exposed to currency
fluctuations on revenue as well as costs. 2022 was a year
of exceptional volatility in global currency markets and,
whilst a depreciation of INR against USD is normal (in the
last few years averaging around 2-3%), in 2022 the INR
weakened by around 10%.
Cost of sales and overheads
Cost of sales decreased slightly to $2.09m (2021:
$2.21m). These costs comprise principally (i) the direct
salary
costs
of
providing
software
support
and
maintenance, professional services and consultancy; (ii)
third-party software maintenance and licensing costs;
and (iii) sales commissions. The decrease reflected
mainly a reduction in sales commission accruing over the
term of contracts for which revenue was recognised in
the year and other software-related purchases, offset by
an increase in support staff salary costs.
and gain share contracts and the balance from post-
contract support. A further $1.11m came from change
requests (2021: $1.96m) and thus all of our revenue was
“repeating” in nature, compared to just over 90% in 2021.
We had recognised some $0.85m of license revenue in
the first half of the year (as reported in the interim
results for the 6 months to 30 June 2022); however, as
noted above, during the year negotiations commenced
to convert this license contract to a managed services
contract and, whilst the revised agreement was not
finally formally signed until February 2023, in order to
give a true and fair view of the results for the year this
revenue has not been recognised in 2022.
Pre-exceptional
overheads
(excluding
depreciation
andamortisation) increased to $2.69m (2021: $2.27m),
reflecting some increase in overall staff costs, additional
efforts in sales and marketing and the cost of travel
compared to the restricted travel in previous years.
Largely due to a reduction in activity levels in one
particular customer group, but also due to the overall
reduction in revenue for the Group, we also recognised a
significant impairment charge against our customer
relationship assets (which arose on the acquisition of the
Danateq assets in 2018). Given the reduction in revenue
in the year and the short-term outlook, we also
recognised a wider impairment of tangible and intangible
assets across the Group, including a specific charge
against the computer hardware assets relating to one
specific managed services contract.
Out of our total revenue of $5.38m, approximately
$4.27m (79%) arose from recurring revenue (2021:
$4.79m), comprising some $3.11m from managed service
During the year the Group was unable to agree on the
technical terms of implementation of a license contract
entered into in 2021 with a small customer. The Group
has now formally withdrawn from this contract and
Exceptional items and impairments
Strategic Report - Financial Review
For the year ended 31 December 2022
16
ANNUAL REPORT 2022
Unusually for the Group, we also wrote off a receivables
balance with a long-standing debtor of around $0.2m
where a change of ownership of the customer meant that
the new management refused to recognise the validity of
certain products and services provided by Pelatro on its
usual commercial terms. The group concerned continues
to be a customer with contracts entered into by new
management which recoverability is not impaired.
Taxation
Adjusted
EBITDA
(earnings
before
interest,
tax,
depreciation, amortisation and exceptional items, as
adjusted for the effect of certain non-recurring or
exceptional items) fell to $0.61m (2021: $2.81m).
During the year it became clear that the activity level of
one particular customer (which the Group had acquired
as a result of the Danateq acquisition in 2018) were
reducing considerably. As a result the value of the
“customer relationships” asset recognised at the time of
that acquisition was considered impaired and an
impairment charge of $3.83m taken against this (and the
corresponding goodwill was also written off). Given the
effect of the wider downturn and volatility in global
markets and the demand for Pelatro’s products, we also
recognised a further impairment charge of $5.48m
against the Group’s other non-current assets, resulting in
a total impairment charge of $9.31m.
Profitability
After taking into account net finance costs, depreciation
and amortisation (including c. $0.7m of acquisition-
related amortisation), and impairment, loss before tax
was $(13.86)m (2021: loss of $(0.67)m) before impairment
and exceptional items. Comprehensive Loss for the year
was $(14.54)m (2021: $(0.94)m).
The net taxation charge was $0.51m (2021: $0.18m)
comprising some $0.54m relating to current tax offset by
a credit of $27,000 relating to a deferred tax asset
recognised in one of the Group’s subsidiaries. The higher
level of current tax arises due to increased profitability in
the Group’s Indian subsidiary as well as the continuing
impact of withholding tax charges which are an
unavoidable feature of our global business.
Statement of Financial Position
Intangible assets
Capitalised development costs and patents
Approximately $2.78m (including $29,000 spent on
patent protection) was capitalised in the year in respect
of software development, offset by amortisation of
$2.61m. As noted above an impairment charge of $4.69m
was recognised, resulting in a carrying value of $1.94m at
the balance sheet date.
Property, plant and equipment
Expenditure on property, plant and equipment was
minimal at $49,000, principally relating to IT and
peripheral equipment (2021: $88,000). The Group
recognised $0.12m in impairment charges against the
Group’s IT and other equipment.
Depreciation in the year amounted to $0.28m (excluding
amounts relating to Right-of-Use assets now recognised
under IFRS 16, and gross of amounts capitalised as
intangible assets) (2021: $0.30m). The aggregate net
book value of property, plant and equipment fell
accordingly from $0.98m to $0.55m.
Right of use assets
The Group recognises certain long-term leases under
IFRS 16 as “right of use” assets. The reduction in the
overall value of the right of use assets from $0.24m in
2021 to $0.13m in 2022, is net of depreciation of $0.17m
and capital additions of $0.26m. These additions do not
reflect new leases but instead the capitalised value of
expected extensions to current leases. The right-of-use
assets were also impaired by $0.18m as part of the
Group impairment charge.
Trade receivables and contract assets
At 31 December 2022 total trade receivables (i.e.
including long-term receivables) stood at $3.45m (2021:
$4.96m). The reduction is largely due to the fall in related
revenue.
Short-term contract assets relating to revenue (i.e. those
which are expected to reverse in less than one year)
decreased to $0.08m (2021: $0.38m). These relate
entirely to the “run off” of pre-2022 contracts which
have been recognised under IFRS 15 differently to their
accordingly the Group has provided $0.3m against the
carrying value of the contract on the statement of
financial position (shown in contract assets). This amount
is reflected in exceptional items for the year.
Adjusted loss per share was (27.3)¢ (2021: loss of (0.4)¢),
and reported loss per share was (31.5)¢ (2021: loss
(2.1)¢). No dividend is proposed for the year (2021: nil).
Loss per share
17
ANNUAL REPORT 2022
invoicing profile. Likewise long-term contract assets deriving from revenue decreased to $0.11m (2021: $0.23m).
Short-term fulfilment assets included in contract assets total $0.30m (2021: $0.18m) (representing costs relating to certain
contracts to be recognised in profit and loss in the next 12 months); and $0.41m (2021: $0.38m) in respect of long-term
assets (representing costs directly relating to certain contracts to be recognised in profit and loss after one year). This
reflects the charge to P&L in respect of sales commissions contracted in previous years but recognised in the line with the
life of the related contract (therefore typically over 3 to 5 years).
Trade and other payables, provisions and contract liabilities
At the year end, short-term trade payables stood at $0.53m (2021: $0.15m), the increase being due principally to amounts
due in respect of sales commissions incurred in 2022 and payable during 2023. Other short-term payables of $0.36m (2021:
$0.45m), comprise principally amounts due in respect of staff bonuses and the balance for sundry creditors.
Trade and other payables
Under the Indian Payment of Gratuity Act 1972, employees in the Group’s Indian subsidiary with more than 5 years’ service
are eligible for the payment of a “gratuity” upon certain end of employment events - short-term provisions include amounts
estimated in respect of such gratuity payments, as well as carried over leave payments and sundry expense provisions, in
total $52,000 (2021: $37,000). The tax provision fell from $35,000 to $21,000 mainly due to an increase in the amount of
advance tax payable from our Indian subsidiary which reduced the year end tax creditor.
Provisions
Long-term provisions of $0.20m (2021: $0.20m) relate solely to amounts estimated in respect of leave encashment and
gratuity payments. Further details of such provisions are given in Note 26.
Contract liabilities represent customer payments received in advance of satisfying performance obligations, which are
expected to be recognised as revenue in 2023 and beyond. Short-term contract liabilities fell to $0.17m (2021: $0.47m)
along with long-term contract liabilities to $0.18m (2021: $0.28m).
Contract liabilities
Statement of Cash Flows
Cash generated by operations before tax payments amounted to $1.64m (2021: $1.27m), the increase largely resulting from
the reduction in trade receivables. The Group had closing gross cash of just under $1.0m (2021: $3.3m). Borrowings
amounted to $0.59m (2021: $0.75m) excluding amounts relating to lease liabilities. These borrowings are to be repaid on an
Equal Monthly Instalment (“EMI”) basis over the next 2-5 years. Post the year end the Group arranged funding amounting to
$1.2 million into one of its subsidiaries. This will be used for working capital and/or acquisition purposes.
Cash flow and financing
Summary
Whilst the year was disappointing in revenue terms, a significant portion of the revenue “lost” will now be recognised in
future years. The Group has continued to invest in its software assets and this, together with targeted marketing and
increasingly successful sales efforts, has ensured an increasing stream of new business for 2023 and beyond.
Nic Hellyer
Chief Financial Officer
25 May 2023
18
ANNUAL REPORT 2022
The s.172 Statement that is required to be covered in the Strategic Report is included in the Corporate Governance review
on pages 32 and 33 and is hereby incorporated within the Strategic Report by reference.
The Strategic Report was approved by the Board of Directors on 25 May 2023.
On behalf of the Board
Subash Menon
Nic Hellyer
25 May 2023
25 May 2023
19
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
Executive Directors
Subash Menon - Managing Director, CEO and
Co-Founder
Subash co-founded the Group in April 2013. Prior to
Pelatro, Subash was the CEO and founder of Subex
Limited ("Subex"), a company he transformed from a
systems integrator in telecoms hardware to a global
leader in Telco software for business optimisation.
Subash also guided Subex through a successful IPO in
India (NSE and BSE) in 1999 and through seven
acquisitions in the UK, US and Canada, driving revenues
to in excess of US$100m, prior to leaving Subex in 2012.
Sudeesh Yezhuvath - COO and Co-Founder
Sudeesh co-founded the Group with Subash in 2013.
Sudeesh joined Subash at Subex in 1993, where he
worked as a Sales Engineer. There, he progressed to a
board Director and Chief Operating Officer. Sudeesh left
Subex in 2012, by which time it had grown to be a global
leader with over 200 telco operators, across more than
70 countries.
Nic Hellyer, FCA - CFO
Nic is a Chartered Accountant who brings extensive
board level experience from his 25 years in investment
banking. Nic spent the majority of his banking career at
UBS and HSBC, advising on a wide range of transactions
including public takeovers, private M&A, IPOs and other
equity fund raisings. Nic joined Pelatro in 2017 prior to
the IPO of the Group in December that year.
Non-Executive Directors
Harry Berry – Chairman
quoted CyanConnode Holdings plc. Prior to holding
various non-executive positions, Harry spent more than
30 years at British Telecom (BT) in several roles including
Global Product Management, Customer Service, New
Product Development and Marketing as well as managing
significant R&D programmes. Additionally, Harry created
BT Brightstar in 2000 which was set up to exploit BT's
R&D to create technology spinouts.
Pieter Christiaan Verkade
Pieter serves as an executive director on the board of
Discover Digital International, responsible for Marketing
and Sales, and is Chairman and Co-Founder of Viva
Africa, an African content aggregator and producer for
video, a role he has held since February 2016. He was the
Chief Commercial Officer for Unitel in Angola from
August 2017 to August 2019. Prior to this, Pieter spent
sixteen years working in numerous board level roles,
varying from CFO, CMO, CCO to CEO for various
companies within the telecommunications industry
working across both Europe and Africa. These included
Telenor International, Orange and MTN, where he was
Group Chief Commercial Officer, responsible for the
Consumer, Enterprise and Digital Services. He has a
bachelor’s degree in marketing and Business Economics.
(i)
Member of Audit Committee
(ii)
Member of Remuneration Committee
(iii)
Member of Nomination Committee
(i)(ii)(iii)
(i)(ii)(iii)
Harry is an experienced chairman and non-executive
director, most recently as non-executive director of AIM-
In 2003, at which time Subash Menon was its CEO, Subex
Limited acquired Azure Solutions International ("Azure").
As a result, New Venture Partners (NVP), as a shareholder
of Azure, became a major shareholder in Subex. Harry
was at that time European Managing Partner of NVP and
joined the board of Subex as their representative from
2006 to 2010.
20
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
Statement of compliance with the 2018 QCA Corporate Governance Code
Chairman’s introduction
High standards of corporate governance are a key priority for the Board of Pelatro and, in line with the London Stock
Exchange’s AIM Rules requiring all AIM-quoted companies to adopt and comply with a recognised corporate governance
code, the Board has adopted the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) as the basis of
the Group’s governance framework. It is the responsibility of the Board to ensure that the Group is managed for the long-
term benefit of all shareholders and stakeholders, with effective and efficient decision-making. Corporate governance is an
important aspect of this, reducing risk and adding value to the Group's business.
The QCA Code is constructed around ten broad principles and a set of disclosures. We have considered how we apply each
principle to the extent that the Board judges these to be appropriate in the circumstances, and below we provide an
explanation of the approach taken in relation to each and how we comply with them.
Harry Berry
Non-Executive Chairman
QCA Principles
SECTION 1: DELIVER GROWTH
Principle 1: Establish a strategy and business model which promote long-term value for shareholders
To help deliver growth and promote long-term value for shareholders, the Board established a clear three-pronged strategy
and business model when the Group floated on the AIM market in 2017 based on:
Sales strategy, which encompasses all critical areas progressively to open up new vistas and enable the
Group to address larger market opportunities while positioning it as a key player in its chosen space
Diversification strategy to offer complementary services
Acquisition-led growth strategy where and when appropriate to expand the business model
This strategy has evolved in line with our growing business and changing operational landscape and we have moved from a
predominantly licence fee model to one now of more annual recurring revenues. This helps us work more closely in
partnership with our telco customers and is giving us greater financial visibility over the longer term.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Company welcomes communication with its shareholders. Understanding what analysts and investors think about us,
and in turn, helping these audiences understand our business, is a key part of driving our business forward and we actively
seek dialogue with our shareholders and the market.
Introduction
21
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
Institutional shareholders
The Directors actively seek to build a relationship with institutional shareholders. Shareholder relations are managed by the
Chief Executive Officer and Chief Financial Officer who make presentations to institutional shareholders and analysts
regularly following the release of the full-year and half-year results, as well as for any significant strategic developments.
The non-executive Chairman and non-executive director are also available to meet investors, whenever required.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for longer-term
success
Our employees are important stakeholders in our business and the Board therefore closely monitors and reviews the
performance and satisfaction of our employees through regular dialogue and a regular appraisal programme as well as
other feedback it receives to ensure alignment of interests.
Employees
Private shareholders
Private shareholders also have access to selected analysts’ research which is made available to them by Pelatro through
the Group’s website. They are also encouraged to contact the company directly with any enquiries they may have.
Report and accounts
The Board has ultimate responsibility for reviewing and approving the Annual Report and Accounts and it has considered
and endorsed the arrangements for their preparation, under the guidance of its audit committee. The Directors confirm
that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and performance, business model and strategy.
The Board
At every Board meeting, the Chief Executive Officer and the Chief Financial Officer provide a summary of the content of any
engagement they have had with investors to ensure that major shareholders’ views are communicated to the Board as a
whole. The Board is also provided with brokers’ and analysts’ reports when published.
Our wider stakeholder group includes our employees, suppliers, customers, advisers and investors. Engaging with our
stakeholder base strengthens our relationships across our stakeholder base and helps us make better business decisions to
deliver on our commitments. The Board is regularly updated on wider stakeholder engagement feedback to stay abreast of
stakeholder insights into the issues that matter most to them and our business, and to enable the Board to understand and
consider these issues in decision-making.
The Group believes that having empowered and responsible employees who display sound judgment and awareness of the
consequences of their decisions or actions, and who act in an ethical and responsible way, is key to the success of the
business.
22
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
The Group recognises the increasing importance of corporate social responsibility and endeavours to take it into account
when operating its business in the interests of its stakeholders, including its investors, employees, customers, suppliers,
business partners and the communities where it conducts its activities.
Corporate Social Responsibility
The operation of a profitable business is a priority and that means investing for growth as well as providing returns to its
shareholders. To achieve this, the Group recognises that it needs to operate in a sustainable manner and therefore has
adopted core principles to its business operations which provide a framework for both managing risk and maintaining its
position as a good "corporate citizen", and also facilitate the setting of goals to achieve continuous improvement.
The Group aims to conduct its business with integrity, respecting the different cultures and the dignity and rights of
individuals in the countries where it operates. The Group supports the UN Universal Declaration of Human Rights and
recognises the obligation to promote universal respect for and observance of human rights and fundamental freedoms for
all, without distinction as to race, religion, gender, language or disability.
Customers
Our success and competitive advantage are dependent upon fulfilling customer requirements. The longevity of customer
relationships is a key part of our strategy, and an understanding of current and emerging requirements of customers
enables us to develop new and enhanced services, together with software to support the fulfilment of those services. The
Group encourages feedback from its customers through engagement with individual customers throughout a project. The
number of customers has been growing significantly over recent years, but the overall number of customers still allows us
to have regular interface with customers and ensure their needs are appreciated. The team holds periodic meetings with
every customer to understand and resolve their "pain points" while collecting valuable feedback on all aspects of business
such as product features, quality of delivery, support and so on.
Health and Safety
The Directors are committed to ensuring the highest standards of health and safety, both for employees and for the
communities within which the Group operates. The Group seeks to exceed legal requirements aimed at providing a healthy
and secure working environment to all employees and understands that successful health and safety management involves
integrating sound principles and practice into its day-to-day management arrangements and requires the collaborative
effort of all employees. All employees are positively encouraged to be involved in consultation and communication on
health and safety matters that affect their work.
Environment
The Directors are committed to minimising the impact of the Group’s operations on the environment. The Group recognises
that its business activities have an influence on the local, regional and global environment and accepts that it has a duty to
carry these out in an environmentally responsible manner. It is the Group’s policy to endeavour to meet relevant legal
requirements and codes of practice on environmental issues so as to ensure that any adverse effects on the environment
are minimised. It strives to provide and maintain safe and healthy working conditions, and to keep its entire staff informed
of its environmental policy whilst encouraging them to consider environmental issues as an everyday part of their role.
23
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board currently takes the view that an internal audit function is not considered necessary or practical due to the size of
the Group and the close day-to-day control exercised by the executive directors.
The Board has overall responsibility for the Group’s internal control systems and for monitoring their effectiveness. The
Board, with the assistance of the Audit Committee, maintains a system of internal controls to safeguard shareholders’
investment and the Group’s assets.
Further details of the principal risks faced by the Group, together with their potential impact and the mitigation measures in
place, are set out in the section titled "Principal risks and uncertainties" in this Annual Report. Regular monthly reporting
keeps the Board appraised of the risk management process, emerging risks, health and safety and the Group’s internal
controls processes.
The Board is responsible to the shareholders and sets the Group’s strategy for achieving long-term success. It is ultimately
responsible for the management, governance, controls, risk management, direction and performance of the Group. The
members of the Board have a collective responsibility and legal obligation to promote the interests of the Group and are
collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and
approach to, corporate governance lies with the chairman of the Board, Harry Berry. The Chairman also ensures effective
communication with shareholders and facilitates the effective contribution of the other non-executive Director.
SECTION 2: MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
Principle 5: Maintain the Board as a well-functioning balanced team led by the Chair
The Board consists of five directors of which three are executive and two are independent non-executives. The Board is
supported by three committees: audit, remuneration and nomination. Non-executive directors are required to attend all
Board meetings (usually in London) and to be available at other times as required for face-to-face and telephone meetings
with the executive team and investors. In addition, they attend Board committee meetings as required. Meetings held
during 2022 and the attendance of Directors is summarised below:
Director
Harry Berry (appointed 05 December
2022)
Richard Day (resigned 03 December
2022)
Nic Hellyer
Subash Menon
Pieter Verkade
Sudeesh Yezhuvath
Board
1
6
7
6
6
5
Audit
-
2
2
n/a
2
n/a
Rumeration
-
1
n/a
n/a
n/a
1
24
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are
distributed to all Directors in advance of Board and Committee meetings. All Directors have access to the advice and
services of the CFO (who is also Company Secretary): he is responsible for ensuring that the Board procedures are followed,
and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the Directors to
obtain independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense.
The Company has adopted a code for directors’ and employees’ dealings in securities which is appropriate for a company
whose securities are traded on AIM and which is in accordance with Rule 21 of the AIM Rules and the Market Abuse
Regulations.
The Board currently comprises three executive and two non-executive Directors with an appropriate balance of sector,
financial and public market skills and experience. The skills and experience of the Board are set out in their biographical
details above. The experience and knowledge of each of the Directors gives them the ability constructively to challenge the
strategy and to scrutinise performance. The Board also has access to a network of external advisers and receive regular
briefings on legal, accounting and regulatory matters from these advisers where necessary to keep their skills and
knowledge base up to date.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
Executive and non-executive Directors are subject to re-election intervals as prescribed in the Company’s Articles of
Association. At each Annual General Meeting one-third of the Directors, who are subject to retirement by rotation shall
retire from office. They can then offer themselves for re-election. The executive directors are employed under service
contracts requiring 12 months' notice (by either party) in the case of Subash Menon and Sudeesh Yezhuvath, and 6 months'
notice in the case of Nic Hellyer. The non-executive director and the Chairman receive payments under appointment letters
which are terminable on three months' notice.
As a small and cohesive Board we openly discuss our performance and effectiveness against strategy on a regular basis.
The effectiveness of the Board is reviewed by the Chairman on an annual basis. As part of this yearly review, we specifically
ask our Nomad and Broker and UK lawyers their opinion on the effectiveness of the Board.
As a Board, we conduct an annual evaluation of the Board, led by the Chairman, in accordance with the recommendation
from the FRC and with reference to the FRC guidance on the list of questions a board should be asking of themselves.
Principle 7: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
We have three committees, being Audit, Remuneration and Nomination. Given the size of our board with only two NEDs, the
NEDS sit on each committee. Harry Berry is Chairman of Audit and Remuneration, and Pieter Verkade is Chairman of
Nomination. The QCA consider it is unusual for the Chairman of an AIM company also to be Chairman of the Remco;
however, this was discussed with our Nomad and investors when we floated in 2017.
These committees are required to act independently of the executive of the Board and indeed may need at times to be in
conflict with the executive members. Because of the respective experience and qualities of the NEDs, they are considered
by our Nomad to have sufficient qualities to fulfil these roles.
25
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Group provides opportunities for training and personal development and encourages the involvement of employees in
the planning and direction of their work. These values are applied regardless of age, race, religion, gender, sexual
orientation or disability. The Group recognises that commercial success depends on the full commitment of all its
employees and commits to respecting their human rights, to provide them with favourable working conditions that are free
from unnecessary risk and to maintain fair and competitive terms and conditions of service at all times.
The Group adopts a policy of equal opportunities in the recruitment and engagement of staff as well as during the course of
their employment. It endeavours to promote the best use of its human resources on the basis of individual skills and
experience matched against those required for the work to be performed.
There is a formal schedule of matters reserved for decision by the Board in place which enables the Board to provide
leadership and ensure effectiveness. Such matters include business strategy and management, financial reporting
(including the approval of the annual budget), Group policies, corporate governance matters, major capital expenditure
projects, material acquisitions and divestments and the establishment and monitoring of internal controls.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by
the Board
In regard to how ethical values are recognised and respected, we include a specific Environmental, Social and Governance
section in this Annual Report. We aim to conduct our business with integrity, respecting the different cultures and the
dignity and rights of individuals in the countries where we operate. We support the UN Universal Declaration of Human
Rights and recognise the obligation to promote universal respect for and observance of human rights and fundamental
freedoms for all, without distinction as to race, religion, gender, language or disability. All the board have a responsibility to
ensure we follow appropriate ethical values.
The Chairman, Harry Berry, is responsible for leadership of the Board, ensuring its effectiveness on all aspects of its role,
setting its agenda and ensuring that the Directors receive accurate, timely and clear information. The Chairman also
ensures effective communication with shareholders and facilitates the effective contribution of the other non-executive
Director. Subash Menon, as Chief Executive Officer, is responsible for the operational management of the Group and the
implementation of Board strategy and policy. By dividing responsibilities in this way, no one individual has unfettered
powers of decision-making.
26
The appropriateness of the Board’s composition and corporate governance structures are reviewed through the ongoing
Board evaluation process and on an ad hoc basis by the Chairman together with the other Directors, and these will evolve
in parallel with the Group’s objectives, strategy and business model as the Group develops.
Board committees
The Audit Committee has Harry Berry as Chairman and has primary responsibility for monitoring the quality of internal
controls, ensuring that the financial performance of the Group is properly measured and reported on, and for reviewing
reports from the Group’s auditors relating to the Group’s accounting and internal controls, in all cases having due regard to
the interests of shareholders. The Audit Committee meets at least twice a year. Pieter Verkade is the other member of the
Audit Committee. A report on the duties of the Audit Committee and how it discharges its responsibilities is set out below.
The Board has established Audit, Nomination and Remuneration Committees.
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
The Board maintains a frequent dialogue with all of its stakeholders, both in person and through formal channels such as
the Annual Report (which, inter alia, contains details of the work of the Board and the various committees during the year)
and the London Stock Exchange Regulatory News Service.
The Nomination Committee has Pieter Verkade as Chairman, and identifies and nominates, for the approval of the Board,
candidates to fill board vacancies as and when they arise. The Nomination Committee meets as necessary and did not meet
in the financial year 2022 as the appointment of the Chairman was considered by the board as a whole. Harry Berry is the
other member of the Nomination Committee.
SECTION 3: BUILD TRUST
Principle 10: Communicate how the Group is governed and is performing
The Remuneration Committee has Harry Berry as Chairman, and reviews the performance of the Executive Directors, and
determines their terms and conditions of service, including their remuneration and the grant of options, having due regard
to the interests of shareholders. The Remuneration Committee meets as necessary. Pieter Verkade is the other member of
the Remuneration Committee. Details of the activities and responsibilities of the Remuneration Committee are set out
below.
The terms of reference of each Committee can be downloaded from www.pelatro.com
27
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
The Audit Committee comprises Harry Berry and Pieter Verkade. The Board considers that Harry Berry has sufficient
relevant financial experience to chair the Audit Committee given his extensive previous board experience, both as an
individual and as representative of external shareholders. Pieter Verkade holds a Bachelor’s degree in business economics
and has held a number of controller and management accountant roles in AT&T and Telenor, culminating in the CFO role for
KPN Orange in Belgium.
The Committee is responsible for reviewing and reporting to the Board on financial reporting, internal control and risk
management, and for reviewing the performance, independence and effectiveness of the external auditors in carrying out
the statutory audit. The Committee advises the Board on the statement by the Directors that the Annual Report when read
as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the
Group’s performance, business model and strategy.
In addition, the Committee reviewed the audit services provided by Crowe. The Committee concluded that Crowe are
delivering the necessary audit scrutiny and accordingly the Committee recommended to the Board that Crowe be re-
appointed for the next financial year.
During the year, the Committee’s primary activity involved meeting with the external auditors Crowe U.K. LLP ("Crowe"),
considering material issues and areas of judgement, and reviewing and approving the interim and year end results and
accounts.
In the coming year, in addition to the Committee’s ongoing duties, the Committee will:
Audit Committee Report
Dear Shareholder
As Chairman of Pelatro’s Audit Committee, I present the Audit Committee Report for the year ended 31 December 2022,
which has been prepared by the Committee and approved by the Board.
consider significant issues and areas of judgement with the potential to have a material impact on the
financial statements, including impairments of the Company’s investments and technologies;
keep the need for an internal audit function under review, having regard to the Company’s strategy and resources
Audit committee and attendance
The Committee is required by its terms of reference to meet at least twice a year. During the year, the Committee met
twice. In addition, Nic Hellyer, CFO, attended both Committee meetings by invitation.
The Committee is responsible for monitoring the integrity of the Group’s financial statements, including its Annual and
Interim Reports, preliminary results announcements and any other formal announcements relating to its financial
performance prior to release
Objectives and responsibilities
to review the Company’s internal financial controls and risk management systems;
to monitor the integrity of the financial statements and any formal announcements relating to the Group’s
financial performance, reviewing significant judgements contained in them;
The Committee’s main responsibilities can be summarised as follows:
28
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
to make recommendations to the Board in relation to the appointment of the external auditors and to recommend
to the Board the approval of the remuneration and terms of engagement of the external auditors;
to review and monitor the external auditors’ independence and objectivity, taking into consideration relevant UK
professional and regulatory requirements;
to develop and implement policy on the engagement of the external auditors to supply non-audit services, taking
into account relevant ethical guidance regarding the provision of non-audit services by the external auditors; and
to report to the Board, identifying any matters in respect of which it considers that action or improvement is
needed, and to make recommendations as to steps to be taken
The terms of reference are reviewed annually and are available on the Company’s website at pelatro.com/investors.
Significant issues considered during the year
During the year, the Committee:
reviewed and approved the annual audit plan and met with the external auditors to receive their findings and
report on the annual audit;
considered significant issues and areas of judgement with the potential to have a material impact on the financial
statements, including impairments of the Group’s investments and technologies;
considered the integrity of the published financial information and whether the Annual Report and Accounts taken
as a whole are fair, balanced and understandable and provide the information necessary to assess the Group’s
position and performance, business model and strategy; and
reviewed and approved the interim and year end results and accounts
The significant accounting areas and judgements considered by the Committee were:
Recoverability of trade receivables and contract assets
The Committee continued to review the track record of receipts from slow-paying debtors and sought regular updates from
management as to the status of trade receivables. In light of this, the Committee reviewed and accepted management
proposals that a specific impairment of trade receivables was required against one particular debtor (and also as required
by IFRS 9) and that, following this impairment, was satisfied that the trade receivables balance was fairly stated.
Carrying value of goodwill and other intangible assets
The Audit Committee also considered the judgements made in relation to the valuation methodology adopted by
management to support the carrying value of goodwill and other intangible assets to determine whether there was a risk of
material misstatement in the carrying value of these assets and whether an impairment should be recognised. The
Committee considered the assumptions, estimates and judgements made by management to support the models that
underpin the valuation of intangible assets in the statement of financial position. Business plans and cash flow forecasts
prepared by management supporting the future performance expectations used in the calculations were reviewed. The
Audit Committee consider the key judgements to be the future revenues and costs and the discount rate and growth rates
used in the value in use calculations. Following a review of the impact of the sensitivities performed by management on the
Additionally the Committee reviewed the contract assets balances and accepted management proposals that a specific
impairment of contract assets was required against the balance arising from one particular contract.
20
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
Going Concern
The Committee reviewed the cash flow forecasts for the Group and discussed the key assumptions and risks relevant to
their achievement. The Committee was satisfied that the basis for adopting the going concern basis in preparing the Group
and Company financial statements, set out in note 3, was reasonable.
Risk review process
The Audit Committee is responsible for reviewing the financial risks and the internal controls relating thereto but the Board
as a whole has responsibility for reviewing the overall business risks and risk management framework. The Group’s principal
risks and uncertainties are set out in the Strategic Report together with mitigating actions and the internal controls and risk
management procedures are summarised in the Corporate Governance Report.
External auditor
The Committee reviewed the effectiveness of the audit process in respect of the year ended 31 December 2021. In doing so,
the Committee considered the reports produced by Crowe, met the audit engagement partner and discussed the audit with
the CFO.
Alternative performance measures
The Group reports a number of performance measures which are not in accordance with the reporting requirements of
IFRS. The audit committee has reviewed these during the year ended 31 December 2022 to ensure they are appropriate and
that in each case the reason for their use is clearly explained; they are reconciled to the equivalent IFRS figure; and they are
not given prominence over the equivalent IFRS figure.
Harry Berry
Chairman of the Audit Committee
25 May 2023
The Committee also reviewed the basis of capitalisation and considered the intangible value attributed to its intangible
software development costs. The Committee was satisfied that the resultant net book values (after the impairment charge
referenced above) were appropriately prepared on a reasonable basis.
discount rate and growth rate in the value in use calculations, the Audit Committee considered that the assumptions used
were reasonable and indicated that an impairment charge should be recognised.
30
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
The Remuneration Committee is responsible for determining the remuneration policy for the Executive Directors, and for
overseeing the Company’s long-term incentive plans. The Board as a whole is responsible for determining non-executive
Directors’ remuneration.
In setting the Group’s remuneration policy, the Remuneration Committee considers a number of factors including the
following
Remuneration Committee Report
Dear Shareholder
As Chairman of Pelatro’s Remuneration Committee, I present the Remuneration Committee Report for the year ended 31
December 2022, which has been prepared by the Committee and approved by the Board. As an AIM company, the
Directors’ Remuneration Report Regulations do not apply to Pelatro and so the report that follows is disclosed voluntarily
and has not been subject to audit.
salaries and benefits available to executive directors of comparable companies
the need to both attract and retain executives of appropriate calibre; and
Whilst not directly under the remit of the Remuneration Committee, the payment of equity shares with a value of
approximately $0.57m in the Company to a small number of key employees was considered and deemed appropriate. The
Committee also approved the issue of options over 250,000 shares in the Company to Nic Hellyer.
Remuneration decisions for 2022
the continued commitment of executives to the Group’s development through appropriate incentive
arrangements
Consistent with this policy, benefit packages awarded to executive directors comprise a mix of basic salary and
performance-related remuneration that is designed as an incentive. The remuneration packages comprise the following
elements:
base salary: the Remuneration Committee sets base salaries to reflect responsibilities and the skills,
knowledge and experience of the individual;
bonus scheme: the executive directors are eligible to receive a bonus dependent on both individual and Group
performance as determined by the Remuneration Committee;
equity: share options (for non-founder executive directors); and
provision of car (leased or purchased), and company contribution into a personal pension scheme (in the UK only)
Purchased cars remain the property of the Group and the annual benefit to the individual comprises (i) the interest cost on
the loan taken to fund the purchase; (ii) the depreciation on the vehicle and (iii) sundry expenses defrayed by the Group.
The Committee will continue to monitor market trends and developments in order to assess those relevant for the Group’s
future remuneration policy.
Harry Berry
Chairman of the Remuneration Committee
25 May 2023
31
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
Companies Act 2006 s. 172
statement
As noted in the Corporate Governance Report, the Board
typically meet 6 times a year with papers circulated in
advance to allow the Directors to fully understand the
performance and position of the Company, alongside
matters arising for decision. Each decision that is made by
the Directors is supported by analysis of the possible
outcomes so that an educated decision can be made
based upon the likely impact on the Company, so a
decision can be made which best promotes the success of
the Company and what impact there may be on the wider
stakeholder group.
Decisions of the Board take into account not just short-
term, but also medium- and long-term consequences,
which are carefully considered and balanced, having
regard to the needs and priorities of the business, its
customers, partners, employees and other stakeholders.
For example, the decision to prioritise recurring revenue
contracts as opposed to license contracts, leading to a
reduction in short-term revenue, was based on the view
that this strengthens customer relationships, creates a
more stable revenue stream and boosts the value of the
business in the long-term.
Factors (a) to (f) below, are all taken into account during
the decision-making process.
The Directors actively consider the interest of employees
in all major decisions. The Directors’ Report and Corporate
Governance report set out in greater detail Pelatro’s
policy towards its employees. Value is created through
innovation and customer service, which is a product of
motivated employees.
(a) The likely consequences of any decision in the long
term
The Board acknowledges its responsibilities under the
Companies Act 2006 (the "Act") and below sets out the
requirements of the Act and in particular section 172(1),
and
the
key
processes
and
considerations
that
demonstrate how the Directors discharge their duties and
promote the success of the Company. References to the
Company include the wider Group where relevant.
Supporting each key decision, the Board are given access
to management papers which set out the potential
outcome of decisions. The papers include diligence on the
financial impact via forecasts, as well as non-financial
factors and how the decision fits with the strategy of the
Company. Where appropriate, the Board will delegate
responsibility to a sub-committee of Directors for areas
such as M&A, investor relations and so on.
(b) The interests of the Company’s employees
Pelatro's success also depends on strategic relationships
with key partners, customers and suppliers, so the Board
maintains ongoing oversight of these. Management packs
report to the Board on the status of key relationships,
which have Board-level engagement from an operational
perspective through the CEO and the COO. Product
performance is constantly monitored, and customer
feedback continuously captured through regular account
meetings, which are always attended by management-
level, and often director-level representatives.
(c)
The
need
to
foster
the
Company’s
business
relationships with suppliers, customers and others
The
Company
takes
its
responsibility
within
the
community
and
wider
environment
seriously
and
acknowledge that more can be done. Pelatro is a global
company and has based itself in strategic locations for the
long term. The Company has a relatively low carbon
footprint in terms of its operations, but acknowledges
improvements can always be made, particularly as travel
schedules can be extensive. In normal times employees
typically would travel for three activities – sales,
implementation and support. With regard to sales, whilst
traveling is essential and much more helpful to progress
various cases, video conferencing as a tool can replace
physical meetings to a limited extent. With respect to
implementation and support, the Company has always
been keen to minimise the need for on-site activity to
minimise costs, hence implementation and support
processes lend themselves very well to remote handling;
in fact the Group has managed successfully to transition
almost entirely to remote implementation this year with a
consequent reduction of both costs and environmental
impact.
(d) The impact of the Company’s operations on the
community and environment
32
ANNUAL REPORT 2022
Corporate Governance Review
For the year ended 31 December 2022
The Board’s adoption and application of the QCA Corporate Governance Code further supports these principles, with more
detail of the steps Pelatro has taken set out in the disclosures against the relevant Principles of the Code, which can be
found in the section on Corporate Governance and on the Pelatro website at:
(e) The desirability of the Group maintaining a reputation for high standards of business conduct
Pelatro seeks to make a positive contribution to its community, at local and global levels, and to minimize as far as possible
its impact on the environment. Pelatro backs its employees’ interests in community activities, supporting them in terms of
time to attend to these commitments and financial backing. Of particular note is the Group’s commitment to employing
graduates and others from local second-tier villages in India, hence enabling us to make a major contribution to the overall
quality of lives of our employees which may otherwise be out of their reach.
The Directors and the Group are committed to high standards of business conduct and governance. The Group has fully
adopted the QCA Corporate Governance Code. Additionally, where there is a need to seek advice on particular issues, the
Board will seek advice from its lawyers and/or nominated adviser to ensure the consideration of business conduct, and its
reputation is maintained.
https://www.pelatro.com/investors/corporate-governance/.
(f) The need to act fairly between members of the Company
The Directors regularly meet with investors and strive to give equal access to all investors and potential investors. We have
enhanced this contact this coming year by increasing use of online platforms giving private investors access to the
management team.
Through its advisers, the Directors seek and obtain feedback from meetings with investors and incorporate such feedback
into its decision-making processes where appropriate. Where conflicting needs arise, advice is sought from the wider Board
and, as necessary, from advisers. Through the careful balancing of stakeholder needs, Pelatro seeks to promote success for
the long-term benefit of shareholders.
33
ANNUAL REPORT 2022
Director's Report
For the year ended 31 December 2022
Principal Activities
The Directors present their annual report on the affairs of the Group, together with the consolidated financial statements
and independent auditor’s report, for the year ended 31 December 2022.
The Pelatro Group provides specialised, enterprise class software solutions, principally through its flagship software suite
mViva, principally to telecommunication companies ("telcos"), who face a series of challenges including market maturity,
saturation and customer churn. Pelatro's software enhances the telco's understanding of its customers and hence its
engagement with them, increasing revenue enhancement, enabling smart pricing bundling, predicting churn and plugging
revenue leakages. The software can be extended further to enable data monetisation.
Pelatro is well positioned in the Multichannel Marketing Hub space (MMH) - this is technology that orchestrates a
customer's communications and offers to customer segments across multiple channels to include websites, social media,
apps, SMS, USSD and others.
Further information on the Group's activities, its prospects and likely future developments is given in the sections titled
"Strategic Report" and "Financial Statements".
Directors’ responsibilities
The Directors are responsible for preparing the annual report and the financial statements for each financial year in
accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to prepare the Group financial statements in accordance
with UK-adopted international accounting standards and applicable law. The parent company financial statements are
prepared in accordance with Financial Reporting Standard 101 Reduced Disclosures Framework (United Kingdom Generally
Accepted Accounting Practice) and applicable law.
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 Company and the Group and of the profit or loss of the Group for that period.
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 applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
34
ANNUAL REPORT 2022
Director's Report
For the year ended 31 December 2022
Website publication
The maintenance and integrity of the Pelatro Plc web site, which includes compliance with AIM Rule 26, is the responsibility
of the Directors.
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Company will continue in business
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. They are further responsible for ensuring that the Report of the Directors and
other information included in the Annual Report and Financial Statements is prepared in accordance with applicable law in
the United Kingdom.
Financial instruments
Information about the use of financial instruments by the Company and its subsidiaries and the Group’s financial risk
management policies are given in note 28 of the financial statements.
Directors and their interests
The Directors who served during the year are as shown below:
Harry Berry
Richard Day
Nic Hellyer
Subash Menon
Pieter Verkade
Sudeesh Yezhuvath
Chairman (appointed 5 December 2022)
Chairman (resigned 3 December 2022)
Chief Financial Officer
Managing Director
Non-Executive Director
Executive Director
In accordance with the Company's articles Nic Hellyer will retire by rotation at the Annual General Meeting and, being
eligible, will offer himself for re-election.
The Directors at 31 December 2022 and their beneficial interests in the share capital of the Company were as follows:
Subash Menon
Sudeesh Yezhuvath
Nic Hellyer
Harry Berry
Pieter Verkade
9,684,244
3,309,309
105,000
-
-
Name of Director
Number of Ordinary Shares of 2.5p each
Options over Ordinary shares
-
-
290,000
-
-
1
1
2
held in the name of Bannix Management LLP
52,600 Ordinary shares held by his wife, Dr Fawzia Ali
1
2
35
ANNUAL REPORT 2022
Director's Report
For the year ended 31 December 2022
Substantial shareholdings
As at 25 May 2023, the Company had received notification (or is otherwise aware) of the following significant interests in
the ordinary share capital of the Company*:
No changes took place in the beneficial interests of the Directors between 31 December 2022 and 25 May 2023.
The Board has overall responsibility for ensuring that the Group maintains a system of internal control to provide its
members with reasonable assurance regarding the reliability of financial information used within the business and for
publication, and that assets are safeguarded. There are inherent limitations in any system of internal control and
accordingly even the most effective system can provide only reasonable, and not absolute, assurance with respect to the
preparation of accurate financial information and the safeguarding of assets.
The market price of the Ordinary Shares at 31 December 2022 was 11.3p and the range during the year was 11.3p to 35.0p.
Bannix Management LLP*
Rathbones Investment Management
Herald Investment Management
12,993,553
2,867,825
1,962,035
Name of Holder
Number of Ordinary Shares
Percentage of Issued Share Capital
26.8%
5.9%
4.0%
*
Bannix Management LLP (“Bannix”) is the investment vehicle of Kiran Menon, Varun Menon and Sudeesh Yezhuvath, who hold shares in Bannix proportional to the
interests shown in “Directors’ interests” above.
Corporate governance
The Company has formalised the following matters by Board resolution:
a formal schedule of Board responsibilities;
the procedure for Directors to take independent professional advice if necessary, at the
Company’s expense;
the procedure for the nomination and appointment of non-executive Directors, for specified
periods and without automatic re-appointment; and
establishment of and written terms of reference for an audit, nomination and remuneration
committees.
Internal control
The key features of the internal control system that operated throughout the year are described under the following
headings:
control environment - particularly the definition of the organisation structure and the appropriate
delegation of responsibility to operational management.
identification and evaluation of business risks and control objectives - particularly through a formal
process of consideration and documentation of risks and controls which is periodically undertaken by
the Board.
36
ANNUAL REPORT 2022
Director's Report
For the year ended 31 December 2022
main control procedures, which include the setting of annual and longer-term budgets and the
monthly reporting of performance against them, agreed treasury management and physical
security procedures, formal capital expenditure and investment appraisal approval procedures
and the definition of authorisation limits (both financial and otherwise).
The Board reviews the operation and effectiveness of this framework on a regular basis. The Directors consider that there
have been no weaknesses in internal controls that have resulted in any losses, contingencies or uncertainties requiring
disclosures in the financial statements.
monitoring, particularly through the regular review of performance against budgets and the
progress of development and sales undertaken by the Board.
The total Comprehensive Loss for the year was $(14.51)m (2021: $(0.94)m). No dividend is proposed for the year (2021: nil).
Results and dividends
These financial statements have been prepared on a going concern basis. The Directors have reviewed the Group's and the
Company's going concern position taking account of its current business activities, budgeted performance and the factors
likely to affect its future development, set out in this Annual Report, and including the Group's objectives, policies and
processes for managing its capital, its financial risk management objectives and its exposure to credit and liquidity risks.
In forming this assessment management has prepared forecasts for the period ended 31 December 2024, and the Directors
have a reasonable expectation that the Group and the Company has adequate resources to continue in operational
existence for this period. As part of this assessment management has performed downside scenario analysis in relation to
the sales pipeline, future revenues and timings of cash collections, this has included more extreme downside scenario
analysis where management has considered the potential actions available to mitigate the impact of these sensitivities. As
a result of these exercises it is noted:
Steps that could be taken to conserve cash have been identified, these include those that could have be implement
with a more immediate effect as well as longer term actions. Whilst management consider these not to be desirable
they are plausible and available measures;
The level of committed revenue and long term customer relationships provides additional assurance over the
quality of revenue and the Group has shown it continues to win new revenue contracts; and
The Group currently holds an overdraft facility of c.$400k, renewable in November 2023, which is currently
unutilised and would be available as short-term cover.
The Group’s business activities, together with the factors likely to affect its future development, performance and position
are set out in the Strategic Report; the financial position of the Group, its cash flows, liquidity position and borrowing
facilities are described in the notes to the financial statements, in particular in the consolidated cash flow statement, in
Note 23 "Loans and borrowings" and Note 28 "Financial instruments".
Going concern
37
ANNUAL REPORT 2022
Director's Report
For the year ended 31 December 2022
As permitted by section 233 of the Companies Act 2006, the Company has purchased insurance cover for the Directors
against liabilities that might arise in relation to the Group.
Liability insurance for Company officers
By order of the Board
Nic Hellyer
Company Secretary
49 Queen Victoria Street
London
EC4N 4SA
25 May 2023
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act
2006.
The Directors intend to place a resolution before the Annual General Meeting to appoint Crowe U.K. LLP as auditor for the
following year.
In March 2023 the Group arranged funding amounting to $1.2 million into one of its subsidiaries. This will be used for
working capital and/or acquisition purposes. Other than as disclosed above there have been no other events subsequent to
the reporting date which would have a material impact on the financial statements.
Events after the reporting date
Details of the Group’s activities on research and development during the year are set out in the Financial Review.
Research and development
Each of the persons who are Directors of the Company at the date when this report was approved confirms that:
Auditor
so far as the Director is aware, there is no relevant audit information (as defined in the Companies Act 2006) of
which the Company’s auditor is unaware; and
the Director has taken all steps that he ought to have taken as a Director to make himself aware of any relevant
audit information (as defined in the Companies Act 2006) and to establish that the Company’s auditor is aware of
that information.
The Directors are of the view that the Group has adequate financing to be able to meet its financial obligations for a period
of at least 12 months from the date of approval of this annual report and financial statements; accordingly the financial
statements have been prepared on a going concern basis.
38
ANNUAL REPORT 2022
Independent Auditors’ Report
For the year ended 31 December 2022
We have audited the financial statements of Pelatro Plc
(the “Parent Company”) and its subsidiaries (the “Group”)
for the year ended 31 December 2022, which comprise:
Opinion
the Group statement of comprehensive income
for the year ended 31 December 2022;
the Group and Parent Company statements of
financial position as at 31 December 2022;
the Group statement of cash flows for the year
then ended;
the Group and Parent Company statements of
changes in equity for the year then ended; and
the notes to the financial statements, including a
summary of significant accounting policies
The financial reporting framework that has been applied
in the preparation of the group financial statements is
applicable law and UK-adopted international accounting
standards. The financial reporting framework that has
been applied in the preparation of the parent company
financial statements is applicable law and United
Kingdom Accounting Standards, including Financial
Reporting Standard 101 Reduced Disclosures Framework
(United
Kingdom
Generally
Accepted
Accounting
Practice).
In our opinion
the financial statements give a true and fair view of
the state of the Group’s and of the Parent
Company's affairs as at 31 December 2022 and of
the Group’s loss for the year then ended;
the Group financial statements have been
properly prepared in accordance with UK-
adopted international accounting standards;
the Parent Company financial statements have
been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and
the financial statements 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 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.
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
Independent auditor’s report to the members of Pelatro
Plc
39
ANNUAL REPORT 2022
Independent Auditors’ Report
For the year ended 31 December 2022
Obtaining the Directors’ assessment of going
concern which covered the period to 31 December
2024 and included a range of scenarios;
Evaluating
the
reasonableness
of
the
assumptions used in the assessment including
obtaining details of the latest sales pipeline,
available financing and the current cash position;
Considering the plausibility of potential actions
that the directors could take to preserve cash in
a ‘worst case scenario’ position.
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 and 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.
is
appropriate.
Our
evaluation
of
the
Directors’
assessment of the ability of the Group and Parent
Company to continue to adopt the going concern basis
of accounting included the following procedures:
Overview of our audit approach
In planning and performing our audit we applied the
concept of materiality. An item is considered material if it
could reasonably be expected to change the economic
decisions of a user of the financial statements. We used
the concept of materiality to both focus our testing and to
evaluate the impact of misstatements identified.
Materiality
Based on our professional judgement, we determined
overall materiality for the Group financial statements as a
whole to be $50,000 (2021: $56,000), based on
approximately 0.9% of Revenue, a key reporting metric.
Parent’s materiality was determined to be $39,200 (2021:
$39,000), based on approximately 1.2% of Revenue.
judgements made as to the entity risk and our evaluation
of the specific risk of each audit area having regard to the
internal control environment. This is set at $35,000
(2021: $39,000) for the Group and $27,440 (2021:
$27,000) for the Parent.
Where considered appropriate performance materiality
may be reduced to a lower level, such as, for related
party transactions and directors’ remuneration.
We agreed with the Audit Committee to report to it all
identified errors in excess of $2,500. Errors below that
threshold would also be reported to it if, in our opinion
as auditor, disclosure was required on qualitative
grounds.
Overview of the scope of our audit
Whilst the Parent Company’s activity and accounting is in
the United Kingdom, the main activity of the Group is
accounted for from its operating location in India.
In establishing our overall approach to the Group audit,
we determined the type of work that needed to be
undertaken at each of the components by us, as the
group audit engagement team. Where the finance
functions are based in India work was performed with the
assistance of a Crowe Global network firm locally as a
subcontracting auditor.
Our responsibilities and the responsibilities of the
Directors with respect to going concern are described in
the relevant sections of this report.
The group audit team led by the Group audit partner was
ultimately responsible for the scope and direction of the
audit process. The group audit team interacted regularly
with the local team during various stages of the audit and
were responsible for the scope and direction of the audit
process and as part of the audit the Group audit partner
had meeting calls with the local audit team. This,
together with the additional procedures performed at
Group level, gave us appropriate evidence for our
opinion on the Group financial statements.
Key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the financial statements of the current period
and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that
we identified. These matters included 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
We use a different level of materiality ("performance
materiality") to determine the extent of our testing for the
audit of the financial statements. Performance materiality
is set based on the audit materiality as adjusted for the
Key audit matters
Assessing adherence to the terms of the lending
arrangements; and
40
ANNUAL REPORT 2022
Independent Auditors’ Report
For the year ended 31 December 2022
We identified going concern (Note 3) as a key audit matter and have detailed our response in the conclusions relating to
going concern section above.
This is not a complete list of all risks identified by our audit.
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How the scope of our audit addressed the key audit matter
The carrying value of intangible assets, tangible
assets and right-of-use assets (Notes 18, 19 and
20).
We spoke directly with management to confirm the basis on
which they had prepared the valuation and how they had
arrived at their key inputs.
We obtained the underlying models challenging the key
assumptions made by management. This included:
The assessment of the carrying value, and in
particular whether they are impaired, requires
significant
judgements
and
estimates
by
management.
Following the downturn in the global economy
and the corresponding impact on the demand for
Pelatro’s
products,
this
has
increased
our
assessment of the risk of overstatement to the
carrying value of these assets.
They carrying value of tangible assets at 31
December 2022 is $549,000, intangible assets is
$1,952,000 and right-of-use assets is $132,000
following the Group recognising an impairment
charge for $9,305,000.
Gaining
an
understanding
of
management’s
assessment of the cash generating units to
undertake impairment testing and whether they
are
appropriate
and
consistent
with
our
expectations;
Ensuring consistency of assumptions with those
provided
with
forecasts
prepared for
going
concern assessment; and
Identifying the key assumptions, inputs and
estimations and tested their appropriateness to
past results and other sources of information. Our
internal valuation specialists assisted in the
assessment of assumptions used in determining
the pre-tax discount rates applied;
As a result of our challenge on the key assumptions,
management increased the impairment charge recognised in
the year.
We considered the adequacy of disclosures made in respect of
impairment, including those made as significant estimates and
judgements.
41
ANNUAL REPORT 2022
Independent Auditors’ Report
For the year ended 31 December 2022
Key audit matter
How the scope of our audit addressed the key audit matter
We obtained an understanding of the processes and controls
over the recognition of development expenses.
We evaluated the appropriateness of the capitalisation of the
development expenditure by discussing with management and
obtaining a technical overview of the developments made to
the mViva software in the year. We challenged management to
ensure that the developments were capital in nature and did
not relate to routine software maintenance. As part of this work
we spoke with the Head of Technology.
Testing the allocation of overhead costs to
capitalised development costs for mathematical
accuracy and reasonableness including challenging
whether the overheads were directly attributable
to
the
software
development
and
agreeing
underlying data to headcount information;
Testing, on a sample basis, the amounts allocated
to development costs to underlying payroll
records and invoices; and
Reviewing the pipeline of potential work to assess
whether
the
software
still
has
commercial
potential.
We
obtained
an
understanding
of
the
design
and
implementation of controls over revenue recognition.
The Group’s operating revenue arises from
mViva
products.
Customer
contracts
can
contain multiple performance obligations with
different
revenue
recognition
points
(See
accounting policy within Note 3).
Revenue recognition (Note 5)
As disclosed in note 18, the Group has
capitalised
approximately
$2.8
million
of
development costs relating to the development
of the mViva product.
Capitalisation of development costs (Note 18)
We have focussed on this because research and
development represents a significant part of
this business and judgement is required in
determining
the
appropriate
accounting
treatment.
The Directors use judgement to determine
whether development costs should be expensed
or
whether
they
meet
the
criteria
for
capitalisation. This criteria includes assessing
whether
the
product
being
developed
is
commercially feasible, whether the Group has
adequate technical, financial and other required
resources to complete the development and
whether the costs will be fully recovered
through future sale or licensing of the product.
The Directors determined that the development
costs meet the criteria for capitalisation.
Errors in the recognition of revenue could
materially misstate the financial statements and
key investor metrics. Since the accounting
policy contains a number of judgements,
particularly in recognising when performance
obligations are satisfied. We considered the risk
that revenue is materially misstated.
Tests of detail included:
Selecting and testing a sample of contracts to ensure
that the performance obligations had been correctly
identified, the transaction price allocated appropriately
and evidence existed of the satisfaction of those
performance
obligations
before
revenue
was
recognised.
For support and maintenance revenue recognised
over time, reperforming the calculation on the
recognition of revenue for a sample of contracts.
We reviewed the revenue disclosures and segmental reporting
to ensure compliance with the underlying accounting standards.
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.
42
Tests of detail included:
ANNUAL REPORT 2022
Independent Auditors’ Report
For the year ended 31 December 2022
The
other
information
comprises
the
information
included in the annual report other than the financial
statements and our auditor’s report thereon. The
directors are responsible for the other information. Our
opinion on the financial statements does not cover the
other information and, except to the extent otherwise
explicitly stated in our report, we do not express any
form of assurance conclusion thereon. In connection
with our audit of the financial statements, our
responsibility is to read the other information and, in
doing so, consider whether the other information is
materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such
material
inconsistencies
or
apparent
material
misstatements, we are required to determine whether
there is a material misstatement in the financial
statements or a material misstatement of the other
information. If, based on the work we have performed,
we conclude that there is a material misstatement of the
other information, we are required to report that fact.
Other information
We have nothing to report in this regard.
In our opinion based on the work undertaken in the
course of our audit:
Opinion on other matters prescribed by the Companies
Act 2006
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 Directors' Report have
been prepared in accordance with applicable legal
requirements.
In 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.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters where 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.
As explained more fully in the Directors’ responsibilities
statement set out on page 34 and 35, 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.
Responsibilities of the Directors for the financial
statements
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and 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 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.
43
ANNUAL REPORT 2022
Independent Auditors’ Report
For the year ended 31 December 2022
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 extent to which our
procedures are capable of detecting irregularities,
including fraud is detailed below:
We obtained an understanding of the legal and
regulatory frameworks within which the company
operates, focusing on those laws and regulations that
have a direct effect on the determination of material
amounts and disclosures in the financial statements. The
laws and regulations we considered in this context were
the relevant company law and taxation legislation in the
UK and India, the Group’s primary operating locations.
We identified the greatest risk of material impact on the
financial statements from irregularities, including fraud,
to be the override of controls by management and the
inappropriate
use
of
accounting
estimates
and
judgements to achieve a particular financial reporting
outcome and the overstatement of revenue. Our audit
procedures
to
respond
to
these
risks
around
management
override
included
enquiries
of
management
about
their
own
identification
and
assessment of the risks of irregularities, sample testing
on the posting of journals and reviewing accounting
estimates for bias. Our audit procedures to respond to
the risk of fraud related to the overstatement of revenue
included:
Selecting and testing a sample of contracts to ensure
that the performance obligations had been correctly
identified,
the
transaction
price
allocated
appropriately and evidence existed of the satisfaction
of those performance obligations before revenue was
recognised; and
For support and maintenance revenue recognised
over time, reperforming the calculation on the
recognition of revenue for a sample of contracts.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements, even
though we have properly planned and performed our
audit in accordance with auditing standards. We are not
responsible for preventing non-compliance and cannot
be expected to detect non-compliance with all laws and
regulations.
These inherent limitations are particularly significant in
the case of misstatement resulting from fraud as this may
involve
sophisticated
schemes
designed
to
avoid
detection,
including
deliberate
failure
to
record
transactions, collusion or the provision of intentional
misrepresentations.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting
Council’s
website
at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
This report is made solely to the 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 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 Company
and the Company's members as a body, for our audit
work, for this report, or for the opinions we have formed.
Use of our report
Peter Gilligan (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
25 May 2023
44
ANNUAL REPORT 2022
Group Statement of Comprehensive Income
For the year ended 31 December 2022
Revenue
Cost of sales and provision of services
Note
5
2022
$’000
(audited)
5,382
7,266
2021
$’000
(audited)
(2,092)
3,290
(2,206)
5,060
Gross Profit
Operating expenses
6
(2,690)
(2,468)
(2,290)
229
(1,152)
(13,656)
-
(489)
(686)
(686)
(45)
(32)
Adjusted operating profit/(loss)
Exceptional items
Amortisation of acquisition-related intangibles
Share-based payments
Operating loss
Finance income
Finance expense
7
18
11
12
13
7
44
(212)
(13,861)
(221)
(666)
Loss before taxation
Income tax expense
14
(509)
(181)
(14,370)
(847)
LOSS FOR THE YEAR ATTRIBUTABLE TO OWNERS
OF THE PARENT
(174)
(97)
(134)
(147)
(40)
50
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Items that will not be reclassified subsequently to profit or
loss:
Other comprehensive income, net of tax
Exchange differences on translation of equity balances
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(14,544)
(944)
Earnings per share
Attributable to the owners of the Pelatro Group (basic and
diluted)
15
(31.5)¢
(2.1)¢
The accompanying notes 1 to 31 are an integral part of these financial statements.
Depreciation and amortisation
(3,068)
(2,541)
(9,305)
-
Impairment of non-current assets
18,19,20
45
ANNUAL REPORT 2022
Group Statement of Financial Position
For the year ended 31 December 2022
The financial statements of Pelatro Plc, registered number 10630166, were approved by the board of Directors and
authorised for issue on 25 May 2023. They were signed on its behalf by:
Assets
Intangible assets
18
Note
2021
($’000)
(audited)
2022
($’000)
(audited)
1,952
19
3,182
13,458
Non current assets
Tangible assets
Right-of-use assets
Deferred tax assets
Contract assets
Trade receivables
20
21
21
549
132
28
521
-
11,453
982
240
14
606
163
Contract assets
21
380
21
5,118
8,994
Current assets
Trade receivables
Other assets
Cash and cash equivalents
22
3,450
301
987
555
4,793
315
3,331
TOTAL ASSETS
8,300
22,452
Liabilities
Borrowings
23
429
24
Non-current liabilities
Lease liabilities
Contract liabilities
Long-term provisions
25
130
181
199
608
80
278
202
26
939
1,168
Short term borrowings
23
130
24
Current liabilities
Lease liabilities
Trade and other payables
Contract liabilities
25
190
897
174
136
188
603
469
25
Provisions
73
72
26
TOTAL LIABILITIES
2,403
2,636
1,464
1,468
NET ASSETS
Share capital
27
1,606
27
Issued share capital and reserves attributable to
owners of the parent
Share premium
Other reserves
Retained earnings
18,502
(779)
(13,432)
1,501
18,046
(639)
908
TOTAL EQUITY
5,897
19,816
Subash Menon (Director)
Nic Hellyer (Director)
The accompanying notes 1 to 31 are an integral part of the financial statements.
5,897
19,816
46
ANNUAL REPORT 2022
Group Statement of Cash Flows
For the year ended 31 December 2022
Cash flows from operating activities
Adjustments for:
2022
($’000)
(audited)
2021
($’000)
(audited)
Profit/(loss) for the year
Income tax expense recognised in profit or loss
Finance income
Finance cost
Depreciation and impairment of tangible non-
current assets
Profit on disposal of fixed assets
509
(7)
212
744
-
Amortisation and impairment of intangible non-
current assets
Share-based payments and shares issued in lieu
of cash
(14,370)
12,314
605
181
(44)
221
467
(10)
(847)
2,814
32
Operating cash flows before movements in working capital
Decrease in contract assets
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Increase/(decrease) in contract liabilities
60
(392)
1,690
(532)
45
(1,271)
7
2,814
273
206
Cash generated from operating activities
1,638
1,262
Income tax paid
(463)
(258)
Net cash generated from operating activities
1,175
1,004
Cash flows from investing activities
Purchase of intangible assets
Development of intangible assets
Acquisition of property, plant and equipment
(49)
(2,767)
(88)
(2540)
(29)
(42)
Net cash used in investing activities
(2,845)
(2,670)
Cash flows from financing activities
Proceeds from borrowings
Proceeds from issue of ordinary shares, net of issue costs
Repayment of borrowings
(122)
-
(748)
4,290
-
70
Interest received
Repayments of principal on lease liabilities
Interest paid
(197)
(181)
(203)
(173)
7
44
Interest expense on lease liabilities
(15)
(25)
Net cash generated by/(used in) financing activities
(508)
3,255
Net increase/(decrease) in cash and cash equivalents
(2,178)
1,589
Foreign exchange differences
(166)
(63)
Cash and cash equivalents at beginning of period
3,331
1,805
Cash and cash equivalents at end of period
987
3,331
47
ANNUAL REPORT 2022
Group Statement of Changes in Equity
For the year ended 31 December 2022
Balance at 1 January 2021
Share
Capital
(Loss) after taxation for the period
1,212
$'000
Share
premium
14,045
$'000
Exchange
reserve
(240)
$'000
Merger
reserve
(527)
$'000
Share-
based
payment
reserve
184
$'000
Retained
Profits
1,734
$'000
Total
16,408
$'000
-
-
-
-
-
(847)
(847)
Share-based payments
-
-
-
-
62
-
62
Transfer on forfeit of share options
(21)
21
-
Other comprehensive income:
Exchange differences
-
-
(97)
-
-
-
(97)
Transactions with owners:
Shares issued by Pelatro Plc for cash
289
4,334
-
-
-
-
4,623
Issue costs
-
(333)
-
-
-
-
(333)
Balance at 31 December 2021
1,501
18,046
(337)
(527)
225
908
19,816
(Loss) after taxation for the period
-
-
-
-
-
(14,370)
(14,370)
Share-based payments
-
-
-
-
64
-
64
Transfer on forfeit of share options
(30)
30
-
Other comprehensive income:
Exchange differences
-
-
(174)
-
-
-
(174)
Transactions with owners:
Shares issued by Pelatro Plc in lieu of
cash
105
464
-
-
-
-
569
Issue costs
-
(8)
-
-
-
-
(8)
Balance at 31 December 2022
1,606
18,502
(511)
(527)
259
(13,432)
5,897
Reserve
Description and purpose
Share capital
Nominal value of issued shares
Share premium
Amount subscribed for share capital in excess of nominal value
less associated costs
Exchange reserve
The difference arising on the translation of foreign operations
and equity balances denominated in currencies other than US
Dollars into the presentational currency of the Group
Merger reserve
Amounts arising on the elimination of the members’ capital in
Pelatro LLC and its subsidiary on presentation of the Group
results under merger accounting principles
Share-based payments reserve
Cumulative amounts charged in respect of unsettled options
issued
Retained earnings
All other net gains and losses not recognised elsewhere
The accompanying notes 1 to 31 are an integral part of these financial statements.
48
ANNUAL REPORT 2022
Notes to the Group Financial Statements
As at 31 December 2022
Pelatro Plc (“Pelatro” or the “Company”) is a public
limited company incorporated and domiciled in England.
The Company's ordinary shares are traded on the AIM
market of the London Stock Exchange. These financial
statements are the consolidated financial statements of
Pelatro Plc and its subsidiaries (“the Pelatro Group” or
the “Group”) and the company financial statements for
Pelatro Plc. The financial statements are presented in US
dollars as the currency of the primary economic
environment in which the Group operates.
1. General information
No new or revised standards have been adopted in the
annual financial statements for the year ended 31
December 2022.
The results of subsidiaries or businesses acquired during
the year are included in the consolidated income
statement from the effective date of acquisition. Where
necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting
policies used into line with those used by the Group. All
intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Pelatro's registered office is at 49 Queen Victoria Street,
London EC4N 4SA and its principal place of business is at
403, 7th A Main, 1st Block, HRBR Layout, Bangalore
560043, India.
2. Adoption and impact of new and/or revised standards
3. Significant accounting policies
Basis of accounting
The financial statements have been prepared on a
historical cost basis (except for certain financial
instruments and share-based payments that have been
measured at fair value), and in accordance with the UK-
adopted international accounting standards and UK
Company Law.
Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to
31 December each year. Pelatro Solutions Private
Limited (“PSPL”, the Group’s Indian subsidiary) has a
statutory year end of 31 March, however, for the
purposes of consolidation, financial statements have
been prepared for PSPL as at 31 December 2022 on the
same accounting principles as for the rest of the Group.
The Company controls an investee if, and only if, the
Company has the following:
Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee);
Exposure of rights to variable returns from its
involvement with the investee; and
The ability to use its power over the investee to
affect its returns
49
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
As at 31 December 2022
These financial statements have been prepared on a
going concern basis. The Directors have reviewed the
Group’s and the Company’s going concern position
taking account of its current business activities,
budgeted performance and the factors likely to affect its
future development, set out in this Annual Report, and
including the Group’s objectives, policies and processes
for managing its capital, its financial risk management
objectives and its exposure to credit and liquidity risks.
The acquisition method of accounting is used to account
for all business combinations, regardless of whether
equity instruments or other assets are acquired. The
consideration transferred for the acquisition of a
business comprises the:
The Directors are of the view that the Group has
adequate financing to be able to meet its financial
obligations for a period of at least 12 months from the
date of approval of this annual report and financial
statements; accordingly the financial statements have
been prepared on a going concern basis.
Going concern
Business combinations and goodwill
Business combinations
fair values of the assets transferred
liabilities to the former owners of the acquired
business incurred
equity interests issued by the Group
fair value of any asset or liability resulting from a
contingent consideration arrangement; and
fair value of any pre-existing equity interest in
the subsidiary.
The Group’s business activities, together with the factors
likely to affect its future development, performance and
position are set out in the Strategic Report; the financial
position of the Group, its cash flows, liquidity position
and borrowing facilities are described in the notes to the
financial statements, in particular in the consolidated
cash flow statement, in Note 23 "Loans and borrowings"
and Note 28 "Financial instruments".
In forming this assessment management has prepared
forecasts for the period ended 31 December 2024, and
the Directors have a reasonable expectation that the
Group and the Company has adequate resources to
continue in operational existence for this period. As part
of
this
assessment
management
has
performed
downside scenario analysis in relation to the sales
pipeline, future revenues and timings of cash collections,
this has included more extreme downside scenario
analysis
where
management
has
considered
the
potential actions available to mitigate the impact of
these sensitivities.
As a result of these exercises it is noted:
Steps that could be taken to conserve cash have
been identified, these include those that could
have be implement with a more immediate effect
as well as longer term actions. Whilst
management consider these not to be desirable
they are plausible and available measures;
The level of committed revenue and long term
customer relationships provides additional
assurance over the quality of revenue and the
Group has shown it continues to win new revenue
contracts; and
The Group currently holds an overdraft facility of
c.$400k, subject to renewal in November 2023,
which is currently unutilised and would be
available as short-term cover.
When the consideration transferred by the Group in a
business combination includes assets or liabilities
resulting from a contingent consideration arrangement,
the contingent consideration is measured at its fair value
on the acquisition date and included as part of the
consideration transferred in a business combination.
Acquisition-related costs are expensed as incurred.
50
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
As at 31 December 2022
consideration transferred;
amount of any non-controlling interest in the
acquired entity; and
acquisition-date fair value of any previous equity
interest in the acquired entity
The excess of the:
Goodwill
over the fair value of the net identifiable assets acquired
is recorded as goodwill, which is initially recognised as an
asset at cost and is subsequently measured at cost less
any accumulated impairment. For the purpose of
impairment testing, goodwill is allocated to the cash-
generating
units
expected
to
benefit
from
the
combination. Cash-generating units to which goodwill
has been allocated are tested for impairment annually, or
more frequently when there is an indication that the unit
may be impaired. If the recoverable amount of the cash-
generating unit is less than the carrying amount of the
unit, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and
then to the other assets of the unit pro-rata on the basis
of the carrying amount of each asset in the unit. Any
impairment is recognised immediately in the income
statement and is not subsequently reversed.
Where settlement of any part of cash consideration is
deferred (whether because it is contingent or otherwise),
the amounts payable in the future are discounted to
their present value as at the date of exchange. The
discount rate used is the Group’s incremental borrowing
rate, being the rate at which a similar borrowing could be
obtained
from
an
independent
financier
under
comparable terms and conditions.
Revenue is measured based on the consideration to
which the Group expects to be entitled in a contract with
a customer and excludes amounts collected on behalf of
third parties. Each element of revenue (described below)
is recognised only when:
Revenue recognition
Revenue in respect of the sale of perpetual licenses for
on-premise software is recognised on the later of the
grant of the license or delivery of the software as
appropriate. Certain contracts provide for revenue which
is contractually linked to the incremental revenue
derived by that customer from use of the software, the
amount being based on a pre-agreed share of that
incremental revenue which is recognised at the end of
each month (a "gain share" contract). Certain contracts
may provide for both a guaranteed (usually monthly)
payment over a period (typically 2-3 years) as well as a
gain share component. If the contract is a “right to use”
contract, then the upfront and fixed payments are are
recognised on transfer of the license at their aggregate
present value using an imputed cost of funds. A notional
finance income recognised on the reducing balance of
the notional balance outstanding (which is recognised as
a contract asset).
when a performance obligation has been
satisfied, that is, a customer obtains control of a
good or service;
consideration receivable is fixed or determinable;
and
collection of the amount due from the customer
is reasonably assured
The amount which is recognised is the amount to which
the Group expects to be entitled to in exchange for the
goods or services transferred. Some contracts include
multiple deliverables, such as the sale of hardware as
well as software, and/or services such as post-contract
support, and usually include installation services -
typically, software installation could be performed by
another party and is therefore accounted for as a
separate performance obligation. Where contracts
include
multiple
performance
obligations,
the
transaction price is allocated to each performance
obligation based on the Group’s best estimate of their
Standalone Selling Price (“SSP”) notwithstanding any
absence or contrary allocation of total cost within a
contract. Where this is not directly observable, it is
estimated based on the best available evidence, for
example expected cost plus margin.
Software licenses
51
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
As at 31 December 2022
Implementation services
Revenue and profits from the provision of professional
services such as managed services, training and
consultancy are delivered under a “time and materials”
type contract and are therefore recognised rateably over
time and based upon number of days worked. Revenue
from this revenue stream may create “Unbilled Revenue”
receivables through yet to be billed time input and
expenses at the reporting date.
Revenue from support and maintenance services is
recognised rateably over the period of the contract.
Revenue is recognised when the provision of support and
maintenance and completion of the performance
obligations are carried out which is deemed to be evenly
throughout the term of the contract. Revenue from this
revenue stream may create a contract liability if
contractually stated PCS income is lower than its SSP
and an element thereof has thus effectively been
included in the license fee as stated in the contract. A
contract asset may be recognised if PCS income is
recognised even though it is not contractually due and
payable (for example when the first year of PCS is
deemed as “free” to the customer).
Revenue in respect of implementation of on-premise
software
is
recognised
on
completion
of
the
implementation.
Change Requests
Revenue in respect of Change Requests (i.e. formal
proposals from customers to change an existing system,
product or service) is recognised on completion of the
work necessary to implement the required change.
Annual support and maintenance (also known as Post-
Contract Support or “PCS”)
Professional services
Revenue in respect of sales of third-party hardware is
recognised when goods are delivered.
Hardware
The cost of provision of services includes the direct
costs of consultants and employees who provide
services, support or maintenance to customers, direct
sales commissions paid to third parties, and certain
third-party software licenses which are integral to the
performance of contracts. Cost of sales also includes
the acquisition cost of hardware resold to end
customers.
Leases
Applying IFRS 16, for all leases (except as noted below),
the Group:
recognises right-of-use assets and lease
liabilities in the consolidated statement of
financial position, initially measured at the
present value of future lease payments;
recognises depreciation of right-of-use assets,
and interest on lease liabilities, in the
consolidated statement of comprehensive
income; and
Lease payments under (i) are discounted using the
interest rate implicit in the lease, if that rate can be
determined, or the Group's estimated incremental
borrowing rate. The finance expense is charged to the
Consolidated Statement of Comprehensive Income
over the lease period to produce a constant periodic
rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated
over the shorter of the asset's useful life and the lease
term on a straight-line basis. Additionally under IFRS 16,
right-of-use assets are tested for impairment in
accordance with IAS 36 Impairment of Assets. This
replaces the previous requirement to recognise a
provision for onerous lease contracts.
Cost of sales and provision of services
separates the total amount of cash paid in
respect of lease obligations into a principal
portion and interest (both presented within
financing activities) in the consolidated
statement of cash flows.
For short-term leases (lease term of 12 months or less)
and leases of low-value assets the Group has opted to
(i)
(ii)
(iii)
52
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
As at 31 December 2022
Where lease-related expenses are directly attributable to
the cost of development of the Group’s proprietary
software (as further detailed in Note 18), such expenses
are
capitalised
in
accordance
with
the
Group’s
accounting
policy
relating
to
such
development
expenditure.
recognise a lease expense on a straight-line basis as
permitted by the Standard. This expense is presented
within other expenses in the consolidated statement of
profit or loss.
Interest income
Interest income is recognised on contracts with a
Significant Financing Component as interest accrues
using the effective interest method. The effective
interest rate is the rate that discounts estimated future
cash receipts through the expected life of the financial
instrument to its net carrying amount.
Foreign currencies
The individual financial statements of each Group
company are prepared in the currency of the primary
economic
environment
in
which
it
operates
(its
functional
currency).
For
the
purpose
of
the
consolidated financial statements, the results and
financial position of each Group company are expressed
in US Dollars, which is the functional currency of the
Company and the presentation currency for the
consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the
entity’s functional currency (foreign currencies) are
recorded at the rates of exchange prevailing on the
dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in
foreign
currencies
are
retranslated
at
the
rates
prevailing on the balance sheet date. Non-monetary
items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences arising on the settlement of
monetary items, are included in profit or loss for the
period. For the purpose of presenting consolidated
financial statements, the assets and liabilities of the
Group’s foreign operations are translated at exchange
rates prevailing on the balance sheet date. Income and
expense items are translated at the average exchange
rates for the period where it approximates the rates on
the dates of the underlying transactions. Exchange
differences arising, if any, are classified as equity and
transferred to the Group’s translation reserve.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-
based payments in respect of options granted under a
share option plan for senior employees dated 15 January
2019 (the "Plan") and certain options issued at the time
of the Company’s IPO. Under the terms of both the Plan
and the options issued at IPO, the Group is able to make
equity-settled
share-based
payments
to
certain
employees and a Director by way of issue of options
over ordinary shares. Such equity-settled share-based
payments are measured at fair value at the date of grant.
This fair value is determined as at the grant date of the
options and is expensed on a straight-line basis over the
vesting period, based on the Group’s estimate of the
number of options that will eventually vest. A
corresponding amount is credited to equity reserves.
expected volatility was based upon historical
volatility and applied over the expected life of
the schemes;
expected life was based upon historical data and
was adjusted based on management’s best
estimates for the effects of non-transferability,
exercise restrictions and behavioural
considerations; and
risk-free rate was taken as the two-, three- and 4-
year UK gilt yields as appropriate for the
expected life of the options concerned.
Fair value is measured by use of a Black-Scholes model
and key inputs to that model have been assessed as
follows:
Proceeds received on exercise of share options and
warrants are credited to share capital (in respect of
53
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
As at 31 December 2022
nominal value) and share premium account (in respect of
the excess over nominal value). Cancelled options are
accounted for as an acceleration of vesting. The
unrecognised grant date fair value is recognised in the
consolidated statement of comprehensive income in the
year that the options are cancelled.
Borrowing costs
All borrowing costs are recognised in profit or loss in the
period in which they are incurred.
Taxation
Any tax 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 date.
Where share-based payment expenses are directly
attributable to the cost of development of the Group’s
proprietary software (as further detailed in Note 18),
such expenses are capitalised in accordance with the
Group’s accounting policy relating to such development
expenditure.
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 provided in full, with no discounting, for all
taxable temporary differences; deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible
temporary differences can be utilised. Deferred tax is
calculated at the tax rates that are expected to apply 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.
Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition
of goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the
accounting profit.
the product is technically feasible and
marketable;
the Group has adequate resources to complete
the development of the product;
The carrying amount of deferred tax assets is reviewed
at each reporting 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 assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to
income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and
liabilities on a net basis.
Intangible assets
Expenditure on the development of the Group’s
proprietary enterprise software where it meets certain
criteria (given below), is capitalised and subsequently
amortised on a straight-line basis over its useful life.
Where no internally generated intangible asset can be
recognised, development expenditure is written-off in
the period in which it is incurred.
Development expenditure
An asset is recognised only if all of the following
conditions are met:
it is probable that the asset created will
generate future economic benefits; and
the development cost of the asset can be
measured reliably
54
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
As at 31 December 2022
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying
amounts of its non-financial assets to determine
whether there is any indication of impairment. If any
such indication exists, then the asset’s recoverable
amount is estimated. Goodwill is tested annually for
impairment.
Development expenditure is amortised on a straight-line
basis over 4 years, such amortisation being charged to
profit or loss. Expenditure on research activities is
recognised as an expense in the period in which it is
incurred.
Patents and licenses
The
costs
incurred
in
purchasing
licenses
and
establishing patents are measured at cost, net of any
amortisation
and
any
provision
for
impairment.
Amortisation is calculated so as to write off the cost of
an asset, less its estimated residual value, over the
useful economic life of that asset as follows:
Intellectual
property/patents
over 10 years on a straight-
line basis
Licenses
over 5 years on a straight-
line basis
Customer relationships acquired are recognised as
intangible assets at their fair values (see note 18).
Customer relationships are amortised on a straight-line
basis over 10 years.
Customer relationships
For impairment testing, assets are grouped together into
the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the
cash inflows of other assets or CGUs. Goodwill arising
from a business combination is allocated to CGUs that
are expected to benefit from the synergies of the
combination.
The recoverable amount of an asset or CGU is the
greater of its value in use and its fair value less costs to
sell. Value in use is based on the estimated future cash
flows, discounted to their present value using a pre-tax
Items of property, plant and equipment are stated at
cost less accumulated depreciation and accumulated
impairment losses, if any. The cost of an asset comprises
its purchase price and any directly attributable costs of
bringing the asset to the location and condition for its
intended use.
Property, plant and equipment
Depreciation is charged to profit or loss (unless it is
included in the carrying amount of another asset) on a
straight-line basis to write off the depreciable amount of
the assets net of the estimated residual values over their
estimated useful lives as follows:
Computer
equipment
Over 3 years on a straight-
line basis
Leasehold
improvements
over 5 years on a straight-
line basis
Office equipment
over 5 years on a straight-
line basis
Vehicles
over 8 years on a straight-
line basis
An impairment loss is recognised if the carrying amount
of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in the statement of
comprehensive income. They are allocated first to
reduce the carrying amount of any goodwill allocated to
the CGU, and then to reduce the carrying amounts of the
other assets in the CGU on a pro-rata basis.
An impairment loss in respect of goodwill is not
reversed. For other assets, an impairment loss is
reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would
have
been
determined,
net
of
depreciation
or
amortisation, if no impairment loss had been recognised.
discount rate that reflects current market assessments
of the time value of money and the risks specific to the
asset or CGU.
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at each
reporting date. An asset’s carrying amount is written
down immediately to its recoverable amount if the
55
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
These assets arise principally from the provision of
sales of software and services and support and
maintenance to customers in the ordinary course of
business. Trade receivables are generally due for
settlement between 30 and 90 days and therefore are
generally classified as current other than where the
terms of the contract provide for payment over an
extended period of time (in which case the relevant
element of the receivable is classified as current and
the balance is classified as non-current, net of an
allowance for the time value of money). The timing of
revenue recognition, invoicing and cash collections
results in both invoiced accounts receivable and
Financial and other assets
Financial assets are recognised on the consolidated
statement of financial position when the Group has
become a party to the contractual provisions of the
instrument. The Group’s financial assets consist of
cash, loans, deposits and receivables. Other relevant
assets include contract assets. The classification of
financial assets at initial recognition depends on the
financial asset’s contractual cash flow characteristics
and the Group’s business model for managing them.
The Group has reviewed its business model for its
financial assets and has concluded that they are held
for collecting contractual associated cash flows.
Under IFRS 9 receivables and contract assets (other
than those which contain a significant financing
component) are initially recognised at fair value and
will subsequently be measured at amortised cost.
The Group recognises lifetime expected credit losses
("ECL") for trade receivables and contract assets. The
expected credit losses on these assets are derived
using hypothetical likely default amounts estimated
by applying a percentage "probability of default" to
the gross value, such probability being related to the
underlying credit rating of the customer or country of
origin.
Trade and other receivables and contract assets
asset’s carrying amount is greater than its estimated
recoverable amount.
Trade receivables are recognised initially at the
amount of consideration that is unconditional unless
they contain significant financing components, when
they are recognised at fair value. The Group holds the
trade receivables with the objective to collect the
contractual cash flows and therefore measures them
subsequently at amortised cost using the effective
interest method, less provision for impairment.
uninvoiced receivables, as well as contract assets.
Invoicing may be implemented (depending on the
contract with the end customer) according to usage or
upon achievement of contractual milestones.
Contract
assets
represent
amounts
relating
to
revenue recognised at the date of the statement of
financial position but not yet due or invoiceable under
the terms of the contract. These arise most typically
for the Group either in (i) licenses of software where
the consideration is structured as an upfront payment
followed by a series of additional payments, which
may comprise fixed sums or fixed sums plus sums
relating to some measure of (for example) sales made
by the purchaser of the license; or (ii) licenses of
software
where
payment
for
the
aggregate
consideration may be structured such that the initial
consideration does not fully reflect the SSP of the
license.
Impairment provisions for current and non-current
trade receivables and contract assets are recognised
based on the simplified approach within IFRS 9 using a
provision matrix for the determination of lifetime
expected credit losses, which assesses the probability
of the non-payment of the trade receivables, which
probability is multiplied by the amount of the
expected loss arising from default to determine the
lifetime expected credit loss for the trade receivables.
In the absence of any historic credit losses and the
expectation of no specific losses in the foreseeable
future, the Directors assessed a hypothetical likely
default amount by applying a percentage "probability
Such payments may extend over several years. Under
IFRS 15, if the contract is a “right to use” contract,
then the upfront and fixed payments are recognised
on transfer of the license at their aggregate present
value using an imputed cost of funds.
56
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
of
default"
to
the
receivables
balance,
such
probability being related to the underlying credit
rating of the customer or country of origin. Trade
receivables and contract assets are reported net, with
such provisions recorded in a separate provision
account with the loss being recognised within cost of
sales in the consolidated statement of comprehensive
income.
Long-term trade receivables represent amounts
relating to revenue recognised at the date of the
statement of financial position but not yet due or
invoiceable under the terms of the contract. These
arise most typically for the Group as a result of the
sale of licenses as an upfront payment followed by a
series of additional payments, which may comprise
fixed sums or fixed sums plus sums relating to some
measure of (for example) gains made by the purchaser
of the license. Such payments may extend over
several years. Under IFRS 15, if the contract is a “right
to use” contract, then the upfront and fixed payments
are recognised on transfer of the license at their
aggregate present value using an imputed cost of
funds.
Long-term trade receivables
Contract fulfilment costs are divided into: (i) costs
that give rise to an asset; and (ii) costs that are
expensed
as
incurred.
When
determining
the
appropriate accounting treatment for such costs, the
Group
firstly
considers
any
other
applicable
standards. If those standards preclude capitalisation
of a particular cost, then an asset is not recognised
under IFRS 15. If other standards are not applicable to
contract fulfilment costs, the Group applies the
following criteria which, if met, result in capitalisation:
(i) the costs directly relate to a contract or to a
specifically identifiable anticipated contract; (ii) the
costs generate or enhance resources of the entity that
will be used in satisfying (or in continuing to satisfy)
performance obligations in the future; and (iii) the
costs are expected to be recovered.
Contract fulfilment assets
The
Group’s
contract
fulfilment
assets
are
due
principally to sales commissions payable to third parties
in return for assistance in obtaining certain contracts.
The Group amortises capitalised costs to obtain a
contract over the expected life of that contract in line
with the recognition of revenue relating to that contract.
Such amortisation is included within cost of sales.
The assessment of these criteria requires the application
of judgement, in particular when considering if costs
generate or enhance resources to be used to satisfy
future performance obligations and whether costs are
expected to be recoverable.
Cash and cash equivalents include cash in hand,
deposits held at call with banks, other short term highly
liquid investments with original maturities of three
months or less, and – for the purpose of the statement
of cash flows - bank overdrafts. Bank overdrafts are
shown within loans and borrowings in current liabilities
on the consolidated statement of financial position.
A capitalised cost to obtain a contract is derecognised
either when it is disposed of or when no further
economic benefits are expected to flow from its use or
disposal. At each reporting date, the Group determines
whether there is an indication that cost to obtain a
contract maybe impaired. If such indication exists, the
Group makes an estimate by comparing the carrying
amount of the assets to the remaining amount of
consideration that the Group expects to receive less the
costs that relate to providing services under the relevant
contract. In determining the estimated amount of
consideration, the Group uses the same principles as it
does to determine the contract transaction price, except
that any constraints used to reduce the transaction price
will be removed for the impairment test.
Cash and cash equivalents
A contract liability is recognised when a payment from a
customer is due (or already received) before the related
performance obligation is satisfied. Typically this arises
where cash (or the related receivable) is received (or
recognised) for PCS in advance of the services being
provided.
Contract liabilities
57
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable
that the Group will be required to settle that obligation.
Provisions are measured at the Directors’ best estimate
of the expenditure required to settle the obligation at
the reporting date and are discounted to present value
where the effect is material. Long-term provisions are
those provisions where the settlement of the obligation
is expected to be on a date more than one year from the
reporting date.
Equity and debt instruments are classified as either
financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the
definitions of a financial liability and an equity
instrument. The Group’s financial liabilities include
trade and other payables and borrowings which are
measured at amortised cost using the effective
interest
rate
method.
Financial
liabilities
are
recognised on the consolidated statement of financial
position when the Group has become a party to the
contractual provisions of the instrument.
Interest-bearing loans are recorded initially at fair value,
net of direct issue costs. Finance charges, including
premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accruals basis
in profit or loss using the effective interest rate method
and are added to the carrying amount of the instrument
to the extent that they are not settled in the period in
which they arise.
Borrowings
Provisions
Financial liabilities and equity instruments
An equity instrument is any contract which evidences a
residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued
by the Group, such as share capital and share premium,
are recognised at the proceeds received net of direct
issue costs.
Segmental information
For management purposes, the Group’s activities are
principally related to the provision of data analytics
Accordingly, the Directors have determined that there is
only one reportable segment under IFRS 8 and the
financial information therefore presents entity-wide
information. The results and assets for this segment can
be determined by reference to the statement of
comprehensive income and statement of financial
position.
The Pelatro Group primarily serves customers in south
and south-east Asia and Africa, with a developing
presence in Europe.
Exceptional items
Exceptional items are disclosed separately in the
financial statements where it is necessary to do so to
provide
further
understanding
of
the
financial
performance of the Company or the Group. They are
items of income or expense that have been shown
separately due to their nature.
services to customers, and all other activities performed
by the Pelatro Group are solely to support its primary
revenue generation activities. All the processes are
primarily subject to the same risks and returns and the
Directors
therefore
consider
that
there
are
no
identifiable business segments that are subject to risks
and returns different to the core business. As such,
internal reporting provided to the chief operating
decision-maker ("CODM"), which has been determined to
be the Board of Directors) for making decisions about
resource allocations and performance assessment
relates to the consolidated operating results of the
Pelatro Group.
The preparation of financial information in conformity
with IFRS requires management to make judgements,
estimates and assumptions that affect the application of
policies and the reported amounts of assets and
liabilities, and income and expenses.
4. Critical accounting judgements and key sources of
estimation uncertainty
The estimates and associated assumptions are based on
historical experience and various other factors that are
believed to be reasonable under the circumstances.
58
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
The key assumptions and critical accounting judgements concerning the future and other key sources of estimation
uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are discussed below:
However, the nature of estimation means that actual outcomes could differ from those estimates. 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.
Critical judgements
Estimates
Development costs are accounted for in accordance
with IAS 38 Intangible Assets, and costs that meet the
qualifying criteria are capitalised and systematically
amortised over the useful economic life of the
intangible asset. Determining whether development
costs qualify for capitalisation as intangible assets
requires judgement, including assessments of the
nature of the work underlying the costs carried out by
relevant employees, estimates of the technical and
commercial viability of the asset created, and its
applicable useful economic life. These estimates are
continually reviewed and updated based on past
experience and reviews of competitor products
available in the market.
Estimates relating to capitalised development costs
include the asset's likely revenue generation and its
applicable useful economic life. These estimates are
continually reviewed and updated based on past
experience and reviews of competitor products
available in the market.
Capitalised development costs
Critical judgements
Estimates
The Group tests goodwill annually for impairment,
and intangible assets if there are indications that an
impairment may be required. Judgement is required
as to whether indicators of impairment exist and
hence whether to perform more detailed analysis to
evaluate
any
impairment
required.
Identifying
indicators of impairment requires judgements to be
made as to the prospects and value drivers of the
individual assets.
The Group uses long-term forecasts of cash flow and
estimates of future growth both to value acquired
intangible assets and goodwill and to assess whether
goodwill or intangible assets are impaired, and to
determine the useful economic lives of its intangible
assets. Estimates are therefore required of the level of
future growth, resulting cash flows as well as an
appropriate discount rate to derive their carrying
value. Assumptions regarding sales and operating
profit growth, gross margin, and discount rate are
considered to be the key areas of estimation in the
impairment review process – further disclosure
regarding such estimates is made in Note 18.
Impairment reviews
59
In valuing these assets and liabilities, judgement is
required as to the likelihood of occurrence of future
events which will affect the value of such assets.
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
The Directors consider that the Group has a single
business segment, being the sale of information
management software and related services principally
to providers of telecommunication services (“telcos”)
but also to other producers and users of significant
quantities of consumer data, at present being one
customer in the financial services space. The operations
of the Group are managed centrally with Group-wide
functions covering sales and marketing, development,
professional services, customer support and finance
and administration.
An analysis of revenue by product or service and by
geography is given below.
5. Revenue and segmental analysis
The Group recognises revenue in seven geographical
regions based on the location of customers, as set out in
the following table:
Revenue by type
The Group has five principal revenue models, being:
contracts for the use of the Group's software on
a regular (usually monthly) basis, which may also
provide for Group employees to provide related
services the customer (“managed services”)
and/or for the Group to take a share of the
revenue gain achieved through use of the
software (“gain share”);
contracts based on the sale of perpetual licenses
for use of the Group's proprietary enterprise
software;
provision of specific customer-requested
modifications to Group software ("change
requests");
provision of maintenance and support for the
software and its users; and
provision of consultancy services and/or training
relating to the use of the software
In addition, the Group may, if required by the customer,
supply appropriate hardware on which to host the
software, either for the account of the customer or
(particularly in the case of managed services) retained in
the ownership of the Group.
An analysis of revenue by type is as follows:
At 31 December
Recurring software
sales and services
2022
2021
$'000
$'000
Total recurring
revenues
Change requests
Total repeating revenues
Software – new licenses
Consulting
3,112
Maintenance and
support
1,160
1,110
5,382
-
-
3,456
1,334
1,958
6,748
498
20
4,272
4,790
5,382
7,266
Revenue by geography
At 31 December
Caribbean
2022
2021
$'000
$'000
Eastern Europe
MENA
South Asia
South East Asia
Sub-Saharan Africa
175
Central Asia
-
130
443
5,382
7,266
241
77
426
104
3,012
2,656
1,817
60
3,407
100
Management makes no allocation of costs, assets or
liabilities between these segments since all trading
activities are operated as a single business unit.
(1)
(2)
(3)
(4)
(5)
60
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
The Group has one customer representing over 10% of
revenue (being 34% of total revenue at $1.82m) (2021:
two customers, approximately 38% of total revenue at
$2.73m).
Customer concentration
Ancillary to a license sale, the Group typically provides
five years of PCS but does not charge for the first year;
similarly in certain contracts the Group may provide
PCS at other than a standalone selling price ("SSP"). For
revenue recognition purposes PCS income is deemed to
accrue over the full term of the service provision
(whether paid or otherwise) and, as far as is estimable,
at a deemed market rate (i.e. the SSP). Accordingly, the
financial statements reflect adjustments to income:
As explained in Note 3, the Group recognises revenue
from the sale of licenses and the implementation of the
software so licensed separately, as the two activities
represent distinct performance obligations. However, as
implementation to date has always been carried out by
Group personnel and is usually viewed by the customer
as an integral part of the license purchase, the two
activities are reported as one.
Revenue recognition
License revenue
Irrespective
of
the
split
between
license
and
implementation recognition, some contracts provide for
fixed payments to be made by customers (usually
monthly) over a given term (e.g. three or five years).
Under IFRS 15, in order to reflect the time value of
money, such contracts are recognised (at the point of
transfer of the license) as the capitalised value of the
income stream. In addition, interest income accrues on
the credit deemed to be extended to the customer (on a
reducing balance basis). For the financial year 2022 this
figure amounts to license revenue of $nil and interest
income (from pre 2022 contracts) of $7,000 (2021:
$0.50m and $38,000).
PCS
to accelerate the recognition of revenue for
initial years for which no contractual payment is
due (and consequent adjustments to revenue to
derecognise
revenue
in
later
years
when
contractual payments exceed revenue to be
recognised); and
to accelerate or defer the recognition of revenue
in cases where the contractual PCS charge is
lower (or higher) than a market rate (the
difference being netted off or added to the
revenue recognised in respect of the license fee).
For the financial year 2022 revenue includes/(excludes)
(i) a net amount of $(64,000) representing income from
PCS already recognised ahead of its contractually due
dates (2021: $(101,000)), and (ii) an amount of nil (2021:
$40,000) representing revenue netted off license
income allocated to PCS.
There are certain software support, professional service,
maintenance and licences contracts that have been
entered into for which both:
Remaining performance obligations
the original contract period was greater than 12
months; and
the Group's right to consideration does not
correspond directly with performance.
The amount of revenue that will be recognised in future
periods on these contracts when those remaining
performance obligations will be satisfied is shown
below.
Year to 31 December
Revenue expected
to be recognised on
software and
service contracts
2024
2025-8
$'000
$'000
229
2023
$'000
366
133
61
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
Reconciliation of operating profit to adjusted earnings
before interest, taxation, depreciation and amortisation
(“EBITDA”)
Comparative figures for the year ended 31 December
2021 were as follows:
Year to 31 December
Revenue expected
to be recognised on
software and
service contracts
2023
2024-7
$'000
$'000
314
2022
$'000
449
320
Costs of obtaining and fulfilling contracts of $0.35m
have been capitalised in 2022 (net of amortisation
against
revenue
recognised
in
respect
of
those
contracts) (2021: $0.12m).
Information about the Group’s non-current assets by
location of assets is as follows:
Non-current assets
At 31 December
India
2022
2021
$'000
$'000
Singapore
UK
680
Russia
49
991
26
2,661
12,675
1,932
-
6,329
5,329
Non-current assets comprise intangible assets, goodwill,
and plant, property and equipment.
Profit for the year has been arrived at after charging:
6. Operating expenses
At 31 December
Amortisation of intangible
non-current assets
2022
2021
$'000
$'000
3,306
Impairment of intangible
non-current assets
9,008
2,814
-
Depreciation of tangible
non-current assets
448
(Profit)/loss on disposal
of Right to Use assets
-
413
(10)
Staff costs (see note 9)
2,888
Auditor’s remuneration
(see note 8)
59
2,865
47
Short-term lease
expenses
21
Realised foreign exchange
(gains)/losses
64
35
17
7. Non-GAAP profit measures and exceptional items
Year to 31 December
Operating profit/(loss)
2022
2021
$'000
$'000
(13,656)
Adjusted for:
13,059
(489)
3,227
Amortisation, depreciation
and impairment
(597)
Revenue recognised as
interest under IFRS 15
7
2,738
38
Expensed share-based
payments
45
Exceptional items:
32
Write off of trade receivables
and contract assets
493
Adjusted EBITDA
607
-
2,808
EBITDA
Impairment of Right of Use
assets
175
-
Impairmetn of tangible
non-current assets
122
-
90
-
Expenses of aborted
acquisition
569
-
Employee share issue
62
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
Adjusted operating profit is calculated as reported
operating profit as adjusted for share-based payments,
exceptional items, impairment and acquisition-related
amortisation.
Adjustment for share-based payment expense is made
because, once the cost has been calculated for a given
grant of options, the Directors cannot influence the
share-based payment charge incurred in subsequent
years relating to that grant; also the value of the share
option to the employee differs considerably in value and
timing from the actual cash cost to the Group.
provide a sufficient basis to compare the Group’s
performance with that of other companies and should
not be considered in isolation or as a substitute for
operating profit or any other measure as an indicator of
operating performance, or as an alternative to cash
generated from operating activities as a measure of
liquidity.
Criteria for adjustments to operating profit or loss in the
calculation of adjusted EBITDA are that they (i) arise
from an irregular and significant event or (ii) are such
that the income/cost is recognised in a pattern that is
unrelated to the resulting operational performance.
Exceptional items are treated as exceptional by reason
of their nature and are excluded from the calculation of
adjusted EBITDA (and adjusted earnings per share in
Note 15) to allow a better understanding of comparable
year-on-year trading and thereby an assessment of the
underlying trends in the Group’s financial performance.
These measures also provide consistency with the
Group’s internal management reporting.
Elements
of
depreciation
on
right-to-use
assets
recognised under IFRS 16 and share-based payment
expense are deemed to be directly attributable
overheads for the purposes of capitalising relevant
expenditure on developing intangible assets (see Note
18). The figures above are shown net of amounts so
capitalised.
EBITDA (and adjusted EPS) are financial measures that
are not defined or recognised under IFRS and should not
be considered as an alternative to other indicators of
the Group’s operating performance, cash flows or any
other measure of performance derived in accordance
with IFRS. Accordingly, these non-IFRS measures should
be viewed as supplemental to, but not as a substitute
for, measures presented in this Annual Report and
Accounts. Information regarding these measures is
sometimes used by investors to evaluate the efficiency
of an entity’s operations; however, there are no
generally accepted principles governing the calculation
of these measures and the criteria upon which these
measures are based can vary from company to
company. These measures, by themselves, do not
8. Auditor’s remuneration
Year to 31 December
Fees payable to the Company's
auditor and associates for the
audit of the financial statements
of Pelatro Plc:
2022
2021
$'000
$'000
59
47
59
48
-
1
Fees payable to the Company's
auditor and its associates for
other services:
Tax compliance
9. Staff Cost
Year to 31 December
Wages and salaries
2022
2021
$'000
$'000
5,611
5,256
2,888
2,865
Social security contributions
Less: amounts capitalised as
intangible assets
44
80
(2,767)
(2,471)
The average number of persons employed by the
Company during the period was:
Year to 31 December
Sales
2022
2021
3
3
Software Development
Support
Marketing
Administration
109
98
130
113
2
3
20
18
264
235
The calculation of adjusted earnings per share is shown
in Note 15.
Total
5,655
5,336
63
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
The Directors’ emoluments in the year ended 31 December 2022 were:
10. Directors’ remuneration and transactions
Executive Directors
N. Hellyer
S. Menon
S. Yezhuvath
Non-Executive Directors
R. Day (resigned 3
December 2022)
P. Verkade
H. Berry (appointed 5
December 2022)
Basic
Salary
2022
$'000
Bonus
2022
$'000
Benefits
in Kind
2022
$'000
Share-based
payments
2022
$'000
Pension
2022
$'000
Total
2022
$'000
Total
2021
$'000
183
186
164
71
37
5
10
-
-
7
16
12
239
202
176
34
5
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
73
37
5
122
279
272
68
41
-
646
10
35
732
34
7
782
The remuneration of the executive Directors is decided by the Remuneration Committee. Save as disclosed above no
Director had a material interest in any contract of significance with the Group in either year.
11. Share based payments
In addition to options granted to a director at the time of the Group’s IPO, the Group introduced a share option plan for
senior employees on 15 January 2019 (the "Plan"). Each share option converts into one ordinary share of the Company on
exercise. No amounts are paid or payable by the recipient on receipt of the option and the Company has no legal
obligation to repurchase or settle the options in cash. The options carry neither rights to dividends nor voting rights, and
may be exercised at any time from the date of vesting to the date of expiry
A charge of $45,000 (net of amounts capitalised of $34,000) (2021: $32,000) has been recognised during the year for
share-based payments over the vesting period. This share-based payment expense comprises the charge in the current
period relating to the expensing of the fair value of (a) 1,323,500 options granted under the Plan (net of forfeited options)
and (b) the 33,000 options (net of forfeited options) issued at the time of the Company’ IPO. The options issued under the
terms of the Plan were granted with an exercise price of 73p, vesting in tranches as follows: 25% after one year, 25% after
two years and 50% after three years. There are no conditions attaching to the vesting of the options other than continued
employment. Of this amount, $10,000 net (2021: $14,000) relates to costs of share options issued to subsidiary
employees.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
64
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
Outstanding at the beginning of the year
2022
1,356,500
(170,000)
Outstanding options are exercisable at prices between 62.5p and 73p and have a weighted average remaining contractual
life of 7.4 years
Forfeited during the year
2021
1,505,500
(149,000)
No of options
2022
72.7p
73.0p
2021
72.7p
73.0p
Weighted average exercise price
1,436,500
Outstanding at the end of the year
1,356,500
60.8p
72.7p
12. Finance income
Interest receivable on interest-bearing deposits
2022
-
7
Notional interest accruing on contracts with a
significant financing component
2021
6
38
7
Total finance income
44
$'000
$'000
250,000
Granted during the year
-
2.5p
-
13. Finance expenses
Interest and finance charges paid or payable on
borrowings
2022
197
15
Interest on lease liabilities under IFRS 16
2021
202
25
212
Total finance expenses
221
$'000
$'000
-
Less: amounts capitalised as intangible assets
(6)
65
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
The effective tax rate in the income statement for the
year is higher than the standard rate of corporation tax
in the UK of 19% (2021: higher). A reconciliation of
income tax expense applicable to the profit before
taxation at the statutory tax rate to income tax expense
at the effective tax rate is as follows:
Reconciliation of the total tax charge
14. Taxation
Year to 31 December
Current tax
2022
2021
$'000
$'000
536
190
UK corporation tax charge/(credit)
on profit for the current year
Overseas income tax
charge/(credit)
-
-
514
232
Adjustments in respect of
prior periods
22
(42)
Total current income tax
Deferred tax
Reversal/(recognition) of deferred
tax asset
(27)
(9)
(27)
(9)
509
181
Total income tax expense
recognised in the year
Tax on profit on ordinary activities
Year to 31 December
(Loss) before taxation
2022
2021
$'000
$'000
(13,861)
(666)
509
181
Tax charge/(credit) at the
applicable rate of 19%
Tax effect of amounts which
are not deductible (taxable) in
calculating taxable income:
(2,634)
(127)
Differences arising on
capitalisation of expenses
(327)
(275)
486
244
Fixed asset differences -
impairment
Expenses not deductible for tax
purposes and other permanent
items
1,768
-
Income not taxable and other
permanent items
2
11
Tax exemptions, allowances
and rebates
(49)
-
12
(11)
Foreign tax credits
(De)recognition of deferred tax
liability
(53)
-
(De)recognition of deferred tax
asset
(101)
(2)
Loss carry back/tax repayable
-
(67)
-
-
Adjustments recognised in current
year tax in respect of prior years
Current tax (prior period)
exchange difference
29
13
Deferred tax not recognised
999
274
Income tax expense
recognised for the current
year
The Group had approximately $8.45m of tax losses carried
forward as at 31 December 2022 against which no deferred
tax asset has been recognised.
The tax effect of exchange differences recorded within the
Group Statement of Comprehensive Income is a credit of
$7,000 (2021: $4,000 credit).
69
12
Overseas taxation at different rates
326
109
Overseas withholding tax expenses
Total deferred income tax
66
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
The current rate for corporation tax in the UK is 19% but,
as a result of the March 2022 Budget statement which
was enacted in May 2022, this is due to rise to 25% from
1 April 2023 for profits in excess of £250,000. This tax
rate is therefore considered when calculating deferred
tax on timing differences expected to reverse on or after
1 April 2023.
Factors affecting future tax charges
Temporary differences associated with Group
investments
Recognised deferred
tax asset
Deferred tax
At 31 December 2022, there was no recognised deferred
tax liability (2021: $nil) for taxes that would be payable
on the unremitted earnings of certain of the Group's
subsidiaries
as
the
Group
has
determined
that
undistributed profits of its subsidiaries will not be
distributed in the foreseeable future.
2022
2021
$'000
$'000
15
-
At 1 January 2022
Recognised in profit and
loss
14
16
14
(2)
At 31 December 2022
28
14
Timing differences
Comprising:
Deferred income tax assets have only been recognised
to the extent that it is considered probable that they can
be recovered against future taxable profits based on
profit forecasts for the foreseeable future. The deferred
income tax assets at 31 December 2022 above are
expected to be utilised in the next two years.
Recognised deferred tax liability
2022
2021
$'000
$'000
-
13
At 1 January 2022
Recognised in profit and
loss
13
24
(13)
(11)
At 31 December 2022
-
13
Timing differences
Comprising:
-
13
28
14
UK
Under Indian tax law, with effect from 1 April 2019 any
company which opted not to utilise certain tax
exemptions or incentives was eligible for a reduced
income tax rate of 22% (previously 25%). For the local tax
year to 31 March 2021 the effective tax rate for the
Group’s Indian subsidiary PSPL was therefore 23.8%
inclusive of surcharges and cess.
India
15. Earnings
Reported earnings per share
Basic earnings per share (“EPS”) amounts are calculated
by dividing net profit or loss for the year attributable to
owners of the Company by the weighted average
number of ordinary shares outstanding during the year.
The Group has one category of security potentially
dilutive to ordinary shares in issue, being those share
options granted to employees where the exercise price
(plus the remaining expected charge to profit under IFRS
2) is less than the average price of the Company's
ordinary shares during the period in issue. No dilution
arose in the year as the exercise price was above the
average share price for the year.
13
Tax losses
14
67
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
The following reflects the earnings and share data used in the basic earnings per share computations:
Adjusted earnings per share is calculated as follows:
Year to 31 December
Profit/(loss) attributable to equity holders of the parent:
2022
2021
$'000
$'000
(31.5)¢
(2.1)¢
Profit/(loss) attributable to ordinary equity holders of the
parent for basic earnings
(14,370)
(847)
Weighted average number of ordinary shares in issue
45,644,075
41,153,537
Basic earnings/(loss) per share attributable to shareholders
Adjusted earnings per share
2022
2021
$'000
$'000
686
686
Profit/(loss) attributable to ordinary equity holders of the
parent for basic earnings
- exceptional items (see note 7)
(14,370)
(847)
1,152
-
- share-based payments
45
32
- prior year adjustments to tax charge
- amortisation of acquisition-related intangibles
(27.3)¢
(0.4)¢
Adjusting items:
22
(42)
Adjusted earnings attributable to owners of the Parent
(12,465)
(171)
Weighted number of ordinary shares in issue
45,644,075
41,153,537
Adjusted earnings/(loss) per share attributable to shareholders
The criteria for inclusion of adjusting items in the calculation of adjusted EPS are the same as those relating to the
calculation of adjusted EBITDA as set out in Note 7. Additionally, finance expense on liabilities relating to contingent
consideration are non-cash costs reflecting the time value of money in arriving at the fair value of such liabilities and the
effluxion of time over the period for which they are outstanding; and amortisation of acquisition-related intangibles relates
to the amortisation of intangible assets in respect of customer relationships and brands which are recognised on a
business combination and are non-cash in nature.
16. Dividends paid and proposed
No dividends were declared or paid during the year and no dividends will be proposed for approval at the AGM (2021:
none).
68
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
18. Intangible assets
Intangible assets comprise capitalised development costs (in relation to internally generated software and software
acquired through business combinations), software acquired from third parties for use in the business, patents, customer
relationships and goodwill.
An analysis of goodwill and other intangible assets is as follows:
2022
At 1 January 2022
Additions
Foreign exchange
At 31 December 2022
Development
costs
$’000
Third party
software
$’000
Patents
$’000
Customer
relationships
$’000
Goodwill
$’000
Total
$’000
11,839
2,786
-
120
-
(5)
57
29
(1)
19,348
2,815
(6)
6,862
470
-
-
-
-
Cost
14,625
115
85
22,157
6,862
470
At 1 January 2022
Charge for the year -
amortisation
Charge for the year -
impairment
Foreign exchange
(5,478)
(2,591)
(4,635)
(71)
(23)
(18)
(2)
(6)
(55)
(7,895)
(3,306)
(9,010)
(2,344)
-
(686)
(3,832)
-
(470)
Amortisation and
impairment
1
4
1
6
-
-
At 31 December 2022
(12,703)
(108)
(62)
(20,205)
(6,862)
(470)
Net carrying amount
At 31 December 2022
1,922
7
23
1,952
-
-
At 31 December 2021
6,361
49
55
11,453
4,518
470
17. Group investments
The Company has investments in the following subsidiary undertakings, which contribute to the net assets of the Group:
Subsidiary
undertakings
Country of
incorporation
and operation
Registered
office
Principal
activity
Description and proportion
of shares held by the Company
Pelatro LLC
USA
110 Summit
Avenue Montvale,
NJ 07645, USA
Sales
100% of members’ capital
Pelatro Pte
Limited
Singapore
One Raffles Place,
#10-62, Tower 2,
Singapore 048616
Ownership of
IP; operation of
branch in Russia
100% ordinary shares
Pelatro Solutions
Private Limited
India
403, 7th A Main, HRBR
Layout, Bangalore
560043, India
R&D and
support
100% ordinary shares
69
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
2021
At 1 January 2021
Additions
Foreign exchange
At 31 December 2021
Development
costs
$’000
Third party
software
$’000
Patents
$’000
Customer
relationships
$’000
Goodwill
$’000
Total
$’000
9,263
2,576
-
110
12
(2)
27
30
-
16,732
2,618
(2)
6,862
470
-
-
-
-
Cost
11,839
120
57
19,348
6,862
470
At 1 January 2021
Charge for the year -
amortisation
Charge for the year -
impairment
Foreign exchange
(3,373)
(2,105)
-
(52)
(21)
-
-
(2)
-
(5,083)
(2,814)
-
(1,658)
-
(686)
-
-
-
Amortisation and
impairment
-
2
-
2
-
-
At 31 December 2021
(5,478)
(71)
(2)
(7,895)
(2,344)
-
Net carrying amount
At 31 December 2021
6,361
49
55
11,453
4,518
470
Development costs
Development costs comprise capitalised staff costs (and allocable related direct costs, including depreciation and interest
charges relating to property leases held by the Group and accounted for under IFRS 16) associated with the development
of new products and services which will be saleable to more than one customer.
Software
Software assets represent purchased licences and distribution rights for third party software which are capitalised at cost
and amortised on a straight-line basis over the relevant estimated useful life.
Patents
Patent costs represent the capitalised value of work undertaken (either internally or externally by appropriate legal or
other consultants) to develop and protect patents, know-how and other similar assets.
70
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
Customer relationships
Customer relationships as stated were acquired as part
of a business combination.
Impairment of non-financial assets and goodwill
Goodwill arose on the acquisition of (i) the Danateq
Assets and (ii) PSPL. It is assessed as having an indefinite
life but the Group tests whether goodwill has suffered
any impairment on an annual basis.
Danateq
The Danateq Acquisition in 2018 (the “Acquisition”)
comprised
various
contracts
and
customer
relationships, certain enterprise software and the
related workforce (together the “Danateq Assets”).
Given the opportunity to leverage this expertise across
Pelatro's existing business and the ability to exploit the
Group’s thus enlarged customer base, the fair value of
the Danateq Assets was deemed to be greater than the
assessed book value of the assets as recognised in the
financial statements of Pelatro, thus leading to the
recognition of an amount of goodwill (the “Danateq
Goodwill”). Given that the software acquired has been
subsumed into the Group's mViva product suite, the
contracts acquired have been transitioned onto and/or
are being fulfilled (for example in the case of the Telenor
framework agreement) by the mViva product, and the
workforce are employed by a branch of Pelatro in
Singapore and work across the product suite, the former
Danateq cash-generating unit ("CGU") no longer has a
separable identity. However, the customer relationships
asset which was recognised following the acquisition is
directly related to the Danateq Assets and accordingly,
given the impairment provision recognised in respect of
that asset, it was considered appropriate to write off the
Danateq Goodwill in its entirety.
PSPL
principal activity was at the time to develop the
Group’s software and provide administrative support
for the rest of the Group. The fair value of the acquired
assets was deemed to be greater than the assessed
book value of the assets as recognised in the financial
statements of Pelatro, thus leading to the recognition
of an amount of goodwill (the “PSPL Goodwill”).
Subsequent to its acquisition, the activities of this
subsidiary have grown to include the provision of
managed services, post-contract support and other
services to customers, using both intangible assets
(including developed software, patents and third-party
software) along with various tangible assets (in
particular on-premise hardware purchased to fulfil a
significant contract) and right-of use assets recognised
under IFRS 16 (principally office leases).
Further details are given in “Customer Relationships”
below.
The PSPL CGU comprises the Group’s software
development and administrative centre in Bangalore
which was acquired in December 2017, and whose
The carrying value of these assets, including the
associated PSPL Goodwill, was assessed, individually
where applicable, as part of the impairment review
carried out at 31 December 2022, and given the
impairment loss deemed appropriate for the related
assets, the PSPL Goodwill was written off in its entirety.
Further details are given in “Other intangible and
tangible assets” below.
Other intangible and tangible assets
Other intangible and tangible assets comprise the
development costs, patents and third-party software
referenced above, together with customer relationships
recognised on the Danateq Acquisition, together with
the Group’s tangible assets (principally computer
hardware and office-related assets, referenced in Note
19 and similar Right-of-Use assets recognised under
IFRS 16.
Management reviews the carrying value of intangible
and tangible assets for impairment annually, or on the
occurrence of an impairment indicator. Some revenue
streams in the group of assets related to the Danateq
Acquisition of 2018 have shown a steep decline as one
customer in particular has retrenched its operations
and withdrawn from taking the Group’s managed
service operations in the short-term. More widely, given
the
downturn
in
Group
revenue
in
2022,
the
management have considered the value attributable to
to the entirety of the Group’s non-current tangible and
71
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
intangible asset base. Of this asset base, other than the
Danateq assets referenced above, individual cash-
generating units (“CGUs”) can be identified as the
hardware assets pertaining to one particular large
managed services contract (and certain related right-of-
use lease assets) and a small number of motor vehicles
(whether owned outright or as a right-of-use asset). In
the latter case, due to the fair value less costs of
disposal no impairment has been recognised. The
remaining assets (comprising principally the capitalised
value of software developed for resale, associated
patents
and
related
third
party
software),
“administrative” assets such as office equipment and
leasehold improvement, along with similar right-of-use
assets have been assessed together by considering the
profitability and cash flows remaining to the Group once
the specific assets referred to above have been taken
into account.
With the exclusion of CGUs deemed sensitive to
impairment from a reasonably possible change in key
assumptions, which have been reviewed in further
detail below, management forecasts for 2023 and 2024
anticipate growth of between 8% and 13% when
compared to 2022 levels. In accordance with IAS 36
forecasts for the subsequent periods (years 3-5)
assume nil real growth in revenues, nil real growth in
The
recoverable
amounts
of
assets
have
been
determined from value in use calculations based on cash
flow projections covering five years plus a terminal
value. Based on these assessments, an impairment loss
has been recognised during the year totalling $3.88m
against the Danateq goodwill and related customer
relationship assets. Similarly an impairment loss has
been recognised during the year totalling $4.63m against
capitalised software and a further $55,000 and $18,000
respectively against related patents and third party
software. A specific impairment charge of $52,000 has
been made against the computer hardware assets (and
related right of use assets) associated with the Group's
significant managed services contract in India (the “MS
Contract”); for the rest of the Group, a total impairment
loss of $0.67m has been recognised against other
intangible and tangible assets, allocated as to $0.43m
(goodwill), $44,000 leasehold improvements, $13,000
office equipment and $0.17m against other right-of-use
assets. These provisions have resulted in the total write
down of all goodwill on the Group balance sheet.
Certain CGUs which are referred below are considered
sensitive to changes of assumptions used for the
calculation of the value in use.
The recoverable amount of the MS Contract CGU, with
a net book value of $0.49m, has been determined using
cash flow forecasts that include annual revenue growth
rates (in real terms) of nil% over the 2 year forecast
period, nil% real long-term growth rate, growth in
associated costs of 5% over the 2 year forecast period
and nil thereafter (in real terms) and a pre-tax discount
rate of 29%. The recoverable amount would equal the
carrying amount of the CGU if the discount rate applied
was lower by 5% or revenue growth was higher by 3%.
The recoverable amount of the Customer Relationships
asset, with a net book value of $3.88m, has been
determined using cash flow forecasts that include
annual revenue growth rates of nil% over the 2 year
forecast period, nil% real long-term growth rate, growth
in associated costs of 5% over the 2 year forecast
period and nil thereafter (in real terms) and a pre-tax
discount rate of 33%. The recoverable amount is nil at
any reasonable discount rate, and would equal the
carrying amount of the CGU if revenue growth was
higher by 80%.
The key assumptions for the value in use calculations
are those regarding growth rates, discount rates and
expected changes to selling prices and direct costs
during the period. Changes in selling prices and direct
costs, if any, are based on expectations of future
changes in the market. Management estimates discount
rates using pre-tax rates that reflect current market
assessments of the time value of money. A change in a
key assumption in respect to operating cash flows
could cause the carrying value of the goodwill to
exceed the recoverable amount, resulting in an
impairment charge. The Board is confident that the
assumptions in respect of operating cash flows remain
appropriate.
Sensitivity to changes in assumptions
certain costs and a reduction in certain growth-related
“investment” costs in line with the forecast of nil real
growth. Management has applied pre-tax discount rates
to the cash flow projections between 29% and 33%.
72
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
19. Tangible assets
2022
At 1 January 2022
Additions
Foreign exchange
differences
At 31 December 2022
Leasehold
improvements
$’000
Computer
equipment
$’000
Office
equipment
$’000
Vehicles
$’000
Total
$’000
129
-
(12)
1,151
45
(113)
58
4
(6)
1,637
49
(161)
299
-
(30)
Cost
117
1,083
56
1,525
269
At 1 January 2022
Charge for the year
Foreign exchange
differences
(41)
(18)
5
(454)
(215)
55
(31)
(11)
4
(655)
(279)
78
(129)
(35)
14
Depreciation
At 31 December 2022
(98)
(677)
(51)
(976)
(150)
Net carrying amount
At 31 December 2022
19
406
5
549
119
At 31 December 2021
88
697
27
982
170
Impairment
(44)
(63)
(13)
120
-
2021
At 1 January 2021
Additions
Foreign exchange differences
At 31 December 2021
Leasehold
improvements
$’000
Computer
equipment
$’000
Office
equipment
$’000
Vehicles
$’000
Total
$’000
131
-
(2)
1,084
88
(21)
59
-
(1)
1,579
88
(30)
305
-
(6)
Cost
129
1,151
58
1,637
299
At 1 January 2021
Charge for the year
Foreign exchange differences
(24)
(18)
1
(222)
(238)
6
(20)
(11)
-
(361)
(303)
9
(95)
(36)
2
Depreciation
At 31 December 2021
(41)
(454)
(31)
(655)
(129)
Net carrying amount
At 31 December 2021
88
697
27
982
170
73
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
20. Right-of-use assets
Right-of-use assets comprise leases over office buildings and vehicles as follows:
2022
At 1 January 2022
Additions in respect of new or extended leases
At 31 December 2022
Office buildings
$'000
Vehicles
$’000
Total
$’000
750
232
-
24
750
256
Cost
912
24
936
At 1 January 2021
Charge for the period
(510)
(167)
-
(2)
(510)
(169)
Depreciation
At 31 December 2022
(802)
(2)
(804)
Net carrying amount
At 31 December 2022
110
22
132
Effects of foreign exchange movements
(70)
-
(70)
Effects of foreign exchange movements
50
-
50
At 31 December 2021
240
-
240
Impairment recognised
(175)
-
(175)
As explained in Note 18, the carrying value of the Group’s non-financial assets was reviewed at 31 December 2022 and as a
result an impairment charge was recognised against all categories of tangible assets.
74
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
At the end of 2021 the Group had had plans to relocate certain office functions then spread over a number of offices in
the Bangalore area to one larger office. However, the Group was not able to find a suitable space and accordingly no such
relocation was made. The relevant existing leases (all of which are on short term notice periods) were deemed to have
been extended accordingly.
21. Trade and other receivables and contract assets
The timing of revenue recognition, invoicing and cash collection results in the recognition of the following assets on the
Consolidated Statement of Financial Position:
invoiced accounts receivable;
accounts invoiceable but uninvoiced at the period end (i.e. “unbilled revenue” or UBR) (collectively with (i)
recognised as “trade receivables”); and
amounts relating to revenue recognised at the date of the statement of financial position but not invoiceable
under the terms of the contract, or fulfilment assets (“contract assets”)
In addition (iv) contract assets are recognised in respect of certain trade-related liabilities (notably sales commissions
payable) where the full amount of such commission is payable within one year but the revenue to which it relates is
recognised over several years (i.e. “contract fulfilment assets”).
2021
At 1 January 2021
Additions in respect of new or extended leases
Disposals in respect of leases terminated
At 31 December 2021
Office buildings
$'000
Vehicles
$’000
Total
$’000
661
112
(10)
32
-
(32)
693
112
(42)
Cost
750
-
750
At 1 January 2021
Charge for the period
Eliminated on leases terminated
(355)
(164)
-
(30)
(2)
32
(385)
(166)
32
Depreciation
At 31 December 2021
(510)
-
(510)
Net carrying amount
At 31 December 2021
240
-
240
Effects of foreign exchange movements
(13)
-
(13)
Effects of foreign exchange movements
9
-
9
(i)
(ii)
(iii)
75
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
Contract assets
The Group was unable to agree on appropriate terms of
implementation of a license contract with a small
customer entered into in 2021 (and accordingly part-
recognised as revenue under IFRS 15 in that year). The
Group chose to withdraw from this contract after the
year end; accordingly management has impaired the
entire carrying value of this contract as it is unlikely that
revenue will arise from it. No amounts have been
invoiced to the customer (and hence there is no write-
off of trade receivables) and no penalties or similar
costs would arise from such a withdrawal.
Due after one year
2022
$’000
2021
$’000
At 1 January
606
751
Contract assets recognised
in the period
238
195
Transfer to current contract
assets
(267)
(340)
At 31 December
521
606
Due within one year
2022
$’000
2021
$’000
At 1 January
555
609
Contract assets recognised
in the period, net of releases
to receivables or cash, or
amortisation to profit or loss
(202)
(394)
Contract assets impaired
(234)
At 31 December
386
555
Transfer from non-current
contract assets
267
340
Contract assets are comprised as follows:
Due after one year
2022
$’000
2021
$’000
Contract assets relating to revenue
113
227
Contract fulfilment assets
408
379
At 31 December
521
606
Due within one year
2022
$’000
2021
$’000
Contract assets relating to revenue
80
375
Contract fulfilment assets
300
180
At 31 December
380
505
Trade terms, credit risk and impairments
The Group’s exposure to credit risk equates to the
carrying value of cash held on deposit (whether at
banks or as deposits against liabilities, e.g. leases) and
trade and other receivables and contract assets. The
Group’s credit risk is primarily attributable to trade
receivables and contract assets, and management has a
credit policy in place to ensure exposure to credit risk is
monitored on an ongoing basis. Credit evaluations are
performed on customers as deemed necessary based
on, inter alia, the nature of the prospect and size of
order.
Unless specific agreement has been reached with
individual customers, sales invoices are typically due
for payment between 60 and 90 days after the date of
the invoice; where customers delay making payment, an
assessment of the potential loss of customer goodwill
arising from the enforcement of contractual payment
terms may take place when considering actions to be
taken to secure payment. Trade receivables include
amounts that are past due at the reporting date for
which no specific impairment provision has been
recognised as these amounts are still considered to be
recoverable. The Group does not require collateral in
respect of financial assets
As
outlined
in
Note
3,
the
Group
recognises
impairments under IFRS 9 for relevant classes of assets.
The Group thus reviews the amount of expected credit
loss associated with its trade receivables based on
forward looking estimates that take into account
current and forecast credit conditions as opposed to
relying on past historical default rates. In the absence of
any historic credit losses and the expectation of no
specific losses in the foreseeable future, the Directors
assess a hypothetical likely default amount by applying
a percentage "probability of default" to the receivables
balance, such probability being related to the
Contract assets impaired
(56)
-
-
76
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
2022
$’000
2021
$’000
Loss allowance at 1 January
89
37
Increase/(decrease) in loss allowance
4
52
Loss allowance at 31 December
93
89
The largest individual counterparty to a receivable included in trade and other receivables at 31 December 2022 was
$0.69m (of which some $0.24m related to unbilled revenue) (2021: $1.14m). This customer was also the largest individual
counterparty based on invoiced receivables ($0.45m, 2021: $0.52m). The small increase in loss allowance is due to a
significant increase in a number of country risks (driven partly by geo-political events) offset by the reduction in the overall
quantum of trade receivables. The Group’s customers are spread across a broad range of geographies.
underlying credit rating of the customer or country of origin. Furthermore, taking into account the time value of money
when applied to contracts assets (which may unwind over a period of years following their initial recognition), a loss
allowance for expected credit losses has been recorded as follows:
2022
$’000
2021
$’000
On trade receivables
82
75
On contract assets
11
14
Loss allowance at 31 December
93
89
The loss allowance is comprised as follows:
Trade receivables by hypothetical "probability of default" (by reference to country risk)
At 31 December 2022
0-2.5%
2.5-5%
5-7.5%
Gross amount
$’000
Impairment
$’000
Impairment
%
Carrying amount
$’000
1,731
1,698
(32)
(44)
1.8%
2.6%
1,699
1,654
Default risk
103
(6)
5.8%
97
3,532
(82)
3,450
At 31 December 2021
0-1%
1-2%
2-3%
Gross amount
$’000
Impairment
$’000
Impairment
%
Carrying amount
$’000
1,719
1,927
(16)
(26)
0.9%
1.3%
1,703
1,901
Default risk
1,349
(32)
2.4%
1,317
5,031
(75)
4,956
3-4%
36
(1)
3.1%
35
77
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
At the reporting date the Group had two term loans, in its operating subsidiary in India and denominated in INR, with
interest rates between 10% and 15.5% (in INR), repayable between 5 and 6 years from their inception, between June 2023
and September 2024.
22. Other assets
At 31 December
Prepayments
Deposits
2022
$'000
2021
$'000
131
70
146
77
302
315
Other assets (including withholding tax, GST and VAT refunds)
101
92
Total other assets
23. Loans and borrowings
At 31 December
Non-current liabilities
Secured term loans
2022
$'000
2021
$'000
10
23
429
608
Unsecured borrowings
419
585
Current liabilities
Current portion of term loans
11
11
130
136
Unsecured borrowings
119
125
559
744
Total loans and borrowings
78
Loans and borrowings comprise:
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
Secured term loans
Unsecured borrowings
Lease liabilities
1 January
2022
$'000
Non-cash
changes –
foreign
exchange
movements
$’000
Non-cash
changes
– net
lease
liabilities
taken on
$’000
Interest
accruals
included in
cash flow
$’000
Transfer
from
non-
current
to
current
$’000
Cash flows -
net
(repayments)
and
drawdowns
$’000
23
585
80
(3)
(44)
(9)
-
-
114
-
-
-
-
(10)
-
-
(124)
(55)
Non-current liabilities
Current portion of
secured term loan
Unsecured borrowings
Lease liabilities
11
125
188
-
(17)
(13)
-
-
142
(8)
(114)
(182)
-
10
-
-
124
55
Current liabilities
Total
1,012
(86)
256
(306)
-
-
Reconciliation between opening and closing balances for liabilities resulting in financing cash flows
31
December
2022
$’000
10
417
130
13
118
190
878
The Directors consider that the carrying amount of borrowings approximates to their fair value.
Lease liabilities comprise liabilities arising from the committed and expected payments on leases over office buildings and
vehicles.
2022
At 1 January 2022
Liabilities taken on in the period
Repayments of principal
Transfer to short-term from long-term
Office buildings
$'000
Vehicles
$'000
Total
$'000
80
102
-
-
12
-
80
114
-
Amounts due in more than one year
(53)
(2)
(55)
120
10
130
24. Lease liabilities
Effects of foreign exchange movements
(9)
-
(9)
At 31 December 2022
7978
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
At 1 January 2022
Liabilities taken on in the period
Liabilities (disposed of) in the period
Transfer to short-term from long-term
Office buildings
$'000
Vehicles
$'000
Total
$'000
188
130
-
-
12
-
188
142
-
Amounts due in less than one year
53
2
55
178
12
190
Effects of foreign exchange movements
(13)
-
(13)
At 31 December 2022
Repayments of principal
(180)
(2)
(182)
2021
At 1 January 2021
Liabilities taken on in the period
Liabilities (disposed of) in the period
Transfer from long-term to short-term
Office buildings
$'000
Vehicles
$'000
Total
$'000
172
24
(10)
-
-
-
172
24
(10)
Amounts due in more than one year
(103)
-
(103)
80
-
(80)
Effects of foreign exchange movements
(3)
-
(3)
At 31 December 2021
At 1 January 2021
Liabilities taken on in the period
Liabilities (disposed of) in the period
Transfer to short-term from long-term
Office buildings
$'000
Vehicles
$'000
Total
$'000
174
89
(1)
-
-
-
174
89
(1)
Amounts due in less than one year
103
-
103
188
-
188
Effects of foreign exchange movements
(6)
-
(6)
At 31 December 2021
Repayments of principal
(171)
-
(171)
As noted above, at the end of 2021 the Group had had plans to relocate certain office functions spread over a number of
offices in the Bangalore area to one larger office. However, the Group was not able to find a suitable space and accordingly
no such relocation was made. The relevant existing leases (all of which are on short term notice periods) were deemed to
have been extended accordingly and additional lease liabilities recognised accordingly.
80
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
At 31 December
2022
$’000
2021
$’000
Due within one year
Trade payables
534
152
Other payables
363
451
Total trade and other payables
897
603
Trade payables include amounts due in respect of sales
commissions due to sales agents which is payable in less
than one year. Other payables comprise principally
amounts due in respect of staff bonuses declared for
December and paid in January.
At 31 December
Due after one year
2022
$’000
2021
$’000
Contract liabilities at 1 January
278
207
Transfers to short-term liabilities
(97)
(81)
Contract liabilities at 31 December
181
278
Under the Indian Payment of Gratuity Act 1972,
employees with more than 5 years’ service are eligible
for the payment of a “gratuity” upon certain end of
employment events, including retirement, resignation,
death and termination or redundancy. The calculation
of the gratuity due is based on the last drawn salary and
number of years of service. The potential liability arising
from these requirements is calculated by third party
actuaries based on employee profiles, their completed
number of years in the organization, their age, salary
and
also
on
the
probability
of
termination
of
employment, and a provision made accordingly.
25. Trade and other payables and contract liabilities
The average credit period taken for normal trade
purchases is between 30 and 60 days. Most suppliers do
not charge interest on trade payables for the first 30
days from the date of the invoice. The Group has risk
management policies in place to ensure that all payables
are paid within the appropriate credit time frame. The
Directors consider that the carrying amount of trade
payables approximates to their fair value.
Contract liabilities
Contract liabilities represent consideration received in
respect of unsatisfied performance obligations. Changes
to the Group’s contract liabilities are attributable solely
to the satisfaction of performance obligations.
Contract liabilities recognised in
the period
-
152
At 31 December
Due within one year
2022
$’000
2021
$’000
Contract liabilities at 1 January
469
495
Transfers from long-term liabilities
97
81
Contract liabilities at 31 December
174
469
Contract liabilities
recognised/(released to revenue) in
the period
(392)
(107)
26. Provisions
At 31 December
Due after one year
2022
$’000
2021
$’000
Employee gratuities
144
141
199
202
Leave encashment
55
61
At 31 December
Due within one year
2022
$’000
2021
$’000
Employee gratuities
8
7
73
72
Leave encashment
44
30
Other provisions (including tax)
21
35
Other provisions comprise tax and other expenses.
81
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
$’000
Number
Ordinary shares of 2.5p each
(issued and fully paid)
At 1 January 2021
1,212
37,032,431
Issued for cash during the
year
289
8,375,000
At 31 December 2022
1,606
48,862,431
27. Share capital and reserves
Under the terms of their employment, employees are
eligible to carry forward 30 “earned leaves” (EL) to the
next calendar year. Any EL balance over and above this is
paid in cash by March the following year, hence resulting
in a long-term provision.
Share capital and share premium
At 31 December 2021
1,501
45,407,431
Issued in lieu of cash during
the year
105
3,455,000
28. Financial instruments
Financial risk management
The Group’s principal financial instruments are cash and
deposits, trade receivables, contract assets, borrowings
and trade payables. The Group therefore has exposure to
certain risks from its use of financial instruments
unrelated to the performance of the Group itself. The
Group's overall risk management programme seeks to
minimise potential adverse effects on the Group’s
financial performance and such risk management is
carried out by the Directors.
The Group’s activities expose it to certain financial risks:
market risk, credit risk and liquidity risk, as explained
below.
Market risk is the risk of loss that may arise from
changes in market factors such as interest rates
and foreign currency movements.
Credit risk is the financial loss to the Group if a
customer or counterparty to financial instruments
fails to meet a contractual obligation. Credit
risk arises from the Group’s cash and cash
equivalents and receivables balances.
Cash
is
held
predominantly
with
ICICI,
an
institution with a Baa3 credit rating on its senior
unsecured medium-term notes from Moody's and
a BBB- rating from Standard & Poors, and Kotak
Mahindra Bank, which has an A-3 (short term) and
BBB- (long term) credit rating from Standard &
Poors. The credit quality of customers is assessed
by considering their financial position, experience
and other factors, and the Group minimises credit
risk by dealing exclusively with those customers
who it believes have a high credit rating.
Liquidity risk is the risk that the Group will not be
able to meet its financial obligations as they fall
due. This risk relates to the Group’s liquidity risk
management and implies maintaining sufficient
cash and/or committed borrowing facilities. The
Directors monitor rolling forecasts of liquidity and
cash and cash equivalents based on expected cash
flows.
The capital structure of the Group consists of debt,
which includes borrowings as disclosed in note 23 and
equity attributable to equity holders of the parent,
comprising issued capital, reserves and retained earnings
as disclosed in the Group statement of changes in equity,
as follows:
At 31 December
2022
$’000
2021
$’000
Borrowings
559
744
Equity attributable to equity
holders of the parent
5,897
19,816
6,456
20,560
82
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
The Group is not subject to any externally imposed
capital requirements and the objective when managing
capital is to maintain adequate financial flexibility to
preserve the ability to meet financial obligations, both
current and long term - the resulting capital structure is
managed and adjusted to reflect changes in economic
conditions and with a view to maximising the return to
shareholders through optimisation of the balance of debt
and equity. Financing decisions are made based on
forecasts of the expected timing and level of capital and
operating expenditure required to meet commitments
and development plans. There was no change in the
Group’s approach to capital management during the
financial period under review.
The following table shows the denomination of the year
end cash, cash equivalents and borrowings, and trade
receivables and payables balances in the principal
currencies disclosed above:
2022
$’000
2021
$’000
Classification of financial
instruments
Financial assets at amortised cost
987
3,331
Cash
70
77
Deposits
3,450
4,956
Trade receivables
Financial liabilities at amortised cost
363
451
Other payables and accruals
534
152
Trade payables
130
136
Short-term borrowings
429
608
Long-term borrowings
320
268
Lease liabilities
All trade receivables are due from customers outside the
UK.
GBP
'000
INR
’000
As at 31 December
2022
111
34,519
Cash and cash
equivalents
4
5,435
Deposits
-
63,054
Trade receivables
-
(46,176)
Borrowings
(24)
-
Trade payables
(18)
(23,258)
Lease liabilities
73
33,574
Net currency exposure
USD
’000
407
-
2,688
-
(503)
-
2,592
GBP
'000
INR
’000
As at 31 December
2021
1,875
27,282
Cash and cash
equivalents
-
5,430
Deposits
-
52,641
Trade receivables
-
(53,477)
Borrowings
(19)
(7,823)
Trade payables
-
(17,961)
Lease liabilities
1,856
6,092
Net currency exposure
USD
’000
406
-
4,331
-
(121)
-
4,616
The sensitivity analysis above demonstrates the effect of
a change in one of the key assumptions while other
assumptions remain unchanged. In reality, such an
occurrence is very unlikely due to correlation between
the factors. Furthermore, these sensitivities are non-
linear, and larger or smaller impacts cannot easily be
derived from the results. The sensitivity analysis does not
take into consideration that the Group’s assets and
liabilities are actively managed and may vary at the time
that any actual market movement occurs.
Foreign currency risk management and sensitivity
analysis
The Group undertakes certain transactions denominated
in foreign currencies. Hence, exposures to exchange rate
fluctuations arise. The Group is mainly exposed to the
currencies of the UK (Great British Pounds or GBP), the
US (US dollars or USD) and India (Indian Rupees or INR),
both with respect to balance sheet amounts and income
and expenditure. Foreign currency risk is monitored
closely on an ongoing basis to ensure that the net
exposure is at an acceptable level.
Had the foreign exchange rate between the US dollar and
the other Group currencies changed by 5%, this would
have affected the profit for the year and the net assets
of the Group by $25,000 (2021: $154,000).
Limitations of sensitivity analysis
83
Group
Group
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities. The table
has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
Group can be required to pay. The table includes both interest and principal cash flows.
Fair values of financial assets and financial liabilities
Interest rate risk management and sensitivity analysis
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. At the year end the Group had no exposure to interest rate risks as all of its borrowings
were fixed rate.
Liquidity risk management and interest risk tables
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and
liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and borrowing
facilities and by continuously monitoring forecast and actual cash flows.
Fixed rate instruments -
borrowings
Lease liabilities
Trade and other payables
Weighted
average effective
interest rate
Less than 1
year
$’000
2-5 Years
$’000
More than 5
years
$’000
Total
$’000
Carrying
value
$’000
15.1%
8.8%
-
208
190
897
529
130
-
558
320
897
-
737
-
-
320
897
Total
As at 31 December
2022
1,295
659
1,775
-
1,954
Weighted
average effective
interest rate
Less than 1
year
$’000
2-5 Years
$’000
More than 5
years
$’000
Total
$’000
Carrying
value
$’000
As at 31 December
2021
Fixed rate instruments -
borrowings
Lease liabilities
Trade and other payables
15.0%
7.1%
-
231
201
603
819
87
-
744
268
603
-
1,050
-
-
288
603
Total
1,035
906
1,615
-
1,941
As at 31 December 2022 and 31 December 2021 there were no material differences between the book value and fair value
of the Group’s financial assets and liabilities.
84
ANNUAL REPORT 2022
Notes to the Group Financial Statements (continued)
For the year ended 31 December 2022
2022
$’000
2021
$’000
Key management personnel -
outstanding reimbursements in
respect of expenses incurred on
behalf of Group companies
4
2
29. Related party transactions
The remuneration of the Directors, who are deemed to
be the only key management personnel of the Group, is
set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures.
Amounts outstanding at the end of the year in respect of
transactions with related parties were as follows:
30. Capital commitments and contingent liabilities
Other than as disclosed above, as at 31 December 2022
the Group had no material capital commitments (2021:
nil) nor any contingent liabilities (2021: nil).
2022
$’000
2021
$’000
Wages and salaries
646
596
Bonuses
10
135
Share-based payments
34
1
Pension cost and other
benefits in kind
42
50
732
782
Suresh Yezhuvath (the brother of Subash Menon and
Sudeesh Yezhuvath), due to his participation in a loan to
the Group taken out in 2019, received interest of
approximately $130,000 on normal commercial terms.
To comply with local legislation regarding resident
directors, Hamish Christie is a director of Pelatro Pte Ltd.
Mr Christie is also the proprietor of H.A. Christie & Co.
and Christie Cosec Services Pvt. Ltd, which firms provide
accountancy, tax and other advisory services to that
company. During the year payments of approximately
$18,000 were made to those two companies; there was a
balance of approximately $2,000 outstanding at the year
end in relation to 2022 expenses.
Other than disclosed in this note or elsewhere in this
financial information as appropriate, no related party
transactions have taken place during the year that have
materially affected the financial position or performance
of the Group.
31. Events after the reporting date
In March 2023 the Group arranged funding amounting to
$1.2 million into one of its subsidiaries. This will be used
for working capital and/or acquisition purposes. Other
than as disclosed above there have been no other events
subsequent to the reporting date which would have a
material impact on the financial statements.
85
ANNUAL REPORT 2022
Company Statement of Financial Position
As at 31 December 2022
Non-current assets
Investments in subsidiaries
Intangible assets
Contract assets
Note
2022
$’000
(audited)
2021
$’000
(audited)
7
8
242
-
371
4,744
Assets
9
558
606
822
5,842
Trade and other receivables
10
-
121
Right-of-use assets
22
-
Current assets
Contract assets
Trade and other receivables
Cash and cash equivalents
9
10
386
2,786
548
6,742
251
2,778
3,423
10,068
4,245
15,910
Total Assets
Non-current liabilities
Contract liabilities
11
181
278
Liabilities
191
278
Current liabilities
Lease liabilities
Contract liabilities
Trade and other payables
11
12
174
-
462
1,018
646
1,204
1,108
1,395
1,386
Total Liabilities
13
2,850
14,524
NET ASSETS
Share capital
Share premium
13
18,502
18,046
Issued share capital and reserves
attributable to owners of the parent
Contract liabilities
Retained earnings
(198)
(96)
(17,060)
(4,927)
2,850
14,524
TOTAL EQUITY
13
13
1,606
1,501
For the period ended 31 December 2022, the Company recorded a loss of $12,135,080 (2021: loss $1,606,000).
Lease liabilities
10
-
86
ANNUAL REPORT 2022
Company Statement of Financial Position
As at 31 December 2022
Subash Menon (Director)
The financial statements of Pelatro Plc, registered number 10630166, were approved by the board of Directors and
authorised for issue on 25 May 2023. They were signed on its behalf by:
Nic Hellyer (Director)
The accompanying notes 1 to 16 are an integral part of these financial statements.
87
ANNUAL REPORT 2022
Company Statement of Changes in Equity
For the year ended 31 December 2022
Balance at 1 January 2021
Profit/(loss) after taxation for the year
Share-based payments
Share
capital
$’000
Share
premium
$’000
Exchange
reserve
$’000
Share-based
payments reserve
$’000
Retained
profits
$’000
Total
equity
$’000
1,212
-
-
14,045
-
-
(369)
-
-
11,749
(1,606)
41
183
(3,322)
-
41
(1,606)
-
18,046
(319)
14,524
223
(4,927)
Transfer on forfeit of share options
Other comprehensive income:
Exchange differences
-
-
-
-
-
50
-
50
(1)
1
-
-
Transactions with owners:
Shares issued by Pelatro Plc for cash
289
4,334
-
4,623
-
-
Issue costs
-
(333)
-
(333)
-
-
1,501
Balance at 31 December 2021
Profit/(loss) after taxation for the year
Share-based payments
-
-
-
-
-
-
(12,135)
35
-
35
(12,135)
-
18,502
(454)
2,850
256
(17,060)
Transfer on forfeit of share options
Other comprehensive income:
Exchange differences
-
-
-
-
-
(135)
-
(135)
(2)
2
-
-
Transactions with owners:
Shares issued by Pelatro Plc for cash
105
463
-
568
-
-
Issue costs
-
(7)
-
(7)
-
-
1,606
Balance at 31 December 2022
Reserve
Description and purpose
Share capital
Nominal value of issued shares
Share premium
Amount subscribed for share capital in excess of nominal value less associated costs
Exchange reserve
The difference arising on the translation of balances denominated in currencies other
than US Dollars into the presentational currency of the Company
Share-based payments reserve
Cumulative amounts charged in respect of unsettled options issued
Retained earnings
All other net gains and losses not recognised elsewhere
The accompanying notes 1 to 16 are an integral part of these financial statements.
88
ANNUAL REPORT 2022
Notes to the Company financial statements
For the year ended 31 December 2022
The Parent Company financial statements of Pelatro Plc
(the “Company”) have been prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure
Framework and as required by the Companies Act 2006.
1. Accounting policies
No profit and loss account is presented by the Company
as permitted by section 408 of the Companies Act 2006.
Disclosure exemptions adopted
In preparing these financial statements the Company has
taken advantage of all disclosure exemptions conferred
by FRS 101. Therefore, these financial statements do not
include:
In addition, and in accordance with FRS 101, further
disclosure exemptions have been adopted because
equivalent disclosures are included in the consolidated
financial statements. These financial statements do not
include certain disclosures in respect of:
business combinations;
financial
instruments
(other
than
certain
disclosures required as a result of recording
financial instruments at fair value);
fair value measurement (other than certain
disclosures required as a result of recording
financial instruments at fair value); and
Basis of preparation
The financial statements have been prepared in US
Dollars, which is the currency of the primary economic
environment in which the Company operates (its
functional currency).
certain disclosures regarding the Company’s
capital;
a statement of cash flows;
the effect of future accounting standards not yet
adopted;
the disclosure of the remuneration of key
management personnel; and
disclosure of related party transactions with
other wholly-owned members of the Pelatro
Group.
impairment of assets.
Investments in and amounts due from subsidiaries
Investments
consist
of
the
Company’s
subsidiary
undertakings. Investments are initially recorded at cost,
being the fair value of the consideration given and
including directly attributable charges associated with
the investment. Amounts due from subsidiaries (i.e.
inter-company debtors) arise in the ordinary course of
funding the Group's activities.
Investments are reviewed for impairment if events or
changes in circumstances indicate the carrying value
may not be recoverable (e.g. the net asset value of the
subsidiary falls below the carrying value of the
investment or the amount due). Inter-company debtor
impairment
provisions
are
determined
using
the
simplified approach to calculate the expected credit loss.
89
ANNUAL REPORT 2022
Notes to the Company financial statements
For the year ended 31 December 2022
Current tax assets and liabilities are measured at the
amount expected to be recovered from or paid to
taxation authorities, based on tax rates and laws that are
enacted or substantively enacted by the statement of
financial position date.
Taxation
Deferred income tax assets and liabilities are offset only
if a legally enforceable right exists to set off current tax
assets against current tax liabilities, the deferred income
taxes relate to the same taxation authority and that
authority permits the Group to make a single net
payment.
Income taxes
Deferred income tax is recognised on all temporary
differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial
statements, with the following exceptions:
where the temporary difference arises from the
initial recognition of goodwill or of an asset or
liability in a transaction that is not a business
combination that at the time of the transaction
affects neither accounting nor taxable profit or
loss;
Foreign currencies
Transactions denominated in foreign currencies are
translated at an approximation of the exchange rate
ruling on the date of the transaction. Assets and
liabilities
denominated
in
foreign
currencies
are
translated at the exchange rate ruling on the balance
sheet date. Resulting exchange gains and losses are taken
to the profit and loss account.
Related party transactions
The Company has taken advantage of the exemption
under FRS 101 from disclosing related party transactions
with
entities
that
are
wholly
owned
subsidiary
undertakings of the Pelatro Group.
in respect of taxable temporary differences
associated within investments in subsidiaries,
associates and joint ventures, where the timing of
the reversal of the temporary differences can be
controlled and it is probable that the temporary
differences will not reverse in the foreseeable
future; and
deferred income tax assets are recognised only
to the extent that it is probable that taxable
profit will be available against which the
deductible
temporary
differences,
carried
forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply when the
related asset is realised, or liability is settled, based on
tax rates and laws enacted or substantively enacted at
the statement of financial position date.
The carrying amount of deferred income tax assets is
reviewed at each statement of financial position date.
Income
tax
is
charged
or
credited
to
other
comprehensive income or directly to equity if it relates
to items that are credited or charged to other
comprehensive income or directly to equity. Otherwise,
income tax is recognised in the income statement.
Trade receivables
Short
term
trade
receivables
are
measured
at
transaction price, less any impairment. The Company
assesses at each reporting date whether any trade
receivables or other assets or group of financial assets is
impaired.
90
ANNUAL REPORT 2022
Notes to the Company financial statements
For the year ended 31 December 2022
Following this assessment, the Directors consider they have made sufficient provisions against their respective carrying
values.
The figures within the auditors’ remuneration note in the Pelatro consolidated financial statements include fees charged
by the Company’s auditors to Pelatro plc in respect of audit and non-audit services. As such, no separate disclosure has
been given above.
3. Auditor’s remuneration
Information concerning Directors’ remuneration can be found in note 10 to the Group financial statements.
4. Directors’ remuneration
Share-based payments associated with share options granted to employees of subsidiaries of the parent company are
treated as an expense of the subsidiary company to be settled by equity of the parent company. The share-based payment
expense increases the value of the parent company’s investment in the subsidiaries and is credited to retained earnings.
5. Share-based payments
No dividends were declared or paid during the year and no dividends will be proposed for approval at the Annual General
Meeting of the Company.
6. Dividends paid and proposed
At 1 January 2021
7. Investment in subsidiaries
$’000
36
Investment in the period – share-based payments in respect of
subsidiaries
(490)
Impairment provision
At 31 December 2021
-
Investment in the period – share-based payments in respect of
subsidiaries
371
825
At 31 December 2022
242
Investments in subsidiary companies
The carrying value of the recoverability of the Company’s investments in and amounts due from subsidiary companies is
reviewed at each reporting date in accordance with the accounting policies.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are as follows:
Key sources of estimation uncertainty
2. Critical accounting judgements and key sources of estimation uncertainty
Impairment provision
(129)
91
ANNUAL REPORT 2022
Notes to the Company financial statements
For the year ended 31 December 2022
8. Intangible assets
Intangible assets comprise software acquired through business combinations, customer relationships and goodwill.
An analysis of goodwill and other intangible assets is as follows:
Cost
At 1 January 2021
Additions
Acquired software
$’000
Customer relationships
$’000
Goodwill
$’000
1,250
-
6,862
-
43
-
Financial year 2021
At 31 December 2021
1,250
6,862
43
Total
$’000
8,155
-
8,155
Amortisation or impairment
At 1 January 2021
Charge for the year
(755)
(312)
(1,658)
(686)
-
-
At 31 December 2021
(1,067)
(2,344)
-
(2,413)
(998)
(3,411)
Net carrying amount
At 31 December 2021
At 31 December 2020
183
495
4,518
5,204
43
43
4,744
5,742
Cost
At 1 January 2022
Additions
Acquired software
$’000
Customer relationships
$’000
Goodwill
$’000
1,250
-
6,862
-
43
-
Financial year 2022
At 31 December 2022
1,250
6,862
43
Total
$’000
8,155
-
8,155
Amortisation or impairment
At 1 January 2022
Charge for the year
(1,067)
(183)
(2,344)
(686)
-
-
At 31 December 2022
(1,250)
(6,862)
(43)
(3,411)
(869)
(8,155)
Net carrying amount
At 31 December 2022
At 31 December 2021
-
183
-
4,518
-
43
-
4,744
Impairment
-
(3,832)
(43)
(3,875)
92
ANNUAL REPORT 2022
Notes to the Company financial statements
For the year ended 31 December 2022
Goodwill arose on the acquisition of the Danateq Assets.
It is assessed as having an indefinite life but the
Company tests whether goodwill has suffered any
impairment on an annual basis. The Danateq Acquisition
in 2018 comprised various contracts and customer
relationships, certain enterprise software and the
related workforce. Given the opportunity to leverage this
expertise across Pelatro's existing business and the
ability to exploit the Group’s thus enlarged customer
base,
the fair value of the Danateq assets acquired was
deemed to be greater than the assessed book value of
the assets as recognised in the financial statements of
the Company, thus leading to the recognition of an
amount of goodwill.
9. Contract assets
2022
$’000
2021
$’000
Due after one year
606
746
At 1 January
238
195
Contract assets recognised in
the period, net of releases to
receivables or cash, or
amortisation to profit or loss
(261)
(335)
Transfer to current contract
assets
558
606
At 31 December
2022
$’000
2021
$’000
Due within one year
548
552
At 1 January
(190)
(339)
Contract assets recognised in
the period, net of releases to
receivables or cash, or
amortisation to profit or loss
261
335
Transfer from non-current
contract assets
386
548
At 31 December
Contract assets are comprised as follows:
2022
$’000
2021
$’000
Contract assets relating to revenue
Contract fulfilment assets
271
595
673
559
944
1,154
Credit risk and impairments
The Group recognises impairments under IFRS 9 for
relevant classes of assets. The Group thus reviews the
amount of expected credit loss associated with its trade
receivables based on forward looking estimates that take
into account current and forecast credit conditions as
opposed to relying on past historical default rates. In the
absence of any historic credit losses and the expectation
of no specific losses in the foreseeable future, the
Directors assess a hypothetical likely default amount by
applying a percentage "probability of default" to the
receivables balance, such probability being related to
the underlying credit rating of the customer or country
of origin. Furthermore, taking into account the time
value of money when applied to contract assets (which
may unwind over a period of years following their initial
recognition), a loss allowance for expected credit losses
has been recorded as follows:
2022
$’000
2021
$’000
89
37
Loss allowance at 1 January
(21)
52
Increase/(decrease) in loss
allowance
68
89
Loss allowance at 31 December
2022
$’000
2021
$’000
57
75
On trade receivables
11
14
On contract assets
68
89
Loss allowance at 31 December
Contract assets are comprised as follows:
(25)
-
Amounts written off
(233)
-
Amounts written off
93
ANNUAL REPORT 2022
Notes to the Company financial statements
For the year ended 31 December 2022
10. Trade and other receivables
2022
$’000
2021
$’000
278
207
Contract liabilities at 1 January
-
152
Contract liabilities recognised in
the period
181
278
Contract liabilities at 31 December
2022
$’000
2021
$’000
-
2,583
Intra-Group receivables
2,786
6,742
Total trade and other receivables
2,644
3,997
Trade receivables
142
162
Other receivables and prepayments
Due within a year
-
121
Trade receivables
Due within a year
Intra-Group receivables as at 31 December 2021 have
been restated to reflect the grossing up of debtor and
creditor balances.
11. Contract liabilities
Contract liabilities represent consideration received in
respect of unsatisfied performance obligations. Changes
to the Group’s contract liabilities are attributable solely
to the satisfaction of performance obligations.
At 31 December
Due after one year
(97)
81
Transfers to short-term
liabilities
2022
$’000
2021
$’000
462
486
Contract liabilities at 1 January
(385)
(105)
Contract liabilities recognised /
(released to revenue) in the period
174
462
Contract liabilities at 31 December
At 31 December
Due within one year
97
81
Transfers from long-term liabilities
12. Trade and other payables
2022
$’000
2021
$’000
518
133
Trade payables
Due within a year
18
12
Other payables
1,018
646
Total trade and other payables
13. Share capital and reserves
$’000
Number
1,212
3,455,000
At 1 January 2021
289
8,375,000
Issued in lieu of cash
during the year
1,501
45,407,431
At 31 December 2021
Share capital and share premium
Ordinary shares of 2.5p each
(issued and fully paid)
105
3,455,000
Issued in lieu of cash during
the year
1,606
48,862,431
At 31 December 2022
As further detailed in Note 11 to the Consolidated
Financial Statements, the Company has granted under
the terms of a share option plan for employee options
with an exercise price of 73p, vesting in tranches as
follows: 25% after one year, 25% after two years and
50% after three years. There are no conditions attaching
to the vesting of the options other than continued
employment. An expense of $45,000 (2021: $32,000)
recorded in the Consolidated Financial Statements
relates to costs of share options issued to subsidiary
employees.
Share-based payments
482
501
Intra-Group payables
Intra-Group payables as at 31 December 2021 have been
restated to reflect the grossing up of debtor and
creditor balances.
94
ANNUAL REPORT 2022
Notes to the Company financial statements
For the year ended 31 December 2022
Granted during the year
Forfeited/cancelled during the year
2022
2021
2022
250,000
(170,000)
-
(149,000)
2.5p
73.0p
No. of options
Outstanding at the end of the year
1,436,500
1,356,500
60.8p
2021
-
73.0p
72.7p
Movements in the number of share options outstanding and their related weighted average exercise prices are as
follows:
Weighted average exercise price
Outstanding at the beginning of the year
1,356,500
1,505,500
72.7p
72.7p
14. Capital commitments and contingent liabilities
Other than as disclosed in the Group financial statements, as at 31 December 2022 the Group had no material capital
commitments nor any contingent liabilities (2021: $nil).
15. Events after the reporting date
There have been no significant events which have occurred subsequent to the reporting date.
16. Related parties
The Company is exempt from disclosing transactions within the wholly owned subsidiaries in the Group. Other related
party transactions are included within those disclosed in the Group consolidated financial statements.
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ANNUAL REPORT 2022
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ANNUAL REPORT 2022