Registered Number SC005543
Annual report and financial statements
for the year ended 31 December 2021
Annual report and financial statements
for the year ended 31 December 2021
Contents
Chairman's statement ........................................................................................................................................... 1
Strategic report ..................................................................................................................................................... 5
Directors’ report ................................................................................................................................................. 15
Statement of directors' responsibilities in respect of the financial statements ................................................. 23
Independent auditors’ report to the members of Touchstar plc ....................................................................... 25
Consolidated income statement ......................................................................................................................... 30
Consolidated statement of changes in equity .................................................................................................... 31
Company statement of change in equity ............................................................................................................ 31
Consolidated and Company statement of financial position .............................................................................. 32
Consolidated and Company cash flow statements ............................................................................................. 34
Notes to the Group financial statements ........................................................................................................... 35
Group Information…………………………………………………………………………………………………………………..……...…………...68
Chairman’s statement for the year ended 31 December 2021
Introduction
I am pleased to report that Touchstar has delivered a strong set of results, above market expectations, for the
year ended 31 December 2021 (“FY2021”), against what has been a challenging backdrop in the world’s
economy. Profit after tax is up 290% to £341,000 (2020: £87,000) and there has been EBITDA growth of
£218,000 to £1,072,000 (2020: £854,000).
The Group has displayed its resilience in the face of the global COVID-19 pandemic and has seen a positive
change in business strength with the new and more profitable revenue streams coming to the fore.
The Company reports a strong year-end cash balance, net of the Coronavirus Business Interruption Loan, of
£2,380,000 and a year-end order book of £646,000 which means the Group is well placed to build on last year’s
performance, we look forward to delivering further strategic progress.
Financial review
Revenue for the year ended 31 December 2021 increased 3.7% to £6,104,000 (2020: £5,886,000). Very
pleasingly recurring revenue increased 14% to £2,322,000 (2020: £2,037,000) and represented 37.4% of total
revenue (2020: 34.6%). The development of recurring revenue is a key to our strategy and future success- as
of 8 April 2022, run rate recurring revenue had increased further to £2,550,000.
It was also pleasing to see the Group experience a healthy recovery in the areas that had been most impacted
by the pandemic in 2020. Nevertheless unsurprisingly, the overall rate of growth was held back in the early
part of the year by the suspension of awards of large projects in the petrochemical distribution sector due to
the re-emergence of the pandemic. Major projects in this area tend to have lead times of 9-12 months, and it
was only in the second half of 2021 that new major projects began being confirmed for 2022 and beyond, thus
revenue in this sector reduced in 2021.
The order book at year end 2021 stood 36% higher at £646,000 compared to the prior year end level of
£475,000.
Gross margins increased in 2021 to 59.5% (2020: 52.0%) driven by a higher level of software sales and
operational efficiency.
Overhead costs increased by 8.9% as expected in 2021 to £3.5 million (2020: £3.1 million). This comparison
excludes the benefits of the Coronavirus Job Retention Scheme which totalled £44,000 in 2021 (2020:
£146,000).
Total spend on research and development during the year amounted to £935,000 (2020: £760,000), of which
£460,000 (2020: £429,000) has been capitalised, as we invested in additional software modules in the proof of
delivery product set.
The positive effects of both higher revenue and improved margins had a dramatic effect upon profitability with
earnings before interest tax and amortisation and depreciation (EBITDA) increasing to £1,072,000 (2020:
£854,000), operating profit before share based payments increasing to £233,000 (2020: £39,000) and profit
before tax increasing to £207,000 (2020: £23,000).
1
Chairman’s statement for the year ended 31 December 2021
(continued)
Due to our R&D expenditure we again benefitted from a tax credit being £134,000 (2020: £64,000) such that
our profit for the year increased 292% to £341,000 from £87,000. This translated into a similar rise in earnings
per share to 4.02p (2020: 1.03p).
As of 31 December 2021, we remained debt free and our cash, net of overdraft and the £135,000 Coronavirus
Business Interruption Loan, was a very healthy £2,380,000 a rise of approximately £609,000 from the prior year
position of £1,771,000. This nevertheless understates the strength of the underlying cash generation from the
business; in 2021 cash was applied to the normalisation of trade and other payables as we unwound deferred
amounts due under the Government’s support packages to business.
Operational review
Whilst the Group and general business environment continued to work within COVID-19 policies and
restrictions, Touchstar saw a positive change in business strength with the new and more profitable revenue
streams coming to the fore; including, increased software licence charges and software development for
bespoke work as well as charging professional fees for services delivered. As a result, the business experienced
a growth in revenue and profitability. Those areas of the business that had experienced the more dramatic
slowdowns in 2020, saw strong and positive recovery during 2021, namely, product sales more associated with
Capital expenditure in Logistics and the ability to commence with onsite work in the Access Control
marketplace, which otherwise had been restricted in 2020.
During the year, the Group continued to enhance the customer driven functionality of its software solutions.
Our in-house developed software, utilising modern cloud-based services, has played a major part in customer
gains and retention. In addition, the Group’s specialist and robust hardware, where margins continue to be
healthy, gives us a real competitive advantage in the proof of delivery market. The TS3200 Android rugged
tablet has and is playing an important part in the continued success and adoption of our solutions.
Retention of customers, as well as securing new clients, is a key focus for the Group. The business is currently
benefiting from many of its existing clients going through the process of an upgrade cycle with us – a testament
to our ongoing service and support. This provides the opportunity to increase the recurring revenue as they
adopt the latest licence-based solution. We now have around 8 major clients operating on the new platform
and another 8 existing clients in the throes of either pilot or roll out phase over the coming 12 to18 months.
During 2021 there were challenges in the timely supply of product and components within the supply chain,
but the Group successfully navigated its way through. We expect these challenges will continue in 2022 and
therefore we will require the same continued focus to mitigate and reduce any impacts that may arise.
Alongside the software developments, we continue to enhance our product sets within the hardware
element of our solution. All devices now designed and supplied utilise the Android operating system – the
defacto choice worldwide.
The dynamics of the team within the business evolve and change too. The Group now has a central support
team for all products, operating out of our Manchester office and we continue to build on our UK in-house
software development and test team. These investments are now necessary given the solution set we now
own and supply to the marketplace.
2
Chairman’s statement for the year ended 31 December 2021
(continued)
Strategy
The objective remains to execute our strategy effectively; delivering organic growth, margin improvement,
building Software as a Service (“SaaS”) revenues at an even faster rate, and achieving higher levels of
profitability.
The Board believes Touchstar has the medium-term potential of sustaining annual double digit top line
growth from our existing businesses driven by:
•
•
•
•
Existing customers upgrading to mobile cloud-based solutions
Capture of new customers
Introduction of enhanced products and solutions
Introduction of more professional services
In addition, we expect the growth rate of recurring revenue to continue to outpace total revenue growth, as
SaaS revenues build. Professional services and licences are predominantly annual charges and thereby we
envisage recurring revenue will continue to grow and strengthen within the Group. The target is for recurring
revenue to account for 40% of total revenue by the end of 2022.
We expect the revenue stream will continue to strengthen in high margin areas such as licences, professional
services, and software development - further enhancing the earnings and building the Group’s strength in the
medium and long term
Current trading and prospects
We intend to build upon the considerable progress made last year. Over the last two years the consistent
message has been that in 2022 the underlying growth rate in all the Group’s businesses should harmonise and
return to normalised trading patterns.
2022 has started well, with a healthy opening order book followed by a strong first quarter of trading. Short-
term prospects are being tempered somewhat by a level of inactivity which we believe is a momentary reaction
to the present economic and global uncertainty, with orders being held up, not lost. So far, we have been able
to balance the pressures on costs by increasing prices in a targeted and appropriate manner, this will need to
be constantly assessed and reviewed during the year.
Realistically the combination of the geo-political instability, inflationary pressures and higher interest rates will
inevitability result in hesitancy in corporate decision making. The assumption made is that this year will see
some subdued levels of macro-economic growth and investment. Currently there has been no material change
to the business from the distressing and sad situation in Ukraine – our thoughts and hopes are with the innocent
people caught up in that conflict.
Whilst we have tempered our enthusiasm in the short-term, the Board believes that the steps we have taken
will see growth in revenue and EBITDA continue in 2022, driving further progress in our financial performance.
3
Chairman’s statement for the year ended 31 December 2021
(continued)
Distributable reserves
The directors would like to have the ability to consider returning value to shareholders either via share
buybacks or the payment of dividends. However, to be able to do this company law requires the Company to
have positive distributable reserves. At present the Company does not have positive distributable reserves
due the deficit on its retained earning reserve which as at 31 December 2021 stood at £2,236,000. The
Directors are consulting with the Company’s advisers over how best to eliminate this deficit which they
believe can be through a combination of dividend payments from the Company’s underlying subsidiaries and
a capital reduction.
Concluding thoughts
The Board’s strategy is clear and remains consistent. We must capitalise on the forward momentum gained,
using internally generated cash to support our rate of organic growth, innovate our products, enhance our
solutions, invest in our people, increase returns to shareholders and become a better business.
The Company has made good progress over the last two years despite the impacts of COVID-19. Touchstar has
already become a much more resilient focussed, coherent, high-quality business with true growth potential.
This has only happened through the dedication, hard work and talent of the people within the Group. Thank
you to all - it is greatly appreciated.
The Board is committed to creating and delivering value that reflects the prospects and embedded value within
the business. With the Company’s cash reserves, a strong balance sheet, growing revenues and especially
recurring revenues that will allow us to increasingly position the company as a software business, the Board is
confident of the Company’s prospects and of increasing shareholder value.
I Martin
Executive Chairman
25 April 2022
4
Strategic report for the year ended 31 December 2021
Business review and principal activities
The Group supplies, installs and maintains licenced software applications and hardware solutions for mobile
applications in the transport, logistics and access control industries. We continue to develop and enhance the
Group’s product portfolio and whilst we continue to supply our core and the more traditional product set, the
new complete solutions allow for increased revenues, greater business stability and profitability for the future.
Profitability
Whilst the business and general environment continued to work within Covid policies and restrictions, which
impacted the Group performance, 2021 has seen a strategic change in business strength with the new and
more profitable revenue streams coming to the fore. Despite the reduction in face-to-face meetings, the
business experienced a modest growth in sales turnover on the previous year of around 4%. Cash generation
remained healthy with the Group year-end cash position in excess of £2.5 million, and the business made
£341,000 profit after Tax, close to 300% increase over 2020 profit of £87,000.
Total recurring revenue
During 2021, the decision to supply and support complete solutions has further strengthened the Group.
Recurring revenue is now a valuable asset within the Groups business. 2020 saw total recurring revenue
increase by 6% on 2019 and this trend continues. In 2021 recurring revenue increased 14% on 2020. This
change in strategy is making a positive impact into the performance and underlying value of the business. In
2021, the Groups recurring revenue equated to 38% of turnover and the Board envisage this percentage will
continue increasing.
As of 8 April 2022, run rate recurring revenue had increased further to £2,550,000.
5
Strategic report for the year ended 31 December 2021 (continued)
The chart below demonstrates the consistent strategic progression of building the business’s recurring
revenue over the previous years:
Software Licence Recurring Revenue
Whilst the Group enjoyed an increase of 14% in total recurring revenue over previous years, the predominant
impact in growth of this type of profitable revenue has come from software licence, a key strategic goal.
Recurring revenue in software licences grew a marked 18% over 2020 performance. This key area of growth
will continue to increase as the change in our business strategy takes effect. If growth in total revenue
continues as expected, we anticipate software licence revenue to exceed hardware recurring revenue in 2022
and grow further still in 2023 and beyond.
6
Strategic report for the year ended 31 December 2021 (continued)
As we have now become a more focussed software and solution orientated business, we have strengthened
the technical and professional services team to provide the best support for our product delivery. Whilst we
continue to grow sales in the solutions area, we still recognise the continuing value that the existing legacy
product sets bring to the business, albeit we are managing down our business reliance on these.
All the Touchstar software products we now offer, are in house owned (IPR) which eliminates our reliance on
third party suppliers and provides maximum flexibility in growing the sales and profit line of the Group. This
move has allowed us to increase the sales of software development as customers require tweaks and
modifications to our standard products to suit their operation. The chart below illustrates the past 4 years of
software development sales, demonstrating an increase of over 200% in this time.
We continue to secure large contracts with blue chip companies across the UK and Europe. The strategy to
supply a SaaS (Software as a Service) model to the industry has become quite widely accepted. This now
provides consistent recurring revenue greater than in previous years. Combining increases of recurring
revenue and the above software development charges has now led to improved Gross margin, of 59% of the
group turnover in 2021 (52% in 2020). As of 8 April 2022, software development and support fees booked
and to be invoiced in 2022 stood at £184,000.
The Group operates under the Touchstar brand providing consistent brand awareness of the operating
companies which has been successful in promoting a cohesive and singular business and all can be accessed
under one web site: www.touchstar.co.uk.
Business environment
The Group’s operations remain focused on the logistics, transport distribution and secure access control
markets. Although servicing different customers, the nature of the products, services and channels to market
are comparable and hence the directors regard the Group as operating in one primary segment, where the
risks and returns are similar.
7
Strategic report for the year ended 31 December 2021 (continued)
Business environment (continued)
At the start of 2021, the UK and most of the world were still experiencing strict lockdowns and restrictions.
The uplift in general business terms in the latter part of 2020 were diminished in the first quarter of 2021. The
restriction and general approach to the Covid pandemic during 2021 had an effect on the business. By the year
end of 2021, Touchstar saw marked improvements in the two product areas, that had subdued performance
in 2019; namely Warehouse & Logistics and Access Control. Both these areas saw strong recovery. The
Transport and Logistics systems (proof of Delivery solution) generally have longer lead times from enquiry to
order placement and as such had a lower level of sales in 2021, due to the 2020 Covid country shutdowns,
where new projects being sanctioned was low and thus enquiries dropped.
During this period, we continued to enhance customer driven functionality to the Software solutions. We
continued with product development plans and focussed on building more solid and robust solutions for
existing and future customers. Our in-house developed software solutions, utilising modern cloud-based
services, have played a massive role in the Groups development. Specialist hardware, where margins continue
to be healthy, gives us a real competitive advantage in the fuel delivery market and our TS3200 Android rugged
tablet is key to the continued success and adoption of our solutions.
In the Warehouse and Logistics market, the Group provides mobile computing solutions for warehouse
operations for both truck-mounted and hand-held applications. These solutions communicate using wireless
technology and provide real time data. This technology improves supply chain management and significantly
reduces warehouse operating costs. In 2021, after a Covid hit sales result in 2020, this product set performed
well in 2021 and has formed some solid key account relationships.
The Group designs and supplies Access Control Systems for industrial and retail environments. This sector was
also heavily affected by the pandemic lockdowns of 2020. In 2021 the activity in this area improved markedly
and success was seen with new clients being added to the customer list.
Strategy
The Group’s overriding strategy is to achieve attractive and sustainable rates of growth and returns through
organic means. Whilst presently the Group is not actively looking for acquisitions, any opportunity that should
arise will be assessed and considered on merit.
Organic growth
During the year, we secured a number of new customers. There is no doubt without the pandemic, the business
would have secured more new customers, which is a fundamental part of organic growth. The latest
technologies that we have implemented into our solutions have assisted in growing our business into new sales
avenues, in terms of software and managed services. The directors are confident this will continue to generate
additional sales revenues and further secures our position in a competitive market.
8
Strategic report for the year ended 31 December 2021 (continued)
Organic growth (continued)
Revenue growth over the next few years will be expected to come in the form of capital sales, but an increasing
element of the sale will focus on recurring revenue as contracts extended into three and five year minimum
terms. Pricing policies will allow for annual upfront payment as well as monthly licence payment for software
usage (SaaS).
Product range
The Group product range include elements in three distinct sets; Software applications, Mobile computer
hardware and Managed services. The Group will continue to invest in these core areas and to reduce product
costs where possible.
In-house designed hardware and application software gives the business the opportunity to create market
specific solutions backed by a complete managed service. This provides an offering far better than the
competition, who rely on elements of third-party product to construct their solution and aftersales support
programme.
Environmental
The Group recognises the importance of managing consumption of the world’s natural resources as well as
providing a safe and healthy working environment for its employees. The Group consumes non-replaceable
raw materials and energy and clearly the successful growth of the Group will lead to an increased consumption
of raw materials on an absolute basis. We therefore seek to reduce the amount of resources consumed on a
unit by unit basis to limit the size of our environmental footprint.
Principal risks and uncertainties
The directors recognise there are a number of risks within the business which may significantly impact the
performance of the business. These risks are subjected to regular review and, where appropriate, processes
are established to minimise the level of exposure. These are summarised below:
1. People
The principal asset of the Group is the commitment and skill of its people. The retention of these people is
therefore key to the success of the business. The Group monitors closely the satisfaction of its employees and
ensures that remuneration packages match both contribution and the wider employment market. In addition,
the Group has in place schemes which are related to Group results, and which allow key employees to
participate in the success of the Group as a whole.
2. Technology changes
Changes in technology occur at an ever-increasing rate. Through its technical functions the business monitors
emerging technologies and seeks to understand how these technologies will impact our current business and
how they may be incorporated in designs of future product offerings.
9
Strategic report for the year ended 31 December 2021 (continued)
Principal risks and uncertainties (continued)
3. Competition
The Group recognises that it operates on a global basis and as such is subject to competitive global pricing as
well as service and performance criteria in local markets. Margins are monitored on a contract by contract basis
and commercial decisions are adjusted accordingly. The Group recognises that a global strategy will create
issues of foreign exchange fluctuations but that the overall contribution from such markets more than
compensates for the level of risk. As described in note 2.1 the COVID-19 pandemic has brought additional
macroeconomic and societal challenges which the business and the wider sector are adapting to.
4. Key commercial relationships
The Group has a diverse range of customers and suppliers, and whilst these relationships are of significant
importance to the Group’s development, no single customer or supplier is of critical importance to the ongoing
success of the Group.
As detailed in note 4, during the year ended 31 December 2021 approximately £932,000 (2020: £nil) of the
consolidated entity’s external revenue was derived from sales to one customer however this was not deemed
of critical importance to the ongoing success of the Group, this was a larger project which produces ongoing
revenue at much lower levels than that generated in 2021.
In the opinion of the directors there no issues or uncertainties around sustainability of the relationship.
5. Business partners
The Group operates through business partners in certain parts of the world. The retention of their loyalty to
the Group’s product offering is important. The business is in frequent contact with these companies and regular
visits are made. The Group also encourages these partners to supply local services, and hence earn a revenue
stream, for contracts that the Group may have secured on a worldwide basis. The financial risks faced by the
Group are detailed in the Directors report on page 20.
Section 172 Statement
Under section 172 of the Companies Act 2006 (“Section 172”), a director of a Group must act in a way that they
consider, in good faith, and would most likely promote the success of the Group for the benefit of its members
as a whole, taking into account the non-exhaustive list of factors set out in Section 172.
Section 172 also requires directors to take into consideration the interests of other stakeholders set out in
Section 172(1) in their decision making. See table below detailing each stakeholder along with why and how
we engage with each.
Touchstar Plc’s (“Touchstar”, “Group” or the “Company”) key stakeholders include its investors, employees,
regulatory bodies, suppliers and customers.
The Group’s strategy is to achieve attractive and sustainable rates of growth and returns through organic
means. Upon the successful implementation of the Group’s strategy, the Group will have an expanded range
of internal and external stakeholders, relations with which the Board will take into consideration when making
decisions on Group strategy.
Engagement with our members plays an essential role throughout our business. We are cognisant of fostering
an effective and mutually beneficial relationship with our members. Our understanding of our members is
factored into boardroom discussions regarding the potential long-term impacts of our strategic decisions.
10
Strategic report for the year ended 31 December 2021 (continued)
Post the reporting period end, the directors of the Group (“Directors”) have continued to have regard to the
interests of the Group’s stakeholders, including the potential impact of its future activities on the community,
the environment and the Group’s reputation when making decisions. The Directors also continue to take all
necessary measures to ensure the Group is acting in good faith and fairly between members and is promoting
the success of the Group for its members in the long term.
The table below acts as our Section 172 statement by setting out the key stakeholder groups, their interests
and how the Group engages with them. Given the importance of stakeholder focus, long-term strategy and
reputation to the Group, these themes are also discussed throughout this Annual Report.
Stakeholder
Why we engage
How we engage
• Regular
reports and analysis on
investors and shareholders
• Annual Report
• Group website
• Shareholder circulars
• AGM
• RNS announcements
• Press releases
• Evaluation and feedback processes for
employees and management
• Competitive rewards packages
• Encouraging employee training and
development
• Flat structure communication with
Board
• Group website
• RNS announcements
• Annual Report
• Direct contact with regulators
• Compliance updates at Board Meetings
• Consistent risk review
Our Investors
Our Employees
Regulatory
bodies
We maintain and value regular dialogue with
our financial stakeholders throughout the year
and place great importance on our relationship
with them. We know that our investors expect a
comprehensive
financial
performance of the Group, and awareness of
long-term strategy and direction. As such, we
aim to provide high levels of transparency and
clarity about our results and long-term strategy
and to build trust in our future plans.
insight
into
the
Our people are at the heart of our business.
Effective employee engagement leads to a
happier, healthier workforce who are invested
in the success of the Group and who are all
pulling in the same direction. Our engagement
seeks to address any employee concerns
regarding working conditions, health and safety,
training and development, as well as workforce
diversity. Engagement with our employees
starts from the top and is driven effectively
throughout the Group.
laws,
regulations, and
The Group’s operations are subject to a wide
listing
range of
requirements including data protection, tax,
employment, environmental and health and
safety legislation, along with contractual terms.
11
Strategic report for the year ended 31 December 2021 (continued)
Our Customers
Our Suppliers
Our customers have individual requirements
that require diligence and trust in our offering.
We aim to listen to and engage with our
customers on a regular basis to ensure that we
understand their needs and can provide
solutions that address them. We ensure that
information is easily accessible and customer
in a timely and
concerns are dealt with
professional manner.
We have a number of key partners and suppliers
with whom we have built strong relationships
with and strongly value. We establish effective
engagement
our
relationships remain collaborative and forward
focused, and to foster relationships of mutual
trust and loyalty.
channels
ensure
to
• Continual review of feedback from
customers to ensure satisfaction
• Dedicated team for Client Services and
consumer
to ensure
Operations
concerns are addressed
• Face to face meetings with customers
to further develop relationships.
• Building strong partnerships with
two-way
through open
suppliers
dialogue and regular face to face
meetings.
• Relationships with suppliers allow the
ongoing review and monitoring of their
performance levels
The above statement should be read in conjunction with the rest of the Strategic Report and the Directors’
Report.
12
Strategic report for the year ended 31 December 2021 (continued)
Key performance indicators
The Group have adopted both financial and non-financial measures to achieve a balanced view of performance.
Recurring revenue
Sales and order
pipeline
Gross margin
Cash
Customer
retention
This KPI has been a major strategic focus for the Group over the past 3 to 5 years. A
key aspect of the business was to, not only increase the level of recurring revenue as
part of overall sales but also generate new types of recurring revenue, namely charging
for ongoing licencing (SaaS – Software as a Service), use of our new suite of Android
software solutions whilst still offering the traditional hardware support/maintenance
contracts. This has come to fruition with recurring revenue for 2021 increasing by 14%
with further double-digit point increases expected in future years.
Considering the impact of the pandemic over the past eighteen months the Group bore
a modest increase in turnover of £218,000 from £5,886,000 in 2020 to £6,104,000 in
2021. The Group pipeline remains strong for all its new hardware and software
solutions, legacy products are still required by some of our existing customers,
however more are upgrading to the new Android solutions. This in turn generates an
increase in recurring revenue. Order book at the year-end stood at £646,000 being 36%
higher than 2020. The management also actively monitor this KPI to justify the
continued development of the Groups product suite.
Understanding our customer needs and expectations is of primary importance in
securing orders and future proofing recurring revenue. Previously, software
development was primarily outsourced to non-UK development consultants. Over the
past eighteen months there has been modification to the Group’s software
development strategy. The management believed that a hybrid of UK employed, and
non-UK consultant developers provide a more balanced understanding thereby
efficiently developing the software solutions sought by existing and prospective
customers. The Group development team now consists of 10 UK employed developers
supported by 9 non-UK developers.
increased delivery costs and
The world markets have recently experienced
product/component shortages which in turn drive a rise in prices throughout the
supply chain. Hardware margins have been increasingly affected and discovering new
ways of mitigating these price increases has been challenging. However, even in light
of these challenges, gross margins have increased from 52% in 2020 to 59.5% (2020:
52%) driven by a higher level of software sales along with implementation of
operational efficiencies.
Cash generation continues to be of primary importance to the business and remains
strong. Cash balances, net of overdraft and the £135,000 CBILs was £2,380,000
compared with £1,771,000 for FY2020.
Retention of customers nearing the end of their contract is of significant importance
for the Group. The business is benefiting from many of its existing clients going through
the process of an upgrade cycle with us. We also have a number of returning customers
upgrading to our new solution, which is testament to our ongoing quality service and
support offering and thus enhancing the future pipeline for the Group.
13
Strategic report for the year ended 31 December 2021 (continued)
Future outlook
Across all markets serviced by the Group there is a sustained drive to reduce costs and to improve customer
service. This can only be achieved by continued investment in the most modern technologies providing
instantaneous information between back-office applications and field-based functions. The Group recognises
that competition will continue to impose challenges on margins. With investment in product offering, however,
a robust commercial approach to the marketplace and above all a strong desire to succeed, we are confident
about our prospects, even amidst the recent global challenges.
On behalf of the board
M W Hardy
Chief Executive Officer
25 April 2022
14
Directors’ report for the year ended 31 December 2021
The directors present their Directors’ report and the audited financial statements of the Group and the Group
for the year ended 31 December 2021.
Quoted Companies Alliance Code
As an AIM listed Group, the Group is required to adopt a recognised corporate governance code and disclose
any deviations from the chosen code. The Group has decided to adopt the Quoted Companies Alliance
(“QCA”) code. High standards of Corporate Governance are a key priority of the Board and details of how the
Group addresses key governance issues are set out in the Corporate Governance section of its website by
reference to the 10 principles of Corporate Governance developed by the QCA.
http://www.touchstarplc.com/about/governance
Business model and strategy
The Group’s vision, together with its partners, is to create innovative data capture solutions that enhance
business intelligence for our client base. Touchstar’s mission is to deliver innovative products and solutions
on a ‘turnkey’ basis, underpinned by an unparalleled attention to detail and customer-centred philosophy.
To achieve this, the Group will focus on five key business strategies;
•
•
•
•
Further penetrating existing markets by forging stronger customer and partner relationships,
including alliances with independent software vendors and third-party hardware manufacturers
Expanding into new markets, where the Group will offer compelling solutions set to meet specific
sector / geographical customer requirements
Inspiring Touchstar personnel and clients by building on the Group’s track record of high-
performance teamwork and collaboration
Intensifying R&D innovation throughout the organisation and delivering unsurpassed quality and
performance in the Group’s products and solutions
• Maximising operational effectiveness with lean, world-class operations underpinned by an
investment in personnel, appropriate technologies and business tools to improve functional
performance across the Group
This strategy is intended to deliver long-term growth in shareholder value.
Effective risk management
The Board has an established Audit, Remuneration, and Executive Committees.
The Group receives regular feedback from its external auditors on the state of its risk management and
internal controls. The Board does not consider it to be appropriate to have its own internal audit function at
the present time, given the Group’s size and nature of its business.
The annual budget setting process examines all areas of the Group’s operations both operationally and
financially.
15
Directors’ report for the year ended 31 December 2021 (continued)
The Group has clear, documented procedures in place to assess and progress opportunities arising, whether
for process improvement, product enhancement, new business or any other matter.
Board of directors
During 2021 the Board was comprised of a non-executive Chairman, one executive director, and an
independent non-executive director. The Board considers that of its two non-executive directors, only one is
independent however they are considered independent in terms of character and judgement in how they
conduct their roles, giving a balance between executive and non-executive directors.
The Chairman is responsible for leading the Board, facilitating the effective contribution of all members and
ensuring that it operates effectively in the interests of the shareholders. The Chief Executive Officer is
responsible for the leadership of the business and implementation of the strategy. The Group Secretary is
responsible, on behalf of the Chairman, for ensuring that all Board and Committee meetings are conducted
properly, that the Directors receive the appropriate information prior to the meeting, for ensuring that
governance requirements are considered and implemented and for accurately recording each meeting. The
Directors may have access to independent professional advice, where needed, at the Group’s expense.
A description of the roles of the Directors is included on the website. The directors are aware of, and
committed to, the time requirements needed to fulfil their roles. Directors are required to devote such time
and effort to their duties as is required to secure their proper discharge and, for Non-Executive Directors, this
typically entails one or two days of meetings per month as well as reading and preparation time.
Meetings of the Board and committees
The Board has established Audit, Remuneration and Executive Committees, each of which conducted their
duties throughout the year. The Audit Committee scrutinise the planned scope of the annual audit as well as
monitoring the independence of the auditors. The Remuneration Committee assess the remuneration of
Directors and senior staff and ensured this was appropriate and consistent with the interests of shareholders
and the business. The Executive Committee managed the operation and strategy of the business throughout
the financial year, in regular consultation with the Board.
The Board meets at least four times a year with relevant information distributed to the Directors in advance
of each meeting.
All members attended each meeting held during the year.
The Board makes decisions on all material matters including long term and commercial strategy, annual
operating and capital budgets along with capital and financial structure.
The Remuneration and Audit Committees are held on an annual basis.
All members required to attend the relevant meeting did attend.
Details of remuneration paid to each director during the year can be found in note 8.
Board Performance
The Board judges its own performance by reference to the Group’s progress against the targets set out in the
Group’s strategic plan.
16
Directors’ report for the year ended 31 December 2021 (continued)
The Group undertakes regular monitoring of personal and corporate performance using agreed key
performance indicators and detailed financial reports. Responsibility for assessing and monitoring the
performance of the executive directors lies with the Chairman and the independent non-executive director.
The Board and the Remuneration Committee evaluate the Board performance, including but not limited to
Board balance, Board skills and remuneration, to ensure that the Board is fit for purpose and is appropriate
for the Group’s ongoing development and growth.
Corporate culture
The Board is committed to embodying and promoting a sound corporate culture and has endorsed various
policies which require ethical behaviour of staff and relevant counterparties.
The Board and management conduct themselves ethically at all times and promote a culture in line with the
standards set out on the website.
Communication with shareholders and other relevant stakeholders
The Board attaches great importance to providing shareholders with clear and transparent information on
the Group’s activities, strategies and financial position, in addition to having regard to its obligations
as a quoted public Group and the AIM Rules.
The Group holds meetings with significant shareholders on a regular basis and regards the Annual General
Meeting as a good opportunity to communicate directly with shareholders via an open question and answer
session.
The Group lists contact details on its website should shareholders wish to communicate with the Board. All
announcements and results, including those released via RNS and RNS Reach, are available on the
Group’s website.
Employees
The Group recognises that the contribution made by its skilled and committed workforce is the business’s most
valuable asset. The Group will continue to provide its people with a challenging environment and to provide
rewards which recognise their achievements. The Group recognises that the needs of the business will continue
to change. As such, training is and will continue to be offered such that employees are able to enhance their
skill base to assist the business in meeting future challenges.
The Group has an established policy of encouraging the employment of disabled persons wherever this is
practicable and endeavours to ensure that disabled employees benefit from training and career development
programmes in common with all other employees. The Group’s policy includes, where practicable, the
continued employment of those who may become disabled during their employment.
17
Directors’ report for the year ended 31 December 2021 (continued)
Dividends
The directors do not recommend a final dividend (2020: £Nil).
Financial instruments
The Group’s operations expose it to a variety of financial risks that include the effects of changes in credit risk,
liquidity risk and exchange rate risk. The policies set by the Board of Directors are implemented by the Group’s
finance department and are detailed in note 3 to the Group financial statements for the year ended 31
December 2021.
Board of directors
The directors who held office during the year and to the date of this report are given below:
I P Martin - Chairman
Ian has worked in the Insurance and Media industries for over 30 years. More recently, as Chairman and CEO
of Avesco (2002 to 2012) the quoted provider to the event and broadcast industry, Ian led the transformation
of the company from a faltering company to a vibrant business, with revenues rising from around £50 million
to £140 million and a profit that grew at a compound profit of 20% per annum.
Prior to this period, Ian has held board positions at Ascot Underwriting and Brockbank Group plc, where he was
CEO and he helped form Admiral Insurance the FT 100 Company. Ian also holds a number of executive and non-
executive directorships, including as a non-executive Director of Chelverton Growth.
M W Hardy - Chief Executive Officer
Mark joined the company in 1992 and has been involved in the mobile communications market since
graduating from University with a BA Honours degree in Business Studies in 1986. Prior to joining the company,
Mark worked for American based companies and was instrumental in driving sales of high-tech products into
developing markets.
With overall responsibility for the commercial running of Touchstar since 1997, Mark remains extremely active
in the sales and key account management aspects of the business.
Non-Executive Director
J L Christmas -
John is a chartered accountant with over 20 years’ experience as finance director of UK listed businesses, most
recently at Avesco Group plc, whom he joined in 2004.
He was Group Finance Director at Boosey & Hawkes plc and previously held positions as Group Finance Director
at MediaKey plc and Video Arts Ltd.
18
Directors’ report for the year ended 31 December 2021 (continued)
Purchase of own shares
The Group did not purchase any of its own shares in 2021.
Shares issued during the year
No shares were issued in 2021.
Research and development
The Group is continually developing its products and services to meet the increasing demands of the markets
in which the Group operates. During the year, the Group incurred total research and development costs of
£935,000 (2020: £760,000), of which £460,000 (2020: £429,000) has been capitalised.
Statutory records
The Company is registered in Scotland and its registered number is SC005543.
Substantial shareholdings
As of 4 April 2022, the Company had been notified of the following interests representing 3% or more of the
issued ordinary share capital:
I P Martin
Interactive Investor Services Ltd
Thomas William George Charlton
Chelverton Growth Trust plc
Charles Stanley & Co
Killik & Co
R D McDougall
Unicorn Asset Management
Robert & Virginia Millington
Ordinary
shares
805,250
1,114,961
935,000
850,000
483,786
401,500
368,500
289,995
262,727
Percentage
of ordinary
share capital
9.50%
13.16%
11.03%
10.03%
5.71%
4.74%
4.35%
3.42%
3.10%
Except for those disclosed above, the directors are not aware of any shareholding which represents 3% or more
of the present issued ordinary share capital of the Company.
19
Directors’ report for the year ended 31 December 2021 (continued)
Matters covered in the Strategic report
Statutory disclosures required under Company law within the Directors’ report are included where relevant in
the Strategic report.
Directors’ indemnities
As permitted by the Articles of Association, the directors have the benefit of an indemnity which is a qualifying
third-party indemnity provision as defined by Section 234 of the Companies Act 2006. The indemnity was in
force throughout the last financial year and is currently in force. The Company also purchased and maintained
throughout the financial year directors’ and officers’ liability insurance in respect of itself and its directors.
Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, cash
flow and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management
programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects
on the Group’s financial performance.
(a) Market risk
(i)
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, principally with respect to the euro and the US dollar. Foreign exchange risk arises from future
commercial transactions and recognised assets and liabilities.
Natural hedging occurs through the matching of foreign currency income, expenditure and commitments.
When projected foreign currency balances are not anticipated to be covered through this natural matching
process, the Group may choose to enter into forward foreign exchange contracts through its bankers and other
financial institutions.
(ii)
Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are
substantially independent of changes in market interest rates.
(b)
Credit risk
The Group has a customer credit policy in place and the exposure to credit risk is monitored on an ongoing
basis.
At 31 December 2021 there were no significant concentrations of credit risk (2020: £nil). The maximum
exposure to credit risk is represented by the carrying amount of each financial asset included in the balance
sheet. Management does not expect any losses from non-performance by these counterparties. Due to the
nature of the Group’s business, credit risk is assessed on a customer by customer basis prior to entering into
contractual arrangements and on an expected credit loss basis in line with IFRS9. See note 2.1 for impact
assessment.
20
Directors’ report for the year ended 31 December 2021 (continued)
Financial risk management (continued)
(c)
Liquidity risk
The Group maintains short-term cash deposits and unutilised banking facilities to mitigate any liquidity risk it
may face. Management monitors rolling forecasts of the Group’s liquidity reserves on the basis of forecast
cash flow.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the
remaining period at the balance sheet date to the contractual maturity date. Impact on discounting is not
deemed material/relevant in respect of trade and other payables since this relates predominantly to deferred
revenue for which the cash has already been received and the balance is being released to the income
statement in line with the contract.
At 31 December 2021
Bank overdraft
Trade and other payables (note 22)
Other borrowings (note 24)
At 31 December 2020
Bank overdraft
Trade and other payables
Other borrowings
Less than
one year
£’000
Between one and
four years
£’000
1,388
1,332
30
1,256
1,246
15
-
-
105
-
-
135
Lease liabilities have been presented within Liabilities as a result of the Group’s implementation of IFRS 16 in
2019.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total
capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in
the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown
in the consolidated balance sheet plus net debt.
21
Directors’ report for the year ended 31 December 2021 (continued)
Capital risk management (continued)
The gearing ratios at 31 December 2021 and 2020 were as follows:
Net debt
Total equity
Total capital
Gearing ratio
2021
£’000
-
2,319
2,319
-%
2020
£’000
-
1,978
1,978
-%
As at 31 December 2021, borrowings (which constitute PLC bank overdraft andCBILs) were entirely offset by
positive cash balances within the subsidiary companies, meaning the Group had no net debt, and therefore
no gearing ratio, at the reporting date (2020 - no gearing ratio).
Fair value estimation
The carrying value, less impairment provision of trade receivables and payables are assumed to approximate
to their fair value. The carrying values of borrowings approximate to their fair value due to their short-term
maturity.
Disclosure of information to auditors
Each director at the date of approval of this report confirms that:
•
•
so far as each director is aware, there is no relevant audit information (that is, information needed by
the auditors in connection with preparing their report) of which the auditors are unaware; and
each director has taken all the steps that he ought to have taken as a director in order to make himself
aware of any relevant audit information and to establish that the auditors are aware of that
information.
This statement is given and should be interpreted in accordance with the provision of Section 418 of the
Companies Act 2006.
Independent auditors
The auditors, Haysmacintyre LLP, have indicated their willingness to continue in office, and a resolution that
they be reappointed will be proposed at the Annual General Meeting.
By order of the Board
N M Rourke
Company Secretary
25 April 2022
22
Statement of directors’ responsibilities in respect of the financial
statements
The directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have prepared the Group financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union and Company financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the
directors must not approve the financial statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that
period. In preparing the financial statements, the directors are required to:
•
•
select suitable accounting policies and then apply them consistently;
state whether applicable IFRSs as adopted by the European Union have been followed for the Group
financial statements and IFRSs as adopted by the European Union have been followed for the
Company financial statements, subject to any material departures disclosed and explained in the
financial statements;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Group and Company will continue in business.
The directors are also responsible for safeguarding the assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position
of the Group and Company and enable them to ensure that the financial statements comply with the
Companies Act 2006.
The directors of the ultimate parent company are responsible for the maintenance and integrity of the ultimate
parent company’s website. Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
23
Statement of directors’ responsibilities in respect of the financial
statements (continued)
Each of the directors, whose names and functions are listed in the Directors' Report confirm that, to the best
of their knowledge:
•
•
•
the Company financial statements, which have been prepared in accordance with IFRSs as adopted by
the European Union, give a true and fair view of the assets, liabilities, financial position and result of
the Company;
the Group financial statements, which have been prepared in accordance with IFRSs as adopted by
the European Union, give a true and fair view of the assets, liabilities, financial position and profit of
the Group; and
the Directors' Report includes a fair review of the development and performance of the business and
the position of the Group and Company, together with a description of the principal risks and
uncertainties that it faces.
By order of the Board
N M Rourke
Company Secretary
25 April 2022
24
Independent auditors’ report to the members of Touchstar plc
Opinion
We have audited the financial statements of Touchstar PLC (the ‘parent company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2021 which comprise a consolidated income statement, a
consolidated statement of financial position, a consolidated and company statements of financial position, a
consolidated statement of changes in equity, a company statement of changes in equity, a consolidated and
company statements of cash flows and notes to the Group financial statements, including a summary of
significant accounting policies. . The financial reporting framework that has been applied in their preparation
is applicable law and UK adopted international accounting standards.
In our opinion, the financial statements:
• give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December
2021 and of the group’s profit for the year then ended;
• have been properly prepared in accordance with UK adopted international accounting standards]; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent of the group 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.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements. In particular, we looked at where the directors made subjective judgements, for
example in respect of significant accounting estimates that involved making assumptions and considering
future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management
override of internal controls, including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud. We tailored the scope of our audit to ensure that
we performed enough work to be able to give an opinion on the financial statements as a whole, taking into
account the structure of the group and the company, the accounting processes and controls, and the industry
in which they operate.
The Group comprises three financially significant companies: two principal trading companies and one holding
company, all of which are based in the UK. We performed audits of the three companies in the Group, giving
us the evidence we needed to form our opinion on the Group financial statements. All work was performed by
the Group engagement team.
25
Independent auditors’ report to the members of Touchstar plc
(continued)
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Costs capitalised represent both internal staff costs (time)
capitalised, as well as third party costs. These costs are
allocated on a project basis.
For internal staff costs capitalised, we have understood the
employees' specific roles and work, and the allocation
between project and non-project activities. We have
discussed
allocations with
management and with employees.
challenged
these
and
A sample of third-party costs capitalised have been agreed
to supporting documentation. The nature of these costs has
been tested to confirm they are used in viable projects.
In addition, we have understood the status of each project,
and compared this to the requirements of IAS 38 to ensure
that capitalisation is appropriate.
We have challenged management’s assessment of the
commercial viability of each active project, to consider
whether capitalised costs are recoverable.
On completion of our audit procedures, we conclude that
the company’s intangible assets are stated and disclosed
accurately in all material aspects.
We agreed cash received to revenue in order to gain
comfort over its occurrence and completeness. We also
agreed a sample of revenue transactions to appropriate
evidence of customer acceptance.
We performed testing over cut-off and also recalculated
and corroborated a sample of deferred revenue items.
Recoverability of capitalised development costs
The Group has capitalised development costs of
£1,198,000. This represents costs incurred on
development projects that meets the criteria as set out in
'IAS 38: Intangible assets'.
The decision whether to capitalise and how to determine
the period of economic benefit requires some judgement,
including an assessment of the commercial viability of the
project, and the prospect of future sales.
Revenue recognition
The Group earned revenue of £6,104,000 in the year.
There is a risk that revenue is recognised inappropriately
and not in accordance with IFRS 15.
26
Independent auditors’ report to the members of Touchstar plc
(continued)
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
Group financial statements
Company financial statements
Overall materiality
£122,000 (2020: £58,000).
£57,350 (2020: £15,000).
How we determined it
2% of turnover (2020: 1% of turnover)
Rationale for benchmark
applied
Based on the benchmarks used in the annual
report, turnover is a primary measure used
by the shareholders in assessing the
performance of the group and is a generally
accepted auditing benchmark.
5% of Net Liabilities (2020: 1% Net
Liabilities).
We believe that net liabilities is a primary
measure used by the shareholders in
assessing the performance of the entity
given the company is a holding company
and so does not trade. Net liabilities is a
generally accepted auditing benchmark.
For each component in the scope of our group audit, we allocated a materiality that was less than our overall
group materiality. The range of materiality allocated across components was between £48,000 and £73,000.
Certain components were audited to a local statutory audit materiality that was also less than our overall
group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our
audit above £6,100 (Group audit) (2020: 2,900) and £2,867 (Company audit) (2020: £750) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the entity’s ability to continue to adopt the going concern basis of accounting included review
of the Group’s budgets and cashflow forecasts and supporting information such as order books.
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’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
27
Independent auditors’ report to the members of Touchstar plc
(continued)
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or
the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns;
or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 23, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or the
parent company or to cease operations, or have no realistic alternative but to do so.
28
Independent auditors’ report to the members of Touchstar plc
(continued)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
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:
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Based on our understanding of the company and industry, we identified that the principal risks of non-
compliance with laws and regulations related to health & safety and employment law, and regulatory
requirements for AIM listed companies, and we considered the extent to which non-compliance might have a
material effect on the financial statements. We also considered those laws and regulations that have a direct
impact on the preparation of the financial statements such as the Companies Act 2006, corporation tax, payroll
tax and sales tax.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls) and determined that the principal risks were related to
the posting of inappropriate journal entries during the final quarter of the year and also management bias in
accounting estimates. Audit procedures performed by the engagement team included:
Inspecting correspondence with regulators and tax authorities;
•
• Discussions with management including consideration of known or suspected instances of non-
•
compliance with laws and regulation and fraud;
Identifying and testing journals, in particular journal entries posted by management in the final quarter
of the year; and
• Challenging assumptions and judgements made by management in their critical accounting estimates
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part
of our auditor’s report.
Use of our report
This report is made solely to the 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.
Christopher Cork (Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP, Statutory Auditors
25 April 2022
10 Queen Street Place
London
EC4R 1AG
29
Consolidated income statement for the year ended 31 December 2021
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other operating income
Operating profit before share-based
payment provision
Share-based payment provision
included in administrative expenses
Operating profit
Finance costs
Profit before income tax
Income tax credit
Profit for the year attributable to the
owners of the parent
Note
4
5
7(b)
5
10
11
2021
£’000
6,104
(2,472)
3,632
(49)
(3,400)
44
233
(6)
227
(20)
207
134
341
2020
£’000
5,886
(2,827)
3,059
(41)
(3,125)
146
39
-
39
(16)
23
64
87
Earnings per ordinary share (pence) attributable to owners of the parent during the year (note 12):
Basic
2021
4.02p
2020
1.03p
There is no other comprehensive income or expense in the current year or prior year and consequently no
statement of other comprehensive income or expense has been presented.
All activity in 2021 relating to continuing operations.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the
parent Company income statement. The profit for the Company is detailed in the Statement of financial position
and the Company statement of changes in shareholders’ equity.
30
Consolidated statement of changes in equity for the year ended 31
December 2021
Share
capital
£’000
424
-
424
-
424
Share
premium
account
£’000
1,119
-
1,119
-
1,119
Share based
payment
Reserves
£’000
Retained
earnings
£’000
-
-
-
6
6
348
87
435
341
776
Total equity
£’000
1,891
87
1,978
347
2,325
At 1 January 2020
Profit for the year
At 31 December 2020
Profit for the year
At 31 December 2021
Company statement of changes in equity for the year ended 31
December 2021
Share
capital
£’000
424
-
424
-
424
Share
premium
account
Share based
payment
reserve
£’000
1,119
-
1,119
-
1,119
£’000
-
-
-
6
6
Retained
earnings
£’000
(2,705)
3
Total equity
£’000
(1,162)
3
(2,702)
(1,159)
6
12
(2,696)
(1,147)
At 1 January 2020
Profit for the year
At 31 December 2020
Profit for the year
At 31 December 2021
31
Consolidated and Company statements of financial position as at 31
December 2021
Group
Company
2021
2020
2021
2020
Note
£’000
£’000
£’000
£’000
Non-current assets
Intangible assets
Investments
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Corporation tax receivable
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Non-current liabilities
Deferred tax liabilities
Contract liabilities
Borrowings
Lease liabilities
13
14
15
16
18
19
20
21
22
23
24
25
18
23
24
25
1,198
1,350
-
94
399
81
-
121
479
63
1,772
2,013
865
1,071
166
3,903
6,005
7,777
1,333
1,762
1,418
169
4,682
251
172
105
242
770
714
1,010
110
3,177
5,011
7,024
1,246
1,485
1,271
163
4,165
215
177
135
354
881
-
5
-
-
3
8
-
-
-
-
-
3
3
-
462
474
-
-
462
470
94
-
1,418
-
1,512
-
-
105
-
105
-
-
474
477
230
-
1,271
-
1,501
-
-
135
-
135
Total liabilities
5,452
5,046
1,617
1,636
32
Consolidated and Company statement of financial position as at 31
December 2021 (continued)
Group
Company
2021
Note
£’000
2020
£’000
2021
2020
£’000
£’000
Capital and reserves attributable
to owners of the parent
Retained earnings at beginning of
year
Profit/(loss) for the year
Retained earnings at end of year
Share capital
Share based payment reserve
Share premium
Total equity
Total equity and liabilities
26
26
26
435
348
(2,702)
(2,705)
341
776
424
6
1,119
2,325
7,777
87
435
424
-
1,119
1,978
7,024
6
3
(2,696)
(2,702)
424
6
424
-
1,119
1,119
(1,147)
(1,159)
470
477
The notes on pages 35 to 67 are an integral part of these Group financial statements.
The Company reported a profit for the financial year of £6,000 (2020: £3,000).
The Group and Company financial statements on pages 30 to 67 were approved by the Board of Directors on
25 April 2022 and were signed on its behalf by:
M W Hardy
Director
Registered number Scotland: SC005543
33
Consolidated and Company cash flow statement for the year ended 31
December 2021
Group
Company
Note
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Cash flows from operating activities
Operating Profit
Depreciation
Amortisation
Share-based payment provision
Movement in:
Inventories
Trade and other receivables
15,16
13
7(b)
19
20
Trade and other payables and contract liabilities 22,23
226
233
612
6
(151)
(60)
358
39
227
588
-
177
307
(86)
Cash generated from/(used in) operations
1,224
1,252
Interest paid
Corporation tax received
(20)
97
(16)
326
Net cash generated from operating activities
1,301
1,562
1
-
-
6
-
(80)
(36)
(109)
(3)
-
(112)
-
(5)
-
(5)
(15)
-
(15)
3
-
-
-
-
715
172
890
(3)
-
887
-
-
-
-
150
-
150
(460)
(439)
-
(50)
(510)
(15)
(182)
(197)
-
(20)
(459)
150
(182)
(32)
594
1,071
(132)
1,037
1,921
2,515
850
1,921
(1,256)
(1,388)
(2,293)
(1,256)
Cash flows from investing activities
Addition of intangible assets
Investment in subsidiaries
Purchase of property, plant and equipment
13
14
15
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of business loan
Principal elements of lease payments
Net cash generated from financing activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at start of the year
Cash and cash equivalents at end of the year
21
34
Notes to the Group financial statements for the year ended
31 December 2021
1
General information
Touchstar plc (the ‘Company’) and its subsidiaries (together ‘the Group’) design and build rugged mobile
computing devices and develop software solutions used in a wide variety of field-based delivery, logistics and
service applications. The Company is a public company limited by share capital incorporated and domiciled in
the United Kingdom. The Company has its listing on the Alternative Investment Market. The address of its
registered office is 1 George Square, Glasgow, G2 1AL.
2
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated and Company financial
statements are set out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
2.1 Basis of preparation
The annual report and financial statements of the Company and the Group have been prepared in accordance
with IFRS as adopted by the United Kingdom (IFRS), IFRS IC interpretations, the Companies Act 2006 applicable
to companies reporting under IFRSs and the AIM rules for companies. The annual report and financial
statements have been prepared under the historic cost convention.
The annual report and financial statements have been prepared on a going concern basis. The Company has
elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent
Company income statement. The loss for the Company is detailed in the Statement of changes in shareholders’
equity.
The presentational currency of the Group and Company is pounds sterling. The Company’s functional currency
is pounds sterling. All amounts included in these financial statements are rounded to the nearest thousand
pounds sterling, except where explicitly stated otherwise.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.
Going concern
These financial statements have been prepared on a going concern basis, which assumes that the Group will
be able to meet its liabilities when they fall due. As of 31 December 2021, the Group held cash of £2,515,000
(after considering overdraft balances as presented in note 21), with unencumbered net cash of £2,380,000
after taking into account the £135,000 Coronavirus Business Interruption Loan. The Group also had an undrawn
£200,000 on demand overdraft facility as of 31 December 2021 (also £nil in April 2022).
35
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
2
Summary of accounting policies (continued)
2.1 Basis of preparation (continued)
Going concern (continued)
The Touchstar management continues to demonstrate its ability to proactively respond to both internal and
external challenges it has faced, non-more so than those encountered over the past two years.
The directors remain confident in the business, the skillset employed in its dedicated staff, solid product set
and loyal customer base.
The C-19 pandemic continued to impact business during 2021, nonetheless, Group sales still increased on 2020
by a modest £218,000, margins grew from 52% in 2020 to 59.5% in 2021 driven by richer margin sales and
operational efficiencies, along with tight control of costs, resulted in a profit after tax of £341,000.
The Group continues to benefit from a supportive bank who have provided the borrowing facility since 2005.
Over the past eighteen months the Group has reduced its reliance on the facility provided by the bank. In
assessing the Company’s ability to continue as a going concern, the Board has reviewed the Group’s cash flow
and profit forecasts removing completely reliance on any facilities. The impact of potential risks and related
sensitivities to the forecasts were considered in assessing the likelihood of additional facilities being required
in the future
The directors have at the time of approving the financial statements, a reasonable expectation that the
company has adequate resources to continue in operational existence for the foreseeable future. Thus
they continue to adopt the going concern basis of accounting in preparing the financial statements.
Changes in accounting policies and disclosures
New standards, amendments to standards or interpretations adopted by the Group and Company
The accounting policies adopted are consistent with those of the previous financial year.
The following standards became effective on 1 January 2020, and in the opinion of the Directors will not have
a material impact on the Group’s financial statements:
-
-
IAS 1 Presentation of Financial Statements
IAS 12 Income Taxes
36
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
2
Summary of accounting policies (continued)
2.1 Basis of preparation (continued)
Changes in accounting policies and disclosures (continued)
New standards, interpretations and amendments not yet effective
At the date of approval of these financial statements, the following standards and interpretations which have
not been applied in these financial statements were in issue, but not yet effective (and in some cases had not
been adopted by the EU):
-
-
-
-
-
-
Amendment to IFRS 3 Business Combinations – Reference to the Conceptual Framework – effective 1
January 2022*
Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets – effective 1 January
2022*
Annual Improvements to IFRS Standards 2018-2020 Cycle – effective 1 January 2022*
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or
Non-current and Amendments to IAS 1: Classification of Liabilities as Current or Non-current – Deferral
of Effective Date – effective 1 January 2023*
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure
of Accounting Policies – effective 1 January 2023*
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors –Definition of
Accounting Estimates – effective 1 January 2023*
*Not yet endorsed in the UK
2.2 Consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group.
The financial statements consolidate the accounts of Touchstar plc and all of its subsidiary undertakings. Intra-
Group sales and profits are eliminated fully on consolidation.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
37
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
2
Summary of accounting policies (continued)
2.3 Segment reporting
In accordance with IFRS 8 operating segments are reported in a manner consistent with the internal reporting
provided to the directors who are considered to be the chief operating decision makers (CODM). The CODM’s,
who are deemed to be the executive board i.e. Directors, are responsible for allocating resources and assessing
performance of the operating segments, these have been identified as the Executive Board. The Executive
Board considers that the Group comprises one segment, being the supply and maintenance of real time
electronic data systems, and this is how results are reported to the Executive Board.
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in sterling, which is the Company’s functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.
2.5 Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other
repairs and maintenance are charged to the income statement during the financial period in which they are
incurred.
Depreciation is calculated using the straight-line method to reduce an asset’s cost to its residual value over its
estimated useful life, as follows:
Plant and machinery
Fixtures, fittings, tools and equipment
over 2-5 years
over 4-5 years
Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
38
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
2
Summary of accounting policies (continued)
2.6 Intangible assets
Development expenditure
Development expenditure is stated at historic cost less accumulated amortisation. Costs incurred on
development projects (relating to the design and testing of new or improved products) are recognised as
intangible assets when the following criteria are fulfilled:
it is technically feasible to complete the intangible asset so that it will be available for use;
•
• management intends to complete the intangible asset and use or sell it;
•
•
•
there is an ability to use or sell the intangible asset;
it can be demonstrated how the intangible asset will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset are available; and
the expenditure attributable to the intangible asset during its development can be reliably measured.
•
Other development expenditure that does not meet the criteria is recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Capitalised development expenditure is recorded as an intangible asset and amortised from the point at which
the asset is ready for use on a straight-line basis over its useful life, not exceeding five years (note 5).
2.7 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost relating to raw materials, consumables,
work on progress and finished goods comprises actual costs incurred in bringing each product to its present
location and condition within each trading subsidiary as follows:
-
-
Touchstar ATC Limited:
Purchase cost and cost of direct materials using standard cost
Touchstar Technologies Limited:
Purchase cost and cost of direct materials using first in/first out (FIFO) basis
The cost of work in progress and finished goods excludes direct labour and related production overheads as
the directors consider that this element is not material.
Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable
selling expenses. Provision is made where necessary for obsolete, slow moving and defective inventory.
39
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
2
Summary of accounting policies (continued)
2.8 Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for impairment.
Under IFRS 9, effective from 1 January 2019, the Group elected to use the simplified approach to measure the
loss allowance at an amount equal to lifetime expected credit losses for trade receivables and contract assets
that result from transactions that are within the scope of IFRS 15, irrespective of whether they contain a
significant financing component or not.
Under the new accounting standard, the Group continues to establish a provision for impairment of trade
receivables when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial difficulties of the counterparty,
probability that the counterparty will enter bankruptcy or financial reorganisation, and default or delinquency
in payments are considered indicators that the trade receivable is impaired. In addition, IFRS 9 requires the
group to consider forward looking information and the probability of default when calculating expected credit
losses. The measurement of expected credit losses reflects an unbiased and probability-weighted amount that
is determined by evaluating the range of possible outcomes as well as incorporating the time value of money.
The Group considers reasonable and supportable customer-specific and market information about past events,
current conditions and forecasts of future economic conditions when measuring expected credit losses.
The amount of the provision is the difference between the carrying amount and the present value of estimated
future cashflows of the asset, discounted, where material, at the original effective interest rate. The carrying
amount of the asset is reduced through the use of an allowance account, and the amount of the loss is
recognised in the Income Statement within ‘administrative costs’. When a trade receivable is uncollectable, it
is written off against the allowance account for the trade receivables. Subsequent recoveries of amounts
previously written off are credited against ‘administrative costs’ in the Income Statement.
They are included within current assets, except where the receivables are expected to be settled in more than
12 months in which case they are classified as non-current assets.
2.9 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts where
applicable are shown within borrowings in current liabilities on the balance sheet and where appropriate the
right of offset has been taken.
40
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
2
Summary of accounting policies (continued)
2.10 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
2.11 Trade and other payables
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of
business from suppliers. Trade and other payables are classified as current liabilities if payment is due within
one year or less. If not they are presented as non-current liabilities.
Trade payables are recognised at fair value and subsequently held at amortised cost.
2.12 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings using the effective interest
method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the balance sheet date.
41
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
2
Summary of accounting policies (continued)
2.13 Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement,
except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In
this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profits or losses. Deferred income tax is determined using tax rates (and laws) that have been
substantively enacted by the balance sheet date and are expected to apply when the related deferred income
tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be
available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where
the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
2.14 Employee benefits
(a) Pension obligations
The Group operates various pension schemes. The schemes are generally funded through payments to
insurance companies. The Group has only defined contribution plans. A defined contribution plan is a pension
plan under which the Group pays fixed contributions into a separate entity.
The Group pays contributions to privately administered pension insurance plans on a contractual or voluntary
basis. The Group has no further payment obligations once the contributions have been paid. The contributions
are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in the future payment is available.
(b) Profit-sharing and bonus plans
The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes
into consideration the profit attributable to the Company’s shareholders after certain adjustments. The Group
recognises a provision where contractually obliged or where there is a past practice that has created a
constructive obligation.
42
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
2
Summary of accounting policies (continued)
2.15 Share-based payments
The group operates an equity-settled, share-based compensation plan, under which the entity receives services
from employees as consideration for equity instruments (options) of the group. The fair value of the employee
services received in exchange for the grant of the options is recognised as an expense. The total amount to be
expensed is determined by reference to the fair value of the options granted based on the performance of the
group as defined in the Plan.
When the options are exercised, the company issues new shares. The proceeds received net of any directly
attributable transaction costs are credited to share capital (nominal value) and share premium.
The grant by the company of options over its equity instruments to the employees of subsidiary undertakings
in the group is treated as a capital contribution. The fair value of employee services received, measured by
reference to the grant date fair value, is recognised over the vesting period as an increase to investment in
subsidiary undertakings, with corresponding credit to equity in the parent entity accounts.
2.16 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and
services in the ordinary course of the Group’s activities. Revenue is shown net of value added tax, returns,
rebates and discounts and after eliminating sales within the Group. All Group revenue is derived from contracts
with customers.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future
economic benefits will flow to the relevant entity and the Group has satisfied its performance obligations as
laid out in contracts with its customers. Any revenue received from customers in advance of the Group
satisfying its performance obligations is classified as a contract liability and carried in the Statement of Financial
Position until it is appropriate to recognise the corresponding revenue (see note 23 Contract liabilities).
Revenue recognised over time relates to fixed term maintenance and software contracts and is recognised on
a straight-line basis over the life on an agreement. All other revenue including but not limited to Installations,
spares, repairs and system sales, relates to Group activities that are recognised at a point in time, with
consideration falling due as performance obligations are satisfied within pre-existing credit terms (see note 4
Revenue).
Transaction prices are determined with references to contracted consideration. No element of financing is
deemed present as sales are typically made with 30-90-day credit terms, which is consistent with market
practice. Where longer term arrangements do arise, the impact of the time value of money on contract
liabilities is considered immaterial and therefore no adjustment is made to reflect this.
43
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
2
Summary of accounting policies (continued)
2.17 Leases
The Group as a lessee
The Group assesses whether a contract is or contains a lease, at inception of a contract. The Group recognises
a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low
value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-
line basis over the term of the lease unless another systematic basis is more representative of the time pattern
in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Group uses its incremental borrowing rate based on rate provided by the Groups bankers,
Barclays.
The lease liability is included in 'Payables' on the Statement of Financial Position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments
made.
The Company did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments
made at or before the commencement day and any initial direct costs. They are subsequently measured at cost
less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.
If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the
Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful
life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are included in the 'Intangible Assets', 'Tangible Fixed Assets' and 'Investment Property'
lines, as applicable, in the Statement of Financial Position.
The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any
identified impairment loss as described in note 16.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account
for any lease and associated non-lease components as a single arrangement. The Company has used this
practical expedient.
2.18 Dividend distribution
Any annual final dividend is not provided for until approved at the Annual General Meeting, whilst interim
dividends are charged in the period they are paid.
44
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
3
Critical accounting estimates and judgements
The Group and Company makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions 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.
(a) Development expenditure
The Group recognises costs incurred on development projects as an intangible asset which satisfies the
requirements of IAS 38. The calculation of the costs incurred includes the percentage of time spent by certain
employees on the development project. The decision whether to capitalise and how to determine the period
of economic benefit of a development project requires an assessment of the commercial viability of the project
and the prospect of selling the project to new or existing customers (see note 13).
(b) Impairment of intangibles
Judgement is required in the impairment of assets, notably intangible software development costs.
Recoverable amounts are based on a calculation of expected future cash flows, which require assumptions and
estimates of future performance to be made. Cash flows are discounted to their present value using pre-tax
discount rates based on the Directors market assessment of risks specific to the asset (see note 13).
(c) Stock provisions
Judgement is required in relation to the appropriate provision to be made for the write down of slow moving
or obsolete inventory. Such provisions are made based on the assessment of the Group’s prospective sale of
inventories and their net realisable value, which are subject to estimation uncertainty (see note 19).
45
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
4
Revenue
The Group has two trading subsidiaries, Touchstar ATC Limited and Touchstar Technologies Limited, however
the Executive Board who are deemed to be the CODMs consider that both companies are engaged in the same
market and therefore the Executive Board review the results of the Group as a whole.
Consequently, the Executive Board regard the Group as operating in one segment, being the supply and
maintenance of real time electronic data systems. All of the Group’s revenue, expenses, results, assets and
liabilities are in respect of the supply and maintenance of real time electronic data systems and are presented
on pages 30 to 34.
All revenue is generated within the UK.
4.1 Geographical information
UK
Europe
Rest of World
2021
£’000
5,752
333
19
6,104
2020
£’000
5,393
433
60
5,886
4.2 Major customers
During the year ended 31 December 2021 approximately £932,000 (2020: £nil) of the consolidated entity’s
external revenue was derived from sales to one customer.
4.3
Analysis of revenue
Recognised at a point in time
Recognised over time (recurring revenue) – note 23
2021
£’000
3,782
2,322
6,104
2020
£’000
3,788
2,098
5,886
46
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
5
Operating profit
Operating loss is stated after charging:
Depreciation:
Owned assets (note 16(a))
Leased assets (note 16(b))
Development expenditure amortisation (note 14)
Share-based payment provision (note 5)
Research and development expenditure
Cost of inventories recognised as an expense
Write down of inventory as an expense
Staff costs (note 7)
(Profit)/loss on foreign exchange
Other operating income:
2021
£’000
77
156
612
6
475
1,494
93
2,366
(8)
2020
£’000
74
153
588
-
331
1,687
259
2,221
(5)
HMRC Job Retention Scheme grant funding
44
146
Auditors’ remuneration
6
During the year the Group obtained the following services from the Company’s auditors at costs as detailed
below:
Audit services:
Fees payable to the Company’s auditors for the audit of the Parent
Company and consolidated financial statements
Fees payable to the Company’s auditors for other services:
Audit of subsidiaries pursuant to legislation
Other assurance services
2021
£’000
2020
£’000
15
35
3
53
13
32
3
48
47
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
7
Employee remuneration
(a) Employee benefits expense
The average monthly number of persons (including directors) employed by the Group and Company during
the year was:
Administrative, management and sales
Production and technical
Staff costs for the above persons were:
Wages and salaries
Social security costs
Other pension costs – defined
contribution plans
Group
2021
2020
Number
Number
35
15
50
33
16
49
2021
£’000
2020
£’000
2,199
2,046
245
109
229
117
2,553
2,392
As at 31 December 2021 the Group and Company had accrued pension costs of £21,000 (2020: £18,000).
Staff costs are inclusive of capitalised salaries amounting to £193,000 (2020: £171,000).
(b) Share-based employee remuneration
The Touchstar plc EMI Share Option Plan (Plan) was approved by the shareholders at the Annual 2021 AGM
on 23 June 2021. It is a share-based payment scheme for employee remuneration which will be settled in
equity.
The Plan is part of the remuneration package for Group employees as selected by the Group’s Remuneration
Committee. Options under this Plan will vest if certain performance conditions, as defined in the Plan are
met. Participants in this Plan must be employed until the end of the agreed vesting period unless deemed as
‘good employees’ by the Group’s Remuneration Committee on leaving. Upon vesting, each option allows the
holder to purchase each allocated share at the market price determined at the grant date.
48
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
7
Employee remuneration (continued)
(b) Share-based employee remuneration (continued)
The number of options granted during the year and outstanding at 31 December 2021 was 211,000 (2020:
n/a). These shares had not vested as at 31 December 2021.
The assessed fair value at grant date of options granted during the year ended 31 December 2021 was £0.35
per option (2020: £n/a). The fair value at grant date is independently determined using the Black-Scholes
model that takes into account the exercise price, the term of the option, the impact of dilution (where
material), the share price at grant date and expected price volatility of the underlying share, the risk-free
interest rate for the term of the option, and the annualised volatility of Touchstar plc’s shares.
The model inputs for options granted during the year ended 31 December 2021 included:
Grant date
Vesting period ends
Share price at date of grant
Volatility
Risk-free investment rate
Fair value per option at grant date
Exercise price at date of grant
Exercise period ends
18 Nov 2021
Term A 30 Jun 2023
Term B 30 Jun 2024
£0.85
50%
1%
£0.41
£0.85
Term A 30 Jun 2023/17 Nov 2031
Term B 30 Jun 2024/17 Nov 2031
Weighted average remaining contractual life
6.06 years
The underlying expected price volatility was determined by reference to the historical data of Touchstar plc
shares over the past 12 months. No special features inherent to the options granted were incorporated into
measurements of fair value.
In total, £6,000 (2020: £n/a) of employee remuneration expense (all of which related to equity-settled share-
based payment transactions) has been included in the income statement and credited to the Share-based
payment reserve.
49
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
8 Directors’ emoluments
Aggregate emoluments
Pension costs – defined contribution plans
All three Directors are remunerated through the parent company.
The emoluments of the individual Directors were as follows:
Salaries and bonuses:
Executive directors
I P Martin
M W Hardy
Non-executive directors
J L Christmas
2021
£’000
292
-
292
2020
£’000
254
10
264
2021
£’000
2020
£’000
50
215
27
293
44
186
25
255
Salaries and fees are inclusive of car allowance for M W Hardy of £2,000 (2020: £23,000).
M W Hardy is also accruing benefits under a defined contribution pension scheme. No other directors receive
contributions to any pension scheme.
During the year 31 December 2021 M W Hardy was awarded and paid a bonus amounting to £16,000 (2020:
£5,000.
Of the 211,000 share options granted during the year, 40,000 were granted to M W hardy.
50
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
9
Key management compensation
Key management consists of the directors and three key departmental managers (2020: three).
Wages and salaries
Social security costs
Pension costs – defined contribution plans
10 Finance costs
Interest and finance charges paid/payable for lease liabilities
Bank interest
Total Finance costs
11
Income tax credit
Corporation tax
Current tax
Adjustments in respect of prior years
Deferred tax
Total tax credit
2021
£’000
543
66
23
632
2021
£’000
17
3
20
2020
£’000
486
57
29
572
2020
£’000
18
(2)
16
2021
£’000
2020
£’000
(147)
(5)
18
(134)
(92)
-
28
(64)
Corporation tax is calculated at 19% (2020: 19%) of the estimated assessable profit for the year. This is the
weighted average tax rate applicable for the year.
51
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
11
Income tax credit (continued)
Factors affecting the tax credit for the year
The tax credit for the year is same as (2020: same as) the standard rate of corporation tax in the UK of 19%
(2020: 19%). The differences are explained below:
Profit before income tax
Multiplied by the standard rate of corporation tax in the UK of 19%
(2020: 19%)
Effects of:
Items not deductible for tax purposes
Enhanced research and development deduction
Adjustments in respect of prior years
Losses surrendered through R&D tax credit
Capital allowances claimed in year less than/(in excess of)
depreciation
Previously unrecognised tax losses used to reduce current tax
expense
Adjustment to deferred tax arising from changes in tax rate
Total tax credit for the year
2021
£’000
207
39
2
(213)
(5)
46
20
(71)
48
(134)
2020
£’000
23
4
1
(167)
-
29
28
-
41
(64)
Factors affecting the future tax charge
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2021 (on 2
February 2022). This included the maintaining of the current corporation tax rate of 19%.
The budget also announced an increase in rate from 19% to 25% from April 2023. Therefore, deferred taxes
at the balance sheet date have been measured at the enacted tax rate of 25%.
52
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
12 Earnings/(losses) per share
Basic
Diluted
2021
4.02p
N/A
2020
1.03p
N/A
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the year. The Group issued 211,000 options with
an exercise price of 85p during the year. Given the exercise price of these options, they are considered anti-
dilutive and therefore no diluted EPS is presented.
Reconciliations of the earnings and weighted average number of shares used in the calculation are set out
below:
2021
2020
Weighted
average
number of
shares (in
thousands)
Weighted
average
number of
shares (in
thousands)
Earnings
£’000
Earnings
£’000
341
8,475
341
8,475
87
87
8,475
8,475
Basic EPS
Profit attributable to owners of the
parent
Adjusted EPS
Earnings attributable to owners of the
parent before share-based payment
provision
53
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
13
Intangible assets
Cost
At 1 January 2020
Additions
Disposal
At 31 December 2020
Additions
Disposal
Group
Development
expenditure
£’000
Goodwill
£’000
9,904
-
(1,313)
8,591
-
-
2,862
439
-
3,301
460
(678)
At 31 December 2021
8,591
3,083
Total
£’000
12,766
439
(1,313)
11,892
460
(678)
11,674
11,267
588
(1,313)
10,542
612
(678)
9,904
-
(1,313)
8,591
-
-
1,363
588
-
1,951
612
(678)
8,591
1,885
10,476
-
-
-
1,198
1,499
1,350
1,198
1,499
1,350
Accumulated amortisation
At 1 January 2020
Amortisation charge
Disposal
At 31 December 2020
Amortisation charge
Disposal
At 31 December 2021
Net book value
At 31 December 2021
At 1 January 2020
At 31 December 2020
Disposal of goodwill relates to the dissolution of the three dormant subsidiary undertakings during 2020.
Amortisation of £612,000 (2020: £588,000) is included within administrative expenses in the income
statement.
54
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
13 Intangible assets (continued)
Development expenditure
The calculation of the costs incurred includes third party developers along with the percentage of time spent
by certain employees on hardware and software development for deployment in business operations. The
decision whether to capitalise and how to determine the period of economic benefit of a development project
requires an assessment of the commercial viability of the project and the prospect of selling the project to new
or existing customers.
Management determined budgeted sales growth based on historic performance and its expectations of market
development via each product set’s underlying pipeline.
A review of each of the product sets did not result in any impairment.
Development expenditure has been capitalised on an ongoing basis and therefore has a remaining useful
economic life ranging from 0 to 5 years.
55
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
14
Investments
Cost
At 1 January and 31 December 2021
Accumulated amortisation
At 1 January and 31 December 2021
Net book value
31 December 2021 and 31 December 2020
Shares in
subsidiary
undertakings
£’000
11,625
11,625
-
The Parent Company has the following wholly owned trading subsidiary undertakings, incorporated and
operating in Great Britain, which are registered in England and Wales:
Name of company and registered address
Nature of business
Description of shares held
Touchstar Technologies Limited
7 Commerce Way, Trafford Park,
Manchester, M17 1HW
Real time electronic data
systems
100,000 ordinary £1 shares
Touchstar ATC Limited
Maple Barn, Beeches Farm Road, Uckfield,
TN22 5QD
Real time electronic data
systems
140,000 ordinary £1 shares
56
Notes to the Group financial statements for the year ended 31
December 2021 (continued)
15 Property, plant and equipment
Fixtures,
fittings,
tools and
equipment
£’000
Plant and
machinery
£’000
Total
£’000
Cost
At 1 January 2020
Additions
Disposals
At 31 December 2020
Additions
Disposals
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charge for the year
Disposals
At 31 December 2020
Charge for the year
Disposals
At 31 December 2021
Net book value
At 31 December 2021
At 1 January 2020
At 31 December 2020
358
12
(55)
315
37
(87)
265
268
34
(48)
254
36
(87)
203
62
61
90
345
8
(5)
348
13
(49)
312
260
40
(12)
288
41
(49)
280
32
61
85
703
20
(60)
663
50
(136)
577
528
74
(60)
542
77
(136)
483
94
121
175
Depreciation expenditure of £77,000 (2020: £74,000) is included within administrative expenses in the income
statement.
57
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
16
IFRS 16 Right of use assets
Premises
£’000
Motor
vehicles
£’000
Total
£’000
Cost
At 1 January 2020
Additions
Disposal
At 31 December 2020
Additions
Disposal
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charge for the year
Disposal
At 31 December 2020
Charge for the year
Disposal
At 31 December 2021
Net book value
At 31 December 2021
At 1 January 2020
At 31 December 2020
579
-
-
579
-
-
579
141
82
-
223
82
-
305
274
438
356
212
121
791
121
(122)
(122)
211
76
-
287
128
71
790
76
-
866
269
153
(111)
(111)
88
74
-
162
125
84
123
311
156
-
467
399
522
479
Depreciation expenditure of £156,000 (2020: £153,000) is included within administrative expenses in the
income statement.
58
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
(a) Financial instruments by category
17
The accounting policies for financial instruments have been applied to the line items below:
Financial assets
Trade and other receivables
Cash and cash equivalents
Total
Financial liabilities
Trade and other payables (excluding tax and
social security payable)
Borrowings
Total
Group
Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
1,070
3,903
4,973
1,010
3,177
4,187
462
-
462
474
-
474
Group
Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
1,332
1,246
94
230
1,523
2,855
1,406
2,652
1,523
1,617
1,406
1,636
note
20
21
22
24
17
(b) Credit quality of financial assets
Credit risk is managed on a Group basis and arises from cash and cash equivalents and credit exposures to
customers. For banks, only independently rated parties with a minimum rating of ‘A’ are acceptable. The Group
has dealt with one (2020: one) bank during the year. For customers the directors consider that, based on the
historical information about default rates and the current strength of customer relationships, a number of
which are recurring long-term customers, the credit quality of financial assets that are neither past due nor
impaired is good.
None of the financial assets that are fully performing have been renegotiated in the last twelve months.
59
Notes to the Group financial statements for the year ended 31
December 2021 (continued)
18 Deferred tax
18.1 Deferred tax asset
At 1 January
Credited/(charged) to income
At 31 December
Group
Company
2021
£’000
63
18
81
2020
£’000
111
(48)
63
2021
£’000
2020
£’000
3
-
3
-
3
3
The deferred tax asset for the Group relates to unused tax losses of £521,000 (2020: £804,000).
18.2 Deferred tax liability
There has been a movement of £36,000 (2020: £19,000) in the deferred tax liability during the year.
2021
£’000
215
36
251
2021
£’000
(251)
81
2020
£’000
234
(19)
215
2020
£’000
(215)
63
At 1 January
Charged to income statement
At 31 December
Deferred tax (liability)/asset analysis:
Amount in respect of fixed assets
Amount in respect of losses
60
Notes to the Group financial statements for the year ended 31
December 2021 (continued)
19
Inventories
Raw materials and consumables
Finished goods and goods for resale
Provision
2021
£’000
480
469
(84)
865
2020
£’000
326
560
(172)
714
The cost of inventories recognised as an expense amounted to £1,494,000 included within cost of sales (2020:
£1,687,000). Provisions of £93,000 were recognised in the income statement within cost of sales (2020:
£259,000). No finished goods are held at fair value less cost to sell (2020: £nil).
20 Trade and other receivables
Trade receivables
Amounts owed by subsidiary undertakings
Prepayments and accrued income
Other debtors
Group
Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
882
-
188
-
818
-
192
-
-
455
7
-
-
467
7
-
1,070
1,010
462
474
The amounts owed by subsidiary undertakings are interest free, unsecured and repayable on demand.
The fair value of trade and other receivables is the same as the book value. No provision for impairment of
trade receivables has been made (2020: £nil).
Trade receivables that are less than three months past due are not considered impaired. As of 31 December
2021, trade receivables of £nil (2020: £37,000) were past due but not impaired. These relate to a number of
independent customers for whom there is no recent history of default. The ageing analysis of these trade
receivables is as follows:
Up to 3 months past due
2021
£’000
-
2020
£’000
37
61
Notes to the Group financial statements for the year ended 31
December 2021 (continued)
20 Trade and other receivables (continued)
As of 31 December 2021, £nil of trade receivables (2020: £nil) were impaired and provided for. No bad debt
expenses (2020: £nil) has been recognised in the income statement.
The carrying amount of the trade and other receivables denominated in the following currencies is:
Sterling
Euros
Group
Company
2021
£’000
1,070
-
1,070
2020
£’000
966
44
1,010
2021
£’000
462
-
462
2020
£’000
474
-
474
The other classes within trade and other receivables do not contain impaired assets. The maximum exposure
to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group
does not hold any collateral as security.
21 Cash and cash equivalents
Cash at bank and in hand
Less: bank overdraft (included
within borrowings note 24)
Group
Company
2021
£’000
3,903
2020
£’000
3,177
2021
£’000
-
2020
£’000
-
(1,388)
(1,256)
(1,388)
(1,256)
2,515
1,921
(1,388)
(1,256)
The above balances are not offset in the Consolidated Statement of Financial Position and are included for
illustrative purposes only.
62
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
22 Trade and other payables
Trade payables
Other taxes and social security
Other payables
Customer deposits
Accruals
Group
Company
2021
£’000
462
453
50
158
209
2020
£’000
431
477
56
61
221
1,332
1,246
2021
£’000
15
26
-
-
53
94
2020
£’000
12
178
-
-
40
230
Amounts owed to subsidiary undertakings are interest free, unsecured and repayable on demand.
23 Contract liabilities
At beginning of year
Invoiced
Released to income statement
At end of year
2021
£’000
1,662
2,594
(2,322)
1,934
2020
£’000
1,530
2,230
(2,098)
1,662
The group has recognised the following liabilities related to contracts with customers:
Due to be released within one year
Due to be released in more than one year
1,762
172
1,485
177
Contract liabilities relate to unsatisfied performance obligations from maintenance and software licensing
contracts.
63
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
24 Borrowings
Current borrowings:
Bank overdraft
Other loans
Non-current borrowings:
Bank overdraft
Other loans
Group
Company
2020
£’000
1,256
15
1,271
2021
£’000
1,388
30
1,418
Group
Company
2020
£’000
-
135
135
2021
£’000
-
105
105
2021
£’000
1,388
30
1,418
2021
£’000
-
105
105
2020
£’000
1,256
15
1,271
2020
£’000
-
135
135
The carrying amounts of borrowings approximate to their fair value due to their short-term maturity, meaning
that the impact of discounting is not significant. The carrying amounts of the Group’s borrowings are
denominated solely in sterling.
The Group bank overdraft facility is secured by a bond and floating charge over the entire assets of the Group.
At 31 December 2021, the Group had total committed undrawn facilities of £200,000 (2020: £350,000).
The Group now operates within a £200,000 net overdraft facility which takes into account both the gross cash
position of each Group entity netted off against any borrowings. As at the 31 December 2021, this represents
the net cash balance of £2,515,000 (2020: £1,921,000) in Note 21.
The Company and its subsidiaries have given a guarantee in relation to the overdraft facilities extended to The
Group.
Other loans relate to the Coronavirus Business Interruption Loan repayable monthly over six years; first
payment commenced on the 12-month anniversary of drawdown, July 2021.
The loan is guaranteed by the UK Government under the Coronavirus Business Interruption Loan Scheme with
interest payable monthly on commencement of loan repayment. The rate of interest is 4.19% per annum above
the Bank of England floating rate.
64
Notes to the Group financial statements for the year ended 31 December
2021 (continued)
Leases
25
The note provides information for leases where the group is a lessee.
i)
The balance sheet shows the following amounts relating to leases:
Amounts recognised in the balance sheet
Notes
16(b)
Right-of-use assets
Buildings
Vehicles
Lease liabilities
Current
Non-current
2021
£’000
274
125
399
2021
£’000
169
242
411
2020
£’000
356
123
479
2020
£’000
163
354
517
Under IFRS 16 the assets are now presented in property, plant and equipment and the liabilities as part of the
group’s borrowings.
Contractual undiscounted cash flows are due as follows:
Lease liabilities (undiscounted)
Not later than one year
Between one year and five years
2021
£’000
171
240
412
2020
£’000
171
357
527
There is not considered to be any significant liquidity risk by the Group in respect of leases.
65
Notes to the Group financial statements for the year ended 31 December
2021 (continued)
25
Leases
ii)
Amounts recognised in the statement of profit or loss
Depreciation charge of right-of-use assets
Buildings
Vehicles
Notes
6
2021
£’000
82
74
156
2020
£’000
82
71
153
66
Notes to the Group financial statements for the year ended
31 December 2021 (continued)
25
Leases (continued)
The statement of profit or loss shows the following amounts relating to leases:
Interest expense (included in finance cost)
Expense relating to short-term leases (included
in administrative expenses)
26 Reserves
The following describes the nature of each reserve within equity:
2021
£’000
17
18
2020
£’000
18
25
Reserve
Share premium
Share-based payment reserve
Retained earnings
Description and purpose
Amount subscribed for share capital in excess of
nominal value.
Provision for options granted under the Group
Enterprise Management Incentive Scheme.
All other net gains and losses and transactions with
owners (e.g. dividends) not recognised elsewhere.
27 Share capital and share premium
Group and company
Number of
shares
(thousands)
Ordinary
shares
£’000
Share
premium
£’000
Total
£’000
At 1 January 2021 and 31 December 2021
8,475
424
1,119
1,543
67
Secretary and Registered Office
N M Rourke
1 George Square
Glasgow
G2 1AL
Bankers
Barclays Corporate Bank
2nd Floor
1 Park Row
Leeds
LS1 5AB
Stockbroker and Financial Advisors
WH Ireland Limited
3rd Floor
Royal House
28 Sovereign Street
Leeds
LS1 4BJ
Group Information
Registered Number in Scotland SC005543
Touchstar plc
7 Commerce Way
Trafford Park
Manchester
M17 1HW
T: +44 (0) 1274 741860
E: investor@touchstar.com
www.touchstar.com
Independent Statutory Auditors
Haysmacintyre LLP
10 Queen St Place
London
EC4R 1AG
Solicitors
Harrison Clark Rickerbys Limited
Overross House
Ross Park
Ross-On-Wye
Herefordshire
HR9 7US
Registrars
Nevilles Registrars Ltd
Neville House
18 Laurel Lane
Halesowen
B63 3DA
68