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Ondo InsurTech Plc announced its Audited Results for the period ended 28 February 2022. The company also stated that the Notice of its 2022 Annual General Meeting (AGM) and a Form of proxy would be posted to shareholders on 29th July, with the AGM scheduled for 11:30 a.m. on 22nd August 2022.
| Date | 28 Jul 2022 |
| Time | 07:00:14 |
| Category | Results |
| ID | 9996T |
28th July 2022
Ondo InsurTech Plc
(formerly: Spinnaker Acquisitions Plc)
("Ondo" or "the Company")
Posting of Notice of Annual General Meeting
Annual Report & Financial Statements for the Period Ended 28th February 2022
Ondo InsurTech Plc (LON: ONDO), the insurtech company which aims to be the leading provider of claims prevention technology for home insurers, is pleased to announce its Audited Results for the period ended 28 February 2022.
Ondo is also pleased to announce that Notice of its 2022 Annual General Meeting ("AGM") and a Form of proxy will be posted to shareholders on Friday 29th July and are available on the Company's website http://www.ondoplc.com .
The AGM will be held at 11.30 a.m. on 22nd August 2022 at the offices of Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London, EC3V 0HR.
Period Highlights
- Admission to Trading and first day of dealings on 14th July 2021 of Spinnaker Acquisitions Plc
- Announcement of proposed acquisition of HomeServe Labs Ltd on 13th December 2021 and subsequent Suspension of Listing
Post Period Highlights
· Publication of an FCA approved prospectus setting out the final details of the acquisition of LeakBot Ltd (formerly HomeServe Labs Ltd)
· Approval of the LeakBot Ltd acquisition by shareholders of Spinnaker Acquisitions Plc, with subsequent admission of the Enlarged Company to trading on the Standard List segment of London Stock Exchange on 21st March 2022, wherein the Company raised gross proceeds of £3.4 million through a fundraising
· Incorporation of LeakBot USA Inc and appointment of Jim Strickland as North America General Manager in April 2022
· New rollout partner signing with Privatsikring in Denmark in May 2022
· Expansion of LeakBot into the State of New York in May 2022
· Publication of 3rd party research on 6th June 2022 which demonstrates LeakBot can reduce escape of water claims spending by 70%
· Announcement of new partnership with Admiral Group Plc, who will roll out 20,000 LeakBot devices in the next 6 months from July 2022
Ondo CEO Craig Foster said:
"The annual report provides the results for the cash shell prior to the closing of the LeakBot transaction. At the end of March 2022 we completed that transaction with the acquisition of LeakBot Ltd and successfully raised £3.4m to support our growth plans. Progress has been rapid since, with Admiral and Privatsikring signed, expansion into New York State and publication of new 3rd party research underlining the huge potential for our defensible and repeatable business model. We look forward to further demonstrating our progress and publishing our first consolidated results with interims to the end of August 2022"
Enquiries
For further information, please visit www.ondoplc.com or contact the following:
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Ondo InsurTech Plc |
Craig Foster, CEO |
+44 (0) 800 783 9866 |
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SI Capital Ltd (Company Broker) |
Nick Emerson Jon Levinson
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+44 (0) 1483 413500 +44 (0) 20 3143 0600 |
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Cassiopeia Services Ltd (PR & Investor Relations) |
Stefania Barbaglio |
+44 (0) 7949 690338
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About Ondo InsurTech Plc
Ondo InsurTech Plc is on a mission to become the world's leading provider of claims prevention technology for home insurers. Ondo's focus is on the global scale-up of LeakBot - an end-to-end internet of things solution which protects homes from the impact of water damage. Water damage is the single biggest cause of home insurance claims, accounting for $17bn of claims every year in the USA and UK combined. LeakBot is a patented self-install solution that connects to the home wireless network and, if it detects a leak, notifies the customer via the LeakBot mobile app and provides access to a team of expert LeakBot engineers to 'find and fix' the problem. Recent independent research by Consumer Intelligence found LeakBot can reduce the cost of water damage claims by 70%.
LeakBot partners with 11 insurance carriers - including Admiral, Direct Line Group, Hiscox, Mapfre and TopDanmark - across 5 different countries, in Europe and the USA.
In March 2022 LeakBot became the first InsurTech to IPO in London, as Ondo InsurTech Plc (LSE:ONDO).
Company Registration No. 13218816
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Ondo InsurTech plc (formerly known as
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Annual Report and Financial
for the period ended 28 February 2022 |
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Contents |
Page number |
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Company Information |
2 |
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Chairman's statement |
3 |
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Chief Executive Officer's Review |
5 |
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Director profiles |
7 |
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Strategic report |
8 |
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Governance Report |
12 |
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Remuneration Committee Report |
16 |
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Directors' report |
18 |
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Independent auditor's report to the members of Ondo InsurTech Plc |
23 |
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Income statement and statement of comprehensive income |
29 |
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Statement of financial position |
30 |
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Statement of changes in equity |
31 |
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Statements of cash flows |
32 |
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Notes to the financial statements |
33 |
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Directors |
Gregory Mark Wood Andrew Morrison Stefania Barbaglio Craig Foster |
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Company Secretary |
Ben Harber |
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Company number |
13218816 (England and Wales) |
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Registered office |
6th Floor 60 Gracechurch Street London England EC3V 0HR |
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Independent Auditor |
PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD |
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Legal advisers |
Hill Dickinson LLP The Broadgate Tower 20 Primrose Street London EC2A 2EW |
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Corporate Adviser & Broker |
SI Capital Limited 19 Berkeley Street London W1J 8ED |
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Registrar |
Neville Registrars Limited Neville House, Steelpark Road Halesowen West Midlands United Kingdom B62 8HD
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Welcome to the first annual report of Ondo InsurTech plc ("Company") which covers the Company's reporting period until 28 February 2022.
As of the date of this document, the legal and commercial name of the issuer is Ondo InsurTech Plc.
The Company was incorporated under the Companies Act 2006 as a private limited company and an indefinite life under the laws of England and Wales on 23 February 2021 and the name Spinnaker Acquisitions Limited. On 12 May 2021, the Company was re-registered as a public limited company with the name Spinnaker Acquisitions Plc. The Company was formed to undertake one or more acquisitions of target companies, businesses, or assets.
The Shares were first admitted to the Official List by way of a Standard Listing and to trading on the London Stock Exchange's main market for listed securities on 28 July 2021. The Company raised £65,003 prior to re-registration as a Plc and further gross proceeds of £2,081,000 through an Initial Public Offering ("IPO") fund-raising conducted amongst High Net Worth and Sophisticated Investors to position the Company as a clean cash shell with a material cash resource to inject into a new business by issuing 20,810,000 shares of £0.05 each at a price of £0.1 per ordinary share.
On 6 September 2021, two new directors were appointed to the Board. These two new directors subscribed for 520,000 ordinary shares at a price of £0.125 raising £65,000.
On 10 December 2021, the Company entered into a sale and purchase agreement with HomeServe Assistance Limited ("Seller"), pursuant to which the Company conditionally agreed to acquire 100 per cent. of the issued share capital of LeakBot Limited ("LeakBot Ltd"). The Company's shareholders gave their consent to the acquisition and fundraise and confirmed authority for the associated share issues at a general meeting held on 6 January 2022.
Following amendments to the sale and purchase agreement made on 28 January 2022, 15 February 2022 and 28 February 2022, the aggregate consideration of £9,799,548 was finalised, split as follows:
• payment to the Seller of £1,599,548 in cash;
• issue and allotment of 13,628,275 and 1,363,392 Consideration Shares to the Seller and Gregory Mark Wood respectively at £0.12 per share, representing an aggregate amount of £1,799,000; and
• granting of secured loan notes of the Buyer with a redemption value equal to £6,401,000.
Following the period end and in conjunction with the completion of the acquisition of LeakBot Ltd, and readmission of its shares to trading on 14 March 2022, the Company raised £3,427,500 through the issue of 28,562,508 Shares at a price of 12 pence each and the grant of 14,281,252 warrants to subscribe for Shares at an exercise price of 25 pence each pursuant to a placing by SI Capital Ltd as placing agent for the Company and a private subscription carried out by the Company.
The Company recorded a loss on its P&L account of £580,260 during the financial year, including an amount of £161,793 in respect of the Company's listing on the Standard Segment and £200,000 of acquisition expenses incurred in advance of completion of the acquisition of LeakBot Limited and readmission to the Standard Segment.
The total commissions and other estimated fees and expenses in connection with the acquisition of LeakBot Ltd and the associated fundraise were approximately £592,000 plus VAT. Full details of the acquisition and fundraise, together with a description of LeakBot Ltd were set out in a prospectus which was published on 14 March 2022.
LeakBot Ltd is a B2B InsurTech business which developed and patented the underlying technologies for a propriety leak detection system. The leak detection system is called LeakBot. LeakBot Ltd's primary business is the manufacture (through third-party manufacturers) of the LeakBot device and supply (either directly or through third-party distributors) of the LeakBot device and the provision of underlying claims mitigation services to its insurer partners. The LeakBot system enables household insurers to mitigate the cost of claims arising due to an escape of water. This is achieved through the installation of patented technology (the LeakBot system) at insured households by end insured consumers and the provision of claims mitigation services such as find-and-fix plumbing repairs and data to assess risk. Insurers in the UK, Denmark, Sweden, Ireland and the US pay for the LeakBot system and derive the benefit of claims mitigation through the prevention of leaks at insured households.
I am pleased to be able to note that following the period under review, Ondo InsurTech Plc, and its subsidiary, LeakBot Ltd have made an encouraging start to life as a public company. Our Chief Executive Office Craig Foster expands on our strategy, our achievements to date and the outlook for the Company in his accompanying review.
It remains for me to thank Andy Morrison (former Chairman and continuing Non-Executive Director), Stefania Barbaglio (continuing Non-Executive Director) and the rest of the Spinnaker Acquisitions team and our team of advisers for enabling the completion of the transaction in macro-economic conditions that became very challenging, especially after the end of February 2022.
Investment conditions remain challenging, but we are confident that we have the product and management team to succeed. We are focused on becoming cash-positive to be able to live within our means as a Company in these uncertain times.
Together with my colleagues on the board and with our talented management, I look forward to being able to report in future on the execution of our strategy and the results obtained.
Gregory Mark Wood
Chairman
27th July 2022
CHIEF EXECUTIVE OFFICER'S REVIEW
Our mission at Ondo InsurTech Plc is to become the world leader in claims prevention technology for home insurers. Thanks to the reverse takeover of LeakBot Ltd, which was completed after the financial year-end, we have taken a significant step towards fulfilling this mission.
A world leader - solving a $17bn problem
I am confident that we can create a world-leading company in claims prevention technology simply because we have the only patented and proven solution to one of the most significant perils in home insurance - claims caused by water damage.
In the US and UK, there are 1.6m claims a year caused by water damage, costing insurers $17bn annually. With our flagship product LeakBot we have a patented and proven solution to this significant industry problem.
Fiscal year to February 2022
The accounting period to the end of February 2022 is prior to the reverse take-over of LeakBot Ltd which took place in March 2022 and therefore does not contain consolidated results. However, I would like to reflect on the progress LeakBot made in that same period.
In those 12 months, LeakBot repeatedly executed the same go-to-market model: where the device and the in-home repairs are offered to homeowners for free by their insurer, with the insurer paying LeakBot for these services in order to make a net saving on claims spending.
We expanded this exact same proposition in the UK with rollouts with Hiscox, Direct Line Select Premier, Eaton Gate and Covea. We tested the same proposition in Denmark with TopDanmark and launched a new pilot with LB Forsikring. Additionally, we tested this model in Sweden with the largest P&C insurer in the country Länsförsäkringar.
In the 12 months to the end February LeakBot reached 39,000 active devices on the platform, identified and resolved 13,820 leaks equivalent to an estimated saving of 400,000 litres of water every day. With our own directly controlled plumbing engineers we attended 1,371 customer homes to fix leaks and prevent claims. Through the period we maintained a 4.8/5 Trust Pilot score from our homeowners.
LeakBot was invented in the UK, patented first in the UK and is now Made in Britain too as during 2021 we also moved our manufacturing from China to Bedford in the UK, making a significant cost saving in the process while reducing supply chain risks, and attaining the Made In Britain mark.
Post Transaction Update
We were very pleased to conclude the reverse takeover transaction in March 2022, creating Ondo Insurtech Plc - the first InsurTech to be listed in the UK. I am delighted that pretty much our entire team - demonstrating their faith in our business - elected to stay in post as we moved from HomeServe to become part of an independent company. We have moved quickly to further strengthen the management team, bringing on board Jim Strickland as General Manager for North America, giving us a huge advantage in terms of North American P&C experience and contacts. In July we also welcomed Dr. Chris Jelley PHD to the team as our new CTO, whose experience is perfect to facilitate a period of rapid growth.
In May we published a landmark study based on research by Consumer Intelligence, who delved into the claims experience of our customer base, which now spans 56,000 device years of data. That study showed that in the UK where our model is the most mature, we can reduce water damage claims costs by 70% - giving us brand new statistics which underpin the value of the business model for our insurance partners.
In the last 4 months the momentum of our business is accelerating.
In July we announced a new landmark deal with Admiral. Admiral is the very first mainstream UK insurer to adopt the LeakBot system. Admiral are one of the biggest home insurers in the UK with 1.3 million customers and are the fastest growing home insurer with 11% growth in the last year. Admiral will rollout 20,000 LeakBots in the next 6 months on their Platinum cover product, using the results to scope out the opportunity for a larger scale roll-out across the Admiral book.
In North America we are now concluding a pilot with Mapfre in Massachusetts and expect to further expand in this state this year, and we recently announced in April an expansion into the State of New York.
In Scandinavia, we announced in May we have signed a new rollout deal with Privatsikring following a successful pilot in Denmark. Similarly, we have now concluded pilots with LB Forsikring in Denmark and Länsförsäkringar in Sweden. LB Forsikring have seen a 50% reduction in escape of water claims during the trial. Länsförsäkringar are the biggest home insurer in Sweden, and piloted LeakBot in 1 of their 23 regions where they already distributed LeakBot to 50% of the eligible customers and have seen both claims reduction and an increase in new customer acquisition, paving the way for expansion across the rest of the 23 regions in the Länsförsäkringar group.
Our immediate focus - more of the same
We are on a mission to become the world leader in claims prevention technology for home insurers. Our immediate focus is to do more of the same - sign more partnerships, install more units in homes, driving continued year-on-year savings for carriers and delivering year-on-year recurring returns for our shareholders.
We are eager to announce our first set of consolidated results with a half year interim update to the end of August 2022, which we aim to publish promptly after the period and are confident this will demonstrate to all our shareholders that we are turning this momentum into top-line growth.
Thank you to all the team who make it happen every day, to our homeowners for doing their bit and to the insurers and investors who have been early adopters and believers in our mission - we are just getting started.
Craig Foster
Chief Executive Officer
27th July 2022
Gregory Mark Wood is one of the UK's leading financial figures. He has held several senior positions in global institutions, including Head of Cash Management at Barclays Bank, Chief Executive of Prudential UK and Europe, and CEO of AXA UK. In 2006, with £500m of private equity backing, Gregory founded Paternoster, which quickly became the market leader in bulk annuities. A regular media commentator on pensions and insurance, Mark is a Non-Executive Director of the RAC Motoring Services plc. He received an Honorary Doctorate in Business Administration from Anglia Ruskin University in 2010. In 2017, Mark was appointed Commander of the Order of the British Empire in recognition of his outstanding contribution to the British public sector.
Mr Morrison is an established entrepreneur and investor operating in junior public markets since 2007. In 2016, he founded and brought Spinnaker Opportunities Plc to the London Stock Exchange as a cash shell, in a transaction analogous to the proposed listing of Spinnaker Acquisitions Plc. Mr Morrison led Spinnaker Opportunities Plc into the reverse take-over of a medicinal cannabis business to form Kanabo Group Plc. The transaction completed in February 2021, achieving multiple returns for fellow investors. Between 2007 and 2016, Mr Morrison learned his trade as hired Chief Executive and/or Board adviser to mostly natural resources companies including Xtract Energy Plc, Silvermere Energy Plc, Zeta Petroleum Plc, Highlands Natural Resources Ltd (now Zoetic International Plc) and Zenith Energy Ltd.
For the first 17 years of his career, Mr Morrison worked for Shell in a variety of positions in oil products trading, shipping, marketing and business development. Mr Morrison has a BSc (1st Class) in Chemical Engineering and Fuel Technology from the University of Sheffield, a Diploma in Company Direction from the Institute of Directors and has published several articles in the fields of innovation, venturing and strategic business development.
Stefania Barbaglio (Non-executive Director) (37)
Stefania Barbaglio is a London-based entrepreneur, business strategist, reputation specialist and well-recognised PR and Investor Relations expert, who has advised a range of private and listed companies across many sectors, focusing on innovation and sustainability. She is the founder and CEO of the boutique Investor & Public Relations agency Cassiopeia Services, and fashion consultancy firm SteffyB. Stefania is highly experienced in Fintech and new technologies. Stefania hosts a finance and crypto podcast and is considered one of the top British female opinion leaders in the crypto sphere. She is also a columnist for the UK online financial journal City AM, a keynote speaker at international events, and hosts regular symposia for public companies and start-ups: investor presentations and networking evenings in exclusive private venues. She is a fellow and alumna of Oxford University and holds two MAs: International Journalism from Westminster University (UK) and TV Production from IULM University (Italy), as well as ten years' previous experience as a freelance financial journalist and producer for mainstream TV channels including Bloomberg, BBC & leading in-house Investor Relations & PR departments.
Craig Foster (Founder and CEO) (43)
Craig Foster is an award-winning corporate entrepreneur and business leader with over 20 years' experience leading businesses, brands and teams both in the UK and globally. Craig spent 7 years at Procter & Gamble in Brand Management in roles both in the UK and Switzerland, before joining HBOS PLC to lead the marketing of the group's UK General Insurance brands. At HomeServe Craig set-up an innovation arm - HomeServe Labs - and it was within this team that LeakBot was developed and launched. In 2017 Mr. Foster was awarded the Insurance Times "Tech Champion of the Year" Award in recognition of the breakthrough nature of LeakBot.
The Directors present their Strategic Report on Ondo Insurtech plc for the period ended 28 February 2022.
Section 172(1) Statement - Promotion of the Company for the benefit of members as a whole:
The Directors believe they have acted in the way they considered in good faith, that would be most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006, and in doing so have had regard to:
· the likely consequences of any decision in the long term;
· The need to act fairly between the members of the Company;
· The desirability of maintaining the Company's reputation for high standards of business conduct;
· Consider the interests of the Company's employees;
· The need to foster the Company's relationships with suppliers, customers and others; and
· the impact of the Company's operations on the community and the environment.
The Board recognise that their primary role is the representation and promotion of shareholders' interests. The Board makes every effort to understand the interests and expectations of the shareholders and other stakeholders, and to reflect these in the choices it makes in its effort to create long-term sustainable value. Governed by the Companies Act 2006, the Company has adopted the Quoted Companies Alliance Corporate Governance Code 2018 (the "QCA Code"). The Board recognises the importance of maintaining a good level of corporate governance which, together with the requirements of a main market listing, ensures that the interest of the company's stakeholders are safeguarded.
As a Company, the Board seriously considers its ethical responsibilities to the communities and environment.
In order to fulfil their duties under section 172 and promote the success of the Company for the benefit of all its stakeholders, the directors need to ensure that they not only act in accordance with the legal duties but also engage with, and have regard for, all its stakeholders when taking decisions. The Company has a number of key stakeholders that it is committed to maintaining a strong relationship with. Understanding the Company's stakeholders and how they and their interests will impact on the strategy and success of the Company over the long term is a key factor in the decisions that the Board make.
Shareholders The promotion of the success of the Company is ultimately for the benefit of the Company's shareholders who provide the Company's permanent capital. As a company listed on the London Stock Exchange, the Company is responsible for ensuring that it is aware of shareholder needs and expectations. The Directors attach great importance to maintaining good relationships with all of its shareholders and interested parties and seeks to ensure that they have access to correct and adequate information in a timely fashion. The Directors are aware that as stakeholders, its shareholders play a vital role in the fabric of the Company and therefore regularly engages in dialogue with the Company's shareholders and is available for meetings with institutional and major shareholders following the release of the Company's Annual and Interim Results. The Directors welcome all shareholders to make contact with the Company and provide any feedback or comments that they may have, and contact details are available on the Company's website. The Company's Annual General Meeting is also an important opportunity for shareholders to meet and engage with Directors and ask questions on the Company and its performance.
Regulatory Bodies As the Company is listed on the Standard Segment of the Main Market of the London Stock Exchange it therefore actively engages with various regulatory bodies and advisory firms to ensure that compliance standards are maintained and that the Company continues to act with the high standards of business conduct that have established its reputation thus far.
Suppliers and Advisors The Company's suppliers and advisors are integral to the day to day operation of the Company. Relationships with suppliers and advisors are carefully managed to ensure that the Company is always obtaining value for money. The Company seeks to ensure that good relationships are maintained with its suppliers and advisors through regular contact and the prompt payment of invoices.
Other stakeholders and the wider community The Directors are committed to ensuring that none of its activities have a detrimental impact on the wider community and the environment.
Review of Business in the Period
Operational Review
The Company's principal activity is set out in the Director's Report on page 18.
The Company was incorporated on 23 February 2021 as a private limited company under the name of Spinnaker Acquisitions Limited. On 12 May 2021, the company re-registered as a public limited company. On 22 March 2022, the company was renamed Ondo InsurTech Plc.
On 14 July 2021, the Company published the Prospectus in relation to its Placing and Subscription and Admission of the share capital to the Official List (by way of a Standard Listing) and to trading on the London Stock Exchange's main market. The Company raised gross proceeds of £2,081,000 from the issue and allotment of shares at that time and began its search for an acquisition.
At that stage the Company had no operating history. Its objective was to acquire one or more target companies or businesses in the sustainability and/or energy transition sectors. During the period from July 2021 to December 2021, the Directors were focused on identifying a suitable target.
On 13 December 2021, the Company announced that it had conditionally agreed to acquire the entire issued share capital of HomeServe Labs Ltd ("Labs"), a wholly owned subsidiary of FTSE250 quoted public company HomeServe Plc, by way of a reverse takeover. The principal activity of Labs is the development and commercialisation of a water security system for the detection of micro-leaks in residential properties.
Events after the reporting date
The acquisition of Labs was completed on 21 March 2022 with the Company changing its name to Ondo InsurTech and the subsidiary was renamed LeakBot Limited.
At the same time as completing the acquisition, the Company has raised gross proceeds of £3,427,500 through the Placing and Subscription and by granting the warrants, and net proceeds of approximately £3,155,500.
Further details of the acquisition and the strategy of the business following the acquisition are provided in the Chief Executive Officer's Review.
On 22 March 2022, a subsidiary called LeakBot USA Inc. was incorporated in the state of Delaware. This company was incorporated to engage directly with US-based insurance companies.
Environmental and Social
The Company is committed to creating long-term value and sharing the benefits of its operations with all its stakeholders, including employees and shareholders. Following the acquisition of Labs, the Company's operations have the potential to provide a significant positive impact on the socio-economic development of its local communities, while minimising their impact on the environment. Environment, social and governance ("ESG") policies, systems and practices are embedded throughout the business.
The Company is aware that it needs to measure the operational carbon footprint in order to limit and control its environmental impact. However, since the Company, due to its limited activities in the period under review, did not consume more than 40,000kWh of energy, the Company's emissions are not disclosed for this reason.
Financial review
Results for the period
The Company incurred a loss for the period from incorporation to 28 February 2022 of £580,260.
The net cash increase was £1,679,207 and at 28 February 2022, the Company held £1,679,207 of cash and cash equivalents.
As the Company did not trade in the period, its key performance indicators were the losses incurred and the cash figures stated above.
Position of the Company's business
At the period end, the Company's Statement of Financial Position shows net assets totalling £1,670,450 which included £1,679,207 of cash and cash equivalents.
Environmental matters
The Board contains personnel with a good history of running businesses that have been compliant with all relevant laws and regulations and there have been no instances of non-compliance in respect of environmental matters.
Employee information
At present, there are three male directors and one female director. The Company has one executive and three non-executive directors. The Company is committed to gender equality and diversity and, if future roles are identified, a wide-ranging search would be completed with the most appropriate individual being appointed irrespective of race or gender.
The Company ensures that employment practices take into account the necessary diversity requirements and compliance with all employment laws. The Board has experience in dealing with such issues and have sufficient training and qualifications to ensure they meet all the requirements.
Anti-corruption and anti-bribery policy
The government of the United Kingdom has issued guidelines setting out appropriate procedures for companies to follow to ensure that they are compliant with the UK Bribery Act 2010. The Company has conducted a review into its operational procedures to consider the impact of the Bribery Act 2010 and the Board has adopted an anti-corruption and anti-bribery policy.
Assessment of business risk
The Board regularly reviews operating and strategic risks. The Company's operating procedures include a system for reporting financial and non-financial information to the Board including:
· reports from management with a review of the business at each Board meeting, focusing on any new decisions/risks arising; and
· consideration of reports prepared by third parties.
Principal Risks and Uncertainties
Reliance on key personnel
If any of the senior management team were to leave the Company the number of appropriately qualified and available replacements would be limited. This situation would be exacerbated due to the high demand for such individuals and so the Company would be likely to incur significant costs to retain key staff or attract replacements should they leave. The loss of the services of any key personnel, or an inability to attract other suitably qualified persons when needed, could prevent the Company from executing its business plan and strategy and it may be unable to find adequate replacements on a timely basis, or at all. While all key personnel will hold equity in the business of a value sufficient to reflect their importance to the business, departure of key personnel would potentially render more difficult the delivery of the current business plan.
Future financial capital requirements
Following completion of the acquisition after the period end, the speed at which the Group can achieve break-even and then profitability will be dependent on whether it expands its customer and distributor base and achieves targeted market acceptance of its products. Therefore, it is possible that, in the future, the Company may need to raise additional funds through equity or debt financings; sale of assets; collaborative arrangements with commercial partners or from other sources. Any additional equity financing may dilute an investor's holdings in the Company. Any future debt financing, if available, may require restrictions to be placed on the Company's future financing and operating activities. The Company may be unable to obtain additional financing on acceptable terms if market and economic conditions, the financial condition or operating performance of the Group, or investor sentiment, are unfavourable. If the Company is unable to raise further funds, its ability to grow its business in the future may be hindered and the Directors may be required to review or change the business strategies of the Group.
Capital Structure
The Company's capital consists of ordinary shares which rank pari passu in all respects and which are traded on the Standard segment of the Main Market of the London Stock Exchange. There are no restrictions on the transfer of securities in the Company or restrictions on voting rights and none of the Company's shares are owned or controlled by employee share schemes. There are no arrangements in place between shareholders that are known to the Company that may restrict voting rights, restrict the transfer of securities, result in the appointment or replacement of Directors, including in relation to the issuing or buying back by the Company of its shares or any significant agreements to which the Company is a party that take after or terminate upon, a change of control of the Company following a takeover bid or arrangements between the Company and its directors or employees providing for compensation for loss of office or employment (whether through resignation, purported redundancy or otherwise) that may occur because of a takeover bid.
Approved by the Board and signed on its behalf by:
Craig Foster
Director
27th July 2022
GOVERNANCE REPORT
The QCA Corporate Governance Code
The Directors recognise the importance of and are committed to, sound corporate governance principles being embedded into the operations of the Company. The Company is not formally required to comply with a corporate governance code; however, the Company has voluntarily applied the Quoted Company Alliance (QCA) Corporate Governance Code published in April 2018 (the QCA Code). As meeting the QCA Code is not required, the Company did not fully comply with any corporate governance code during the year, however, post year-end, following the acquisition, it has adopted the QCA Code and will seek to meet its ten principles.
The principles of the Quoted Company Alliance (QCA) Code:
Principle 1: Establish a strategy and business model which promotes long-term value for shareholders
The Company's overarching strategic objective is to deliver long-term value to shareholders. Since the period end, the Company has completed the acquisition of LeakBot Limited.
The Directors expect their strategy will drive shareholder value through delivering organic growth, delivering growth through acquisition, delivering operating profitability to shareholders and delivering operational efficiencies.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Board intends to maintain high levels of communication and have constructive dialogue with its shareholders on a regular basis. The Company understands the need for effective communication and constructive dialogue with investors and financial media and will provide communications through its Annual and Interim Reports, along with Regulatory News Service announcements. The Board is putting in place a general policy of keeping all interested parties informed by regular announcements and update statements. The CEO will be the Company's principal spokesperson with investors, fund managers, the press and other interested parties and act as a general liaison for all shareholders.
All Directors will attend annual general meetings of the Company ("AGM"s), where private investors are given the opportunity to speak to and question the Board. The AGM will provide an opportunity to meet, listen and present to shareholders, and all shareholders are encouraged to attend.
The Directors intend to continue dialogue with shareholders at other formal meetings which provide an opportunity to meet, listen and present to shareholders, such as at Capital Markets Days. The Company is open to receiving feedback from all stakeholders and will take action where appropriate. The Company is contactable by email and relevant shareholder queries are passed to the Board for discussion. Investor Relations information on the Company's website will be kept updated on relevant developments, financial reports and results presentations.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Directors believe that the main stakeholders of the Company are its clients, its employees, the communities it works with and its shareholders. The Directors are mindful of its corporate social responsibilities and the need to build and maintain strong relationships across its range of stakeholder groups.
The Directors are committed to providing its customers and clients the highest levels of service and to seeking their regular feedback to ensure any concerns are understood and addressed.
The Board believes good two-way communication with staff is a key requirement for high levels of engagement, fostering a culture of innovation. The Company consciously fosters a work environment where employees are - and consider themselves to be - key stakeholders in the business.
With regard to shareholders, the Company seeks to meet its responsibilities through meeting regulatory requirements and by understanding shareholder sentiments on the business, its prospects and performance of management. The Directors are available to discuss any matter stakeholders might wish to raise.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board takes responsibility for the establishment and oversight of the Group's risk management framework and has established an Audit & Risk Committee to ensure the Group's risk management systems, policies and procedures are appropriate to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor ongoing risks. The Committee will maintain effective working relationships with the Board of Directors, management, and the external auditors and monitor the independence and effectiveness of the auditors and the audit.
The Board's oversight covers all financial and operational controls. The Board's primary method of monitoring is through reviewing reports from management to consider whether significant risks are identified, evaluated and controlled and whether any significant weaknesses are resolved.
An internal audit function is not yet considered necessary or practical due to the size of the Company and day to day control is sufficiently exercised by the Executive Directors. However, the Board will continue to monitor the need for an internal audit function.
Principle 5: Maintain the Board as a well‑functioning, balanced team led by the Co-Chairs
The Board comprises of Craig Foster as CEO with three non-executive directors; Gregory Mark Wood, Andy Morrison and Stefania Barbaglio.
The Board is charged with responsibility for the stewardship of the Company and for ensuring that corporate governance arrangements are appropriate for the nature and complexity of the Company's operations. The Board is responsible for taking all major strategic decisions and also addressing any significant operational matters. In addition, the Board reviews the risk profile along with the Audit and Risk Committee and ensures that an adequate system of internal control is in place.
The Independent Non-Executive Directors are considered by the Board to be independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement in accordance with the QCA Code. The Board deem this appropriate due to the balance of skills and experience held by each individual director, in the context of the current size of the Group and its growth potential.
The Chief Executive is responsible for the leadership and day-to-day management of the Company and its Group. This includes formulating and recommending the strategy for Board approval and executing the approved strategy.
The Board meets monthly, and more frequently if necessary.
The Audit and Risk Committee will meet at least two times a year and the Remuneration Committee at least three times a year. The terms of reference setting out the responsibilities of the Audit & Risk Committee and Remuneration Committee are summarised on the Group's website.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Board considers its current composition and overall size to be both appropriate and suitable with the correct blend of sector, financial and public markets experience and personal skills and capabilities to enable it to deliver its strategy and provide appropriate critique.
The composition of the Board is reviewed on an annual basis by the Nomination Committee. The Nomination Committee is fully committed to the appointment of the right skills that are required to grow shareholder value.
The Board will undertake a thorough evaluation of the skills, knowledge and experiences of a proposed new Director before making the final decision on the appointment of a new member. Throughout the year, the Directors will receive updates on corporate governance matters.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The Board itself is responsible for board evaluation. An internal Board evaluation will take place annually going forward and will be conducted by way of a questionnaire and interviews. In addition, the Non-executive Directors will meet, without the executive directors present, and will evaluate performance of the executives. The results shall be used by the Board for its approach to succession planning.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Board promotes a healthy corporate culture and has considered how that culture is consistent with the Company's objectives, strategy and business model. The Board believes the culture to be inclusive, transparent and collaborative with appropriate behaviours. The Board is satisfied that the Company has a 'speak up' culture and the Directors regularly observe this occurring in practice.
The Group has a Code of Conduct, a Share Dealing Code, an Anti-Bribery Policy, Publicity Guidelines, Related Party Transaction guidelines, a Disclosure policy stating the Company's commitment to conducting its business with honesty and integrity, its expectation that staff will maintain high standards, and encouraging prompt disclosure of any suspected wrongdoing. All such policies have been shared with employees are available to view on internal systems.
In addition, in line with the Market Abuse Regulations ("MAR"), the Company has adopted a Share Dealing Policy and Dealing Code which apply to all Directors and employees of the Company.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Board is committed to a high standard of corporate governance across the Company, recognising that it is important in protecting Shareholders' interests and the long-term success of the Company. The QCA Code is being implemented on a "comply or explain" basis, whereby there is an acceptance that non-compliance is not wrong, provided there is a well-justified explanation which properly describes why such noncompliance is appropriate for the Company and is in the best interests of its Shareholders.
Progress, and how it is intended to be made, in terms of governance structures against the Company's objectives, strategy and business model, will be detailed in the Company's next annual report and shall also be included on the Company's website.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Directors are committed to open communication with all its shareholders. Communications with shareholders will be predominantly through the Annual Report and AGM. Other communications are in the form of, full-year and half-year announcements, periodic market announcements (as appropriate), one-to-one meetings and investor roadshows with institutional investors.
The Company's website is regularly updated and users can register to be alerted via email when announcements or details of presentations and events are posted on the website.
Committees
As envisaged by the QCA Corporate Governance Code, the Board has established an Audit and Risk Committee, a Nomination Committee and a Remuneration Committee.
If the need should arise, the Board may set up additional committees as appropriate.
Audit and Risk Committee
The Audit and Risk committee, which comprises of Andy Morrison (Chair) and Stefania Barbaglio, has the primary responsibility for monitoring the quality of internal control and ensuring that the financial performance of the Company is properly measured and reported on and for reviewing reports from the Company's auditors relating to the Company's accounting and internal controls.
The committee is also responsible for making recommendations to the Board on the appointment of auditors and the audit fee and for ensuring that the financial performance of the Company is properly monitored and reported.
The Audit and Risk Committee will meet not less than three times a year.
Remuneration Committee
The remuneration committee, which comprises of Andy Morrison (Chair) and Stefania Barbaglio, is responsible for the review and recommendation of the scale and structure of remuneration for senior management, including any bonus arrangements or the award of share options with due regard to the interests of the Shareholders and the performance of the Company.
Due to the limited operations on the Company during the period ended 28 February 2022, the Remuneration Committee has not prepared a Report but details on Directors' remuneration and their interest in the share capital of the Company are provided in the Directors' Report.
Nomination Committee
The nomination committee, which comprises Stefania Barbaglio (Chair), Gregory Mark Wood and Craig Foster, is responsible for matters of nomination and succession of board directors and senior management.
Approved by the Board and signed on its behalf by:
Gregory Mark Wood
Chairman
27th July 2022
REMUNERATION COMMITTEE REPORT
On behalf of the board, I am pleased to present the Remuneration Committee Report for the period ended 28 February 2022.
External Advice
The Remuneration Committee did not receive any external advice in the period in meeting its responsibilities.
Directors Remuneration Policy
The Remuneration Committee takes into account both Group and individual performance, market value and sector conditions in determining director and senior employee remuneration. Since the acquisition of LeakBot Limited, the Group has maintained a policy of paying salaries comparable with peer companies in the sector in order to attract and retain key personnel.
The remuneration policy of the Company prior to the transaction was not to pay fees to directors or retained advisers and instead to pay a success fee in shares upon completion of a transaction. This was done in the post period. The revised remuneration policy of the Group is being worked on by the Remuneration Committee. The expected completion date for the revised remuneration policy is December 2022.
Annual Report on Remuneration
Responsibilities of the Remuneration Committee
The key responsibilities of the Remuneration Committee are to determine on behalf of the Board:
• the Company's general policy on Executive remuneration; and
• the specific remuneration packages of the Executive Directors, the Chair of the Board and senior
Executives of the Group including, but not limited to, base salary, pension, annual performance-related bonuses and Performance Share Plan ("PSP") awards.
The fees of the Non-Executive Directors are determined by the Chair and the Executive Directors. All Directors are subject to the overriding principle that no person shall be involved in the process of determining his or her own remuneration.
The full responsibilities of the Committee are contained within its Terms of Reference, which are available on our website.
Audited information
The audited tables and related notes are identified within this report
Single Figure of Total Remuneration
The total amount paid by the Company to each of the Directors, in respect of the financial period ended 28 February 2022 is set out in the table below.
Period ended 28 February 2022
PSP awards are the calculated values of the Share Options awarded to directors in compensation for their work and do not represent cash payments.
The Committee is grateful for the continuing support of shareholders. To ensure that this continues, the Committee will consult with shareholders on major issues where it is appropriate to do so. It will also continue to adhere to its underlying principle of decision-making that Executive Directors' pay must be linked to performance and the sustainable delivery of value to our shareholders.
This Annual Report on Remuneration has been approved by the Board of Directors and signed on its behalf by:
Andrew Morrison
Chair of the Remuneration Committee
27th July 2022
DIRECTORS' REPORT
The Directors present their report together with the audited financial statements for the period ended 28 February 2022.
Principal Activity
The principal activity of the Company during the period ended 28 February 2022 was that of an investment company quoted on the Standard Segment of the Main Market of the London Stock Exchange.
Directors
The present members of the Board of Directors together with brief biographies are shown on page 7.
The following directors were appointed during the period and after the period end:
Gregory Mark Wood - Appointed 21 March 2022
Andrew Morrison - Appointed 23 February 2021
Stefania Barbaglio - Appointed 6 September 2021
Craig Foster - Appointed 21 March 2022
Anthony Harpur - Resigned on 21 March 2022
Alan Hume - Resigned on 21 March 2022
Claudia Stijlen - Resigned on 21 March 2022
Directors' interests
The interests of the Directors who served at the end of the period in the share capital of the Company at 28 February 2022:
|
Name |
Number of shares |
Holding % |
|
|
|
|
|
Andrew Morrison |
2,150,020 |
9.50 |
|
Anthony Harpur |
2,150,020 |
9.50 |
|
Alan Hume |
1,150,020 |
5.08 |
|
Stefania Barbaglio |
370,000 |
1.63 |
|
Claudia Stijlen |
400,000 |
1.63 |
|
|
|
|
Directors' interests in share options and warrants
At 28 February 2022, the Directors' interests in share options were:
|
Name |
|
Number of options |
|
|
|
|
|
Andrew Morrison |
|
820,151 |
|
Anthony Harpur |
|
488,500 |
|
Alan Hume |
|
276,895 |
|
Stefania Barbaglio |
|
175,983 |
|
Claudia Stijlen |
|
- |
|
|
|
|
Remuneration
Directors' remuneration for the period ended 28 February 2022:
|
Name |
|
Share based payments 2022 £ |
Total remuneration 2022 £ |
|
|
|
|
|
|
Andrew Morrison |
|
35,856 |
35,856 |
|
Anthony Harpur |
|
21,357 |
21,357 |
|
Alan Hume |
|
12,106 |
12,106 |
|
Stefania Barbaglio |
|
7,694 |
7,694 |
|
Claudia Stijlen |
|
- |
|
|
|
|
|
|
|
|
|
77,013 |
77,013 |
|
|
|
|
|
There were no pension entitlements and no fees were payable to the directors prior to the completion of an acquisition, which occurred after the year end.
Political donations
The Company did not make any political donations or expenditure in the period.
Substantial shareholders
As at 25 July 2022, the parties who are directly or indirectly interested in 3 percent or more of the nominal value of the Company's share capital are as follows:
|
|
Number of Ordinary Shares |
% |
|
|
|
|
|
|
|
|
|
Homeserve Assistance Limited |
13,628,275 |
19.99 |
|
Premier Miton Investors |
4,166,666 |
6.11 |
|
Anthony Harpur |
3,055,187 |
4.48 |
|
Andy Morrison |
2,970,171 |
4.36 |
|
|
|
|
Financial instruments
Details of the use of the Company's financial risk management objectives and policies as well as exposure to financial risk are contained in the accounting policies and note 14 of the financial statements.
Dividends
The Directors do not propose a dividend in respect of the period ended 28 February 2022.
Future developments and events subsequent to the period end
Further details of the Company's developments and events subsequent to the period end are set out in the Strategic Report on page 8 and in note 17 to the financial statements.
Viability and going concern statement
In accordance with the UK Corporate Governance Code 2018 (the 'Code'), the Directors have assessed going concerns over a twelve-month period from the approval of these financial statements i.e. up to 31 July 2023 and have assessed the viability of the Group. The assessment period for viability is aligned with the strategic outlook timeframe. As part of this assessment, the Directors have analysed the prospects of the Group by reference to its current financial position, recent trading trends and momentum, forecasts and financial projections, strategy, economic model and the principal risks and mitigating factors.
Group planning process
Our annual planning process begins in September with a detailed review of the key strategic goals by the Board of Directors and the Executive Team, following which an updated long-term financial plan is derived. A detailed, bottom-up budget for the year ahead is then prepared, which is signed off by the Board in November. We monitor our performance throughout the financial year against this budget with a regular formal re-forecasting process conducted on a monthly basis.
Base case
The strategic plan forms the base case for the scenario modelling that underpins the viability assessment and going concern assessment. It has been built out from the Board-approved budget which includes the funds raised of £3,427,500 in March 2022. Principal assumptions include: continued activity with existing insurance partners, and new activity with pipeline partners; pricing assumptions based on signed contracts or active negotiations; direct cost assumptions based on current run-rates; assumptions about fixed overhead and operational costs being largely stable through the period; some limited capital expenditure in technology and manufacturing.
Viability assessment
The Directors have reviewed the Group's forecasts and projections for a period of twelve months from the approval of these financial statements i.e. up to 31 July 2023 (the 'Assessment Period'), which is aligned to the Group's current strategic planning cycle. The Directors have assessed the future viability of the Group by reviewing the Base Case and risk scenarios based on the Principal Risks. These circumstances have been evaluated based on principal and emerging risks identified by management through its risk management process, with consideration given to broader socioeconomic factors.
Conclusion
The Directors are of the opinion that the Company has adequate working capital to meet its obligations for a period of twelve months from the approval of these financial statements i.e. up to to 31 July 2023. The Directors have therefore made an informed judgement, at the time of approving the financial statements, that there is reasonable expectation that the Company has adequate resources to continue its operational existence for the foreseeable future.
Auditors
The Board appointed PKF Littlejohn LLP as auditors of the Company on 21 June 2022.
PKF Littlejohn LLP have expressed their willingness to accept in office and a resolution to reappoint them will be proposed at the Annual General Meeting in accordance with Section 489 of the Companies Act 2006.
Website publication
The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the UK governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Statement of Directors' Responsibilities in respect of the financial statements
The Directors are responsible for preparing the Annual Report of the Directors and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Company financial statements in accordance with UK adopted international accounting standards. Under Company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies with a standard listing.
In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgments and accounting estimates that are reasonable and prudent;
· state whether applicable international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Statement of Directors' responsibilities pursuant to disclosure and transparency rule
Each of the Directors, whose names and functions are listed on page 7 confirm that, to the best of their knowledge and belief:
· the financial statements prepared in accordance with UK adopted international accounting standards give a true and fair view of the assets, liabilities, financial position, and loss of the Company; and
· the Annual Report and financial statement include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face.
Disclosure of information to auditor
In the case of each person who was a Director at the time this report was approved:
· so far as that director is aware there is no relevant audit information of which the Company's auditor is unaware; and
· that each director has taken all steps that the director ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Approved by the Board and signed on its behalf by:
Gregory Mark Wood
Chairman
27th July 2022
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ONDO INSURTECH PLC
Opinion
We have audited the financial statements of Ondo InsurTech PLC (the 'company') for the period ended 28 February 2022 which comprise: the Income Statement and Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards.
In our opinion, the financial statements:
· give a true and fair view of the state of the company's affairs as at 28 February 2022 and of its loss for the period 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 company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 company's ability to continue to adopt the going concern basis of accounting included
· Reviewing the cash flow forecasts prepared by management for the period up to 31 July 2023 corroborating, providing challenge to key assumptions and reviewing for reasonableness;
· A comparison of actual results for the period to forecasts to assess the forecasting ability/accuracy of management;
· Reviewing post-year end RNS announcements; and
· Assessing the adequacy of going concern disclosures within the Annual Report and Financial Statements.
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 company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality for the financial statements as a whole applied to the financial statements of the Company was £14,000 based on 1% of gross assets. We consider gross assets to be the most relevant performance indicator for a Company seeking to undertake an acquisition.
Performance materiality was set at 60% of the respective financial statement materiality levels. We use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes.
We agreed with the board that we would report all audit differences identified during the course of our audit in excess of £700. There were misstatements identified during the course of our audit that were considered to be material and adjusted for by management.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular we addressed the risk of management override of internal controls, including evaluation whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
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 scope addressed this matter |
|
Management override |
|
|
Under ISA (UK) 240 "The Auditor's responsibility to consider fraud in an audit of financial statements", there is a presumed significant risk of management override of the system of internal controls.
Due to low volume of transactions during the period and direct involvement of management in the operations, there is a potential risk of manipulation of financial results.
|
Our work in this area will included but not limited to: · A review of journals processed during the period under review and in the preparation of the financial statements to determine whether these were appropriate. · A review of key estimates, judgements and assumptions within the financial statements for evidence of management bias, and agree to appropriate supporting documentation. In this context we view the key estimates as being fair value of share options and warrants. · An assessment of whether the financial results and accounting records include any significant or unusual transactions where the economic substance is not clear. We did not identify any indicators of fraud or management override of controls from our testing. |
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report7. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with 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 period 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 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, or returns adequate for our audit have not been received from branches not visited by us; or
· the financial statements and the part of the directors' remuneration report to be audited 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 statement of directors' responsibilities in respect of the financial statements, 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 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 company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
· We obtained an understanding of the company and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, industry research, application of cumulative audit knowledge and experience of the sector. This is evidenced by discussion of laws and regulations with the management, reviewing minutes of meetings of those charged with governance and RNSs announcements and review of legal or professional expenditures.
· We determined the principal laws and regulations relevant to the company in this regard to be those arising from Companies Act 2006, London Stock Exchange listing rules, UK taxation laws etc.
· We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the company with those laws and regulations. These procedures included, but were not limited to:
o enquiries of management,
o review of minutes of board meetings,
o review of regulatory news service announcements (RNSs)
o review of legal and professional fee to understand the nature of the costs and the existence of any non-compliance with laws and regulations
· As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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.
Other matters which we are required to address
We were appointed by the Audit Committee on 21 June 2022 to audit the financial statements for the period ending 28 February 2022 and subsequent financial periods. Our total uninterrupted period of engagement is one financial year.
The non-audit services prohibited by the FRC's Ethical Standard were not provided to the company and we remain independent of the company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
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.
Eric Hindson (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
27th July 2022
INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME
For the period ended 28 February 2022
|
|
|
|
|
Period |
|
|
|
|
|
ended |
|
|
Note |
|
|
28 February 2022 |
|
|
|
|
|
|
|
|
|
|
|
£ |
|
Revenue |
|
|
|
- |
|
|
|
|
|
|
|
Operating and administrative expenses |
4 |
|
|
(218,597) |
|
Other operating income |
|
|
|
130 |
|
Exceptional expense in relation to the IPO and acquisition |
5 |
|
|
(361,793) |
|
Loss before income tax |
|
|
|
(580,260) |
|
|
|
|
|
|
|
Income tax |
8 |
|
|
- |
|
|
|
|
|
|
|
Loss for the period and total comprehensive loss |
|
|
|
(580,260) |
|
|
|
|
|
|
|
Earnings per share attributable to equity owners |
|
|
|
|
|
Basic and diluted (loss) per share |
12 |
|
|
(4.30) |
The income statement has been prepared on the basis that all operations are continuing operations.
The accounting policies and notes form an integral part of these financial statements.
STATEMENT OF FINANCIAL POSITION
As at 28 February 2022
|
|
|
|
|
As at 28 February 2022 |
|
|
Note |
|
|
£ |
|
ASSETS |
|
|
|
|
|
Current assets |
|
|
|
|
|
Other receivables |
9 |
|
|
86,394 |
|
Cash and cash equivalents |
10 |
|
|
1,679,207 |
|
Total assets |
|
|
|
1,765,601 |
|
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
Equity attributable to owners |
|
|
|
|
|
Share capital |
13 |
|
|
1,131,503 |
|
Share premium |
|
|
|
954,640 |
|
Share based payments reserve |
|
|
|
164,567 |
|
Retained earnings |
|
|
|
(580,260) |
|
|
|
|
|
|
|
|
|
|
|
1,670,450 |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
11 |
|
|
95,151 |
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
|
1,765,601 |
|
|
|
|
|
|
The financial statements were approved by the board of directors and authorised for issue on 27th July 2022
and are signed on its behalf by:
Craig Foster
Director
Company Registration No.13218816
The accounting policies and notes form an integral part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
As at 28 February 2022
|
|
|
Share capital |
|
Share premium |
|
Share based payments reserve |
|
Retained earnings |
|
Total |
|
|
|
£ |
|
£ |
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
|
|
|
At incorporation (23 February 2021) |
|
3 |
|
- |
|
- |
|
- |
|
3 |
|
Issue of ordinary shares |
|
1,131,500 |
|
1,079,500 |
|
- |
|
- |
|
2,211,000 |
|
Cost of shares issued |
|
- |
|
(50,000) |
|
- |
|
- |
|
(50,000) |
|
Share based payment |
|
- |
|
(74,860) |
|
164,567 |
|
- |
|
89,707 |
|
Total comprehensive loss for the period |
|
- |
|
- |
|
- |
|
(580,260) |
|
(580,260) |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 28 February 2022 |
|
1,131,503 |
|
954,640 |
|
164,567 |
|
(580,260) |
|
1,670,450 |
|
|
|
|
|
|
|
|
|
|
|
|
Share Capital
Share capital represents the nominal value of shares that have been issued.
Share premium
Share premium represents the difference between the nominal value of shares issued and the total consideration received.
Share based payments reserve
Share based payments reserve is a reserve used to recognise the cost and equity associated with the fair value of share options and warrants.
The accounting policies and notes form an integral part of these financial statements.
STATEMENT OF CASH FLOWS
For the period ended 28 February 2022
|
|
|
|
|
Period |
|
|
|
|
|
ended |
|
|
|
|
|
28 February 2022 |
|
|
|
|
|
|
|
|
|
|
|
£ |
|
Cash flows from operating activities |
|
|
|
|
|
Loss before income tax |
|
|
|
(580,260) |
|
Adjustments: |
|
|
|
|
|
Share based payments |
|
|
|
89,707 |
|
|
|
|
|
|
|
Movement in working capital |
|
|
|
|
|
(Increase) in receivables |
9 |
|
|
(86,394) |
|
Increase in payables |
11 |
|
|
95,151 |
|
|
|
|
|
|
|
Net cash flow from operating activities |
|
|
|
(481,796) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from issue of ordinary shares, net of costs |
13 |
|
|
2,161,003 |
|
|
|
|
|
|
|
Net cash flows from financing activities |
|
|
|
2,161,003 |
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
|
1,679,207 |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
|
- |
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
|
|
1,679,207 |
The accounting policies and notes form an integral part of these financial statements.
NOTES TO THE FINANCIAL INFORMATION
For the period ended 28 February 2022
1. General information
Ondo Insurtech Plc (the "Company") was incorporated on 23 February 2021 in England and Wales, with registered number 13218816 under the Companies Act 2006. The registered office of the company is 6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR.
The Company was initially incorporated with the name Spinnaker Acquisitions Limited. On 12 May 2021, the Company re-registered as a public limited company. On 22 March 2022, the Company changed its name from Spinnaker Acquisitions Plc to Ondo InsurTech Plc.
During the period ended 28 February 2022, the principal activity of the Company was that of an investment company. Since the year end, the Company has made an acquisition of a company in the B2B InsurTech sector.
2. Basis of preparation
The financial information and accompanying notes are based on the following policies which have been consistently applied:
The financial information of the Company has been prepared in accordance with the Companies Act 2006 and UK-adopted international accounting standards ("UK adopted IAS"). .
The financial statements are presented in Sterling, which is the Company's functional and presentational currency and has been prepared under the historical cost convention.
The preparation of financial information in conformity with UK adopted IAS's requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Information are disclosed in Note 3.
Going Concern
In accordance with the UK Corporate Governance Code 2018 (the 'Code'), the Directors have assessed going concern over a twelve-month period from the approval of these financial statements i.e. up to 31 July 2023 and have assessed the viability of the Group. The assessment period for viability is aligned with the strategic outlook timeframe. As part of this assessment, the Directors have analysed the prospects of the Group by reference to its current financial position, recent trading trends and momentum, forecasts and financial projections, strategy, economic model and the principal risks and mitigating factors.
The strategic plan forms the base case for the scenario modelling that underpins the viability assessment and going concern assessment. It has been built out from the Board approved budget which includes the funds raised of £3,427,500 in March 2022. Principal assumptions include: continued activity with existing insurance partners, and new activity with pipeline partners; pricing assumptions based on signed contracts or active negotiations; direct cost assumptions based on current run-rates; assumptions about fixed overhead and operational costs being largely stable through the period; some limited capital expenditure in technology and manufacturing.
The Directors have reviewed the Group's forecasts and projections for the 12-month period to July 2023 (the 'Assessment Period'), which is aligned to the Group's current strategic planning cycle. The Directors have assessed the future viability of the Group by reviewing the Base Case and risk scenarios based on the Principal Risks. These circumstances have been evaluated based on principal and emerging risks identified by management through its risk management process, with consideration given to broader socioeconomic factors.
2. Basis of preparation (continued)
The Directors are of the opinion that the Company has adequate working capital to meet its obligations over the next 18 months. The Directors have therefore made an informed judgement, at the time of approving the financial statements, that there is reasonable expectation that the Company has adequate resources to continue its operational existence for the foreseeable future.
Adoption of new and revised standards
New standards, amendments and interpretations
The Company has adopted all of the new and amended standards and interpretations issued by the International Accounting Standards Board that are relevant to its operations and effective for accounting periods commencing on or after 23 February 2021.
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the UK adopted international accounting standards but are not yet effective and have not been adopted early by the Company. Management anticipates that all of the relevant pronouncements will be adopted in the Company's accounting policies for the first period beginning after the effective date of the pronouncement.
|
Standard |
Key requirements |
Effective date for annual periods beginning on or after: |
|
IAS 1 |
Amendments to IAS1, 'Presentation of Financial Statements' regarding the classification of liabilities |
1 January 2023 |
|
IAS 12 |
Amendments to IAS12, 'Income Taxes' regarding deferred tax related to assets and liabilities arising from a single transaction |
1 January 2023 |
|
IAS 1 |
Amendments to IAS1, 'Presentation of Financial Statements' regarding the amendments of disclosure of accounting policies |
1 January 2023 |
|
IAS 8 |
Amendments to IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' to distinguish between accounting policies and accounting estimates. |
1 January 2023 |
|
IFRS 17 |
Insurance Contracts - Original issue |
1 January 2023 |
|
IAS 16 |
Amendments to IAS 16 'Property, Plant and Equipment' regarding proceeds before intended use |
1 January 2022 |
The Company is currently assessing the impact of the amendments to determine the impact they will have on the Company's accounting policy disclosures.
3. Accounting policies
The accounting policies set out below have, unless otherwise stated, been applied consistently.
There have been no judgements made by the Directors, in the application of these accounting policies that have significant effect on the financial information and estimates with a significant risk of material adjustment in the next year except for the judgements on share options regarding their fair value and expected life which are estimated based on judgement.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term deposits with an original maturity of three months or less.
Equity
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs, or at fair value where no proceeds are received.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Financial assets are recognised in the statement of financial position when the Company becomes party to the contractual provisions of the instrument.
Financial assets are classified into specified categories. The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition.
Financial assets are subsequently measured at amortised cost, fair value through OCI, or FVPL.
The classification of financial assets at initial recognition that are debt instruments depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. The Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest ("SPPI")' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• financial assets at amortised cost;
• financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments);
• financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); and
• financial assets at FVPL.
3. Accounting policies (continued)
Financial assets at amortised cost (debt instruments)
The Company measures financial assets at amortised cost if both of the following conditions are met:
• the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate ("EIR") method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Company's financial assets at amortised cost include other receivables and cash and cash equivalents.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised when:
• the rights to receive cash flows from the asset have expired; or
• the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either: (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Company also recognises an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Impairment of financial assets
The Company recognises an allowance for expected credit losses ("ECLs") for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
The Company recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original EIR. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For other receivables due in less than 12 months, the Company applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Company does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.
3. Accounting policies (continued)
The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company's financial liabilities include trade and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
• loans and borrowings and trade and other payables;
• after initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process;
• amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income.
This category generally applies to trade and other payables.
Derecognition
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.
Financial risk management
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company. 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.
Financial Risk Factors
The Company's cash holdings are all held with major financial institutions whose financial status is regularly reviewed.
Credit Risk
Credit risk arises from outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.
3. Accounting policies (continued)
The Company considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk, which is stated under the cash and cash equivalents accounting policy.
Liquidity risk
The Company's continued future operations depend on its ability to raise sufficient working capital through the issue of share capital and generate revenue.
Capital risk management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders. The Company's capital structure primarily consists of equity attributable to the owners, comprising issued capital, reserves and retained losses.
Current and deferred tax
Current tax
The tax currently payable is based on taxable profit or loss for the period. Taxable profit or loss differs from the profit or loss for the financial period as reported in the statement of total comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit or loss.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the subsidiary intends to settle its current tax assets and liabilities on a net basis.
Deferred tax will be recognised on the losses incurred when the Company has sufficient visibility over the usage of these loses and is forecasting future profits in the short term.
Share-based payments
The company makes equity-settled share-based payments to its directors and brokers. The fair value of options and warrants granted is recognised in statement of comprehensive income with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the receivers become unconditionally entitled to the options. The fair value of the options and warrants granted is measured on the Black-Scholes framework, taking into account the terms and conditions upon which the instruments are granted. At each balance sheet date, the company revises its estimate of the number of options and warrants that are expected to become exercisable.
3. Accounting policies (continued)
Critical accounting estimates and judgements
The Company makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual results may differ from these estimates and assumptions. There are no 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 period except for the judgements on share based payments.
Share based payments
The estimates of share-based payment costs require that management selects an appropriate valuation model and makes decisions on various inputs into the model, including the volatility of its own share price, the probable life of the options before exercise, and behavioural consideration of employees. A significant element of judgement is therefore involved in the calculation of the charge.
4. Operating expenses by nature
|
|
|
|
2022 |
|
|
|
|
£ |
|
|
|
|
|
|
|
|
|
|
|
Subscriptions |
|
|
10,895 |
|
Professional fees |
|
|
87,786 |
|
Share based payments |
|
|
89,707 |
|
Sundry expenses |
|
|
30,209 |
|
|
|
|
218,597 |
5. Exceptional expenses
|
|
|
2022 |
|
|
|
£ |
|
|
|
|
|
Professional fees related to the IPO |
|
161,793 |
|
Professional fees related to the acquisition and readmission |
|
200,000 |
|
|
|
|
|
|
|
361,793 |
6. Auditors' remuneration
|
|
|
2022 |
|
|
|
£ |
|
|
|
|
|
Audit services |
|
35,000 |
|
Non-audit services: |
|
|
|
- Assurance services related to the IPO |
|
17,500 |
|
- Assurance services related to the acquisition and readmission |
|
75,000 |
|
|
|
|
|
|
|
127,500 |
7. Directors' remuneration
The average monthly number of employees, which were solely the Directors, during the period was 5.
Directors' remuneration for the period ended 28 February 2022 was:
|
Name |
|
Share based payments 2022 £ |
Total remuneration 2022 £ |
|
|
|
|
|
|
Andrew Morrison |
|
35,856 |
35,856 |
|
Stefania Barbaglio |
|
7,694 |
7,694 |
|
Anthony Harpur |
|
21,357 |
21,357 |
|
Alan Hume |
|
12,106 |
12,106 |
|
Claudia Stijlen |
|
- |
- |
|
|
|
|
|
|
|
|
77,013 |
77,013 |
|
|
|
|
|
No pension contributions were paid.
8. Taxation
|
|
|
|
2022 |
|
|
|
|
£ |
|
|
|
|
|
|
Current tax |
|
|
- |
|
Deferred tax |
|
|
- |
|
|
|
|
|
|
Tax charge/(credit) for the period |
|
|
- |
The Company's unutilised tax losses carried forward at 28 February 2022 amounted to £93,002. A deferred tax asset has not been recognised due to uncertainty over the timing of the utilisation of the losses.
The standard rate of tax for the current year, based on the UK effective rate of corporation tax is 19%. The actual tax for the current and previous year varies from the standard rate for the reasons set out in the following reconciliation:
|
|
|
|
2022 |
|
|
|
|
£ |
|
Loss for the period |
|
|
(580,260) |
|
|
|
|
|
|
Tax on ordinary activities at standard rate |
|
|
(110,249) |
|
Effects of: |
|
|
|
|
Expenses not deductible for tax purposes |
|
|
92,579 |
|
Tax losses available for carry forward against future profits |
|
|
17,670 |
|
Tax for the period |
|
|
- |
On 24 May 2021, the Government enacted that from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. From this date companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.
9. Other receivables
|
|
|
|
2022 |
|
|
|
|
£ |
|
Other receivables |
|
|
86,394 |
|
|
|
|
86,394 |
10. Cash and cash equivalents
|
|
|
|
2022 |
|
|
|
|
£ |
|
Cash at bank |
|
|
1,679,207 |
|
|
|
|
1,679,207 |
11. Other payables
Amounts falling due within one year:
|
|
|
|
2022 |
|
|
|
|
£ |
|
Other payables |
|
|
17,222 |
|
Accruals |
|
|
77,929 |
|
|
|
|
95,151 |
12. Earnings per share
The basic earnings per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue.
The Company had in issue 22,630,060 ordinary shares at 28 February 2022. The loss attributable to equity holders and weighted average number of ordinary shares for the purposes of calculating diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share.
|
|
|
|
2022 |
|
|
|
|
£ |
|
Loss for the period attributable to equity holders (£) |
|
|
580,260 |
|
Weighted average number of shares in issue |
|
|
13,485,234 |
|
|
|
|
|
|
Basic and diluted earnings per share (£) |
|
|
(4.30) |
13. Share capital and share premium
On 18 March 2021, the Company sub-divided each ordinary share of £1 into 20 ordinary shares of £0.05 each.
On 13 April 2021, the company issued 1,300,000 ordinary shares of £0.05 each.
On 28 July 2021, the company issued 20,810,000 ordinary shares of £0.05 each at a price of £0.1 per ordinary shares creating a share premium of £1,040,500. Issue costs of £50,000 in relation to the share issue have been offset against the premium
On 10 September 2021, the Company issued 520,000 new ordinary shares of £0.05 each at a price of £0.0125 per ordinary share creating a share premium of £39,000.
The share-based payment charge for the 500,000 'Broker' warrants have been set off against the share premium as options granted to the broker were in connection with fundraising.
|
|
Number of Ordinary shares |
Share capital |
Share premium |
Total |
|
|
|
£ |
£ |
£ |
|
At Incorporation |
3 |
3 |
- |
3 |
|
Sub-division of ordinary shares (18/03/2021) |
60 |
3 |
- |
3 |
|
Issue of ordinary shares (13/04/2021) |
1,300,000 |
65,000 |
- |
65,000 |
|
Issue of ordinary shares (28/07/2021) |
20,810,000 |
1,040,500 |
990,500 |
2,031,000 |
|
Issue of ordinary shares (10/09/2021) |
520,000 |
26,000 |
39,000 |
65,000 |
|
Share based payments for broker warrants |
- |
- |
(74,860) |
(74,860) |
|
At 28 February 2022 |
22,630,060 |
1,131,503 |
954,640 |
2,086,143 |
14. Financial instruments
The Company's financial instruments comprise cash, other receivables and other payables. The main purpose of these financial instruments is to provide finance for the Company's future activities and day to day operational needs.
The main risks faced by the Company are limited to interest rate risk on surplus cash deposits and liquidity risk associated with raising sufficient funding to meet the operational needs of the business.
The Board reviews and agrees policies for managing these risks and they are summarised below.
Financial assets by category
The categories of financial assets included in the statement of financial position and the headings in which they are included are as follows:
|
|
|
|
2022 |
|
At amortised cost |
|
|
£ |
|
Other receivables |
|
|
86,394 |
|
Cash and cash equivalents |
|
|
1,679,207 |
|
|
|
|
1,765,601 |
Financial liabilities by category
The categories of financial liabilities included in the statement of financial position and the headings in which they are included are as follows:
|
|
|
|
|
2022 |
|
At amortised cost |
|
|
|
£ |
|
Other payables |
|
|
|
95,151 |
Interest rate risk
The Company manages the interest rate risk associated with the Company's cash assets by ensuring that interest rates are as favourable as possible, whilst managing the access the Company requires to the funds for working capital purposes.
The Company's cash and cash equivalents are subject to interest rate exposure due to changes in interest rates. Short-term receivables and payables are not exposed to interest rate risk.
Capital risk management
The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through optimisation of the debt and equity balance. The capital structure of the Company currently consists of cash and cash equivalents, and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained earnings, all as disclosed in the Statement of Financial Position.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument disclosed in Note 3 to the financial statements.
15. Equity-settled share based payments
Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.
On 28 July 2021, 2,211,005 share options were granted with an exercise price of £0.10 and an expiry period of 3 years.
On 28 July 2021, two tranches of share warrants were issued: 10,405,000 warrants at an exercise price of £0.20 with an expiry period of 4 years and 500,000 warrants at an exercise price of £0.10 with an expiry period of 3 years.
The fair value of the options has been calculated using the Black-Scholes valuation model. The assumptions used in the fair value calculation were as follows:
|
|
Options |
|
Date of grant |
28 July 2021 |
|
Number |
2,211,005 |
|
Exercise price (pence) |
10p |
|
Risk free interest (%) |
0.5% |
|
Expected volatility (%) |
37.8% |
|
Expected life (years) |
2.9 |
|
Fair value |
0.52 |
|
Option life |
3 years |
The total share-based payment expense recognised in the income statement for the period ended 28 February 2022 in respect of the share options granted was £89,707.
Volatility was determined by reference to the standard deviation of daily share prices.
At the date of grant, the 500,000 warrants that came under the scope of IFRS 2 Share based payments were valued based on an agreed fee payable to the broker on completion of the fundraising. This resulted in a charge of £74,860 against share premium in respect of share issue costs.
No share based payments charge arose in respect of the 10,405,000 warrants granted to investors.
16. Controlling party
The Directors do not consider there to be an ultimate controlling party.
17. Subsequent events
On 21 March 2022, the Company was readmitted to the London Stock Exchange following the reverse takeover of LeakBot Limited. On readmission the company also changed its name from Spinnaker Acquisitions Plc to Ondo InsurTech Plc.
On 21 March 2022, the Company raised £198,538 by allotment of 1,985,377 ordinary shares of £0.05 each at a price of £0.1 per ordinary share. On the same day company raised £5,226,501 by allotments of 43,554,175 ordinary shares of £0.05 each at a price of £0.12 per ordinary share.
On 22 March 2022, a subsidiary called Leakbot USA Inc. was incorporated in the state of Delaware.
18. Copies of the Annual Report
Copies of the annual report are available on the Company's website at www.ondoplc.com and from the Company's registered office 6th Floor, 60 Gracechurch Street, London, England, EC3V 0HR.