Basis of preparation

The condensed consolidated financial statements for the six months ended 30 June 2024 have been prepared in accordance with the AQSE Growth Market Rules and the recognition and measurement requirements of IFRSs as adopted for use in the UK.  The interim financial information should be read in conjunction with the Group's Annual Report and Financial Statements for the year ended 31 December 2023, which were prepared in accordance with IFRSs as adopted for use in the UK.

The comparative figures for the financial year ended 31 December 2023 are not the company's statutory accounts for that financial year.  Those accounts have been reported on by the company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, and (ii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The Group's business activities together with the factors that are likely to affect its future developments, performance and position are set out in the Update.  The condensed consolidated financial statements were approved by the Board of Directors on 11 September 2024.

Going Concern

It is the intention of the Directors to capital to shareholders and to liquidate the Parent Company and the Group when the remaining legal matter, as described in note 7, has been concluded and any value from litigation assets has been achieved. It is not possible to determine the timeframe for this process to be completed as it is contingent upon several external factors including court approval for a capital return.

The Parent Company and the Group remain solvent, with net assets and sufficient cash and term deposits to meet their ongoing need for the foreseeable future up until when they will be liquidated.  Given the intention to liquidate the Parent Company and the Group, the Directors therefore believe that it is not appropriate to prepare these condensed consolidated financial statements on a going concern basis. Accordingly, the Directors have prepared these condensed consolidated financial statements on a basis other than going concern. No adjustment was needed to the amounts recognised in these condensed consolidated financial statements because of this change.

Statement of Directors' responsibilities

The Directors confirm that, to the best of their knowledge, this set of condensed consolidated financial statements have been prepared in accordance with the AQSE Growth Market Rules.

Significant Accounting Policies

The accounting policies applied by the Group in this set of condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 December 2023, except for the adoption of new standards and interpretations as of 1 January 2024.  None of these standards have any significant impact on the accounting policies, financial position or performance of the Group, as noted below:

Effective for the period beginning 1 January 2024 

·      Amendment to IAS 7 and IFRS 7 - Supplier finance arrangements.

·      Amendment to IFRS 16 - Lease liability in a sale and leaseback transaction.

·      Amendments to IAS 1 - Classification of lease liabilities as current or non-current and non-current liabilities with covenants.

 Effective for the period beginning 1 January 2025 

·      Amendment to IAS 21 - Lack of exchangeability.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

In the process of applying the Group's accounting policies, management has made a number of judgements, and the preparation of condensed consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

The key management judgements together with assumptions concerning the future and other key sources of estimation uncertainty at 30 June 2024 that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities during the current financial year are discussed below.

Estimate and judgement: Legal cases

The Group is involved with a legal case which, if successful, could result in material cash inflows to the Group.  The relative merits of the case and the assessment of its likely outcome is highly judgemental by nature.  Similarly, management recognise the hurdle set by accounting standards to recognise an asset or disclose a contingent asset is very high and therefore neither is recognised or disclosed within these condensed consolidated financial statements.

Judgement: Recognition of liabilities arising under the Distribution Incentive Scheme

As discussed in the Directors' Remuneration Report on pages 8 and 9 of the 2023 Annual Report and Financial Statements the Group Chief Executive Officer is entitled to 5.43% of any distribution over and above a prescribed distribution hurdle ("DIS Hurdle") which was first and permanently exceeded during 2020. As discussed in the Update the percentages to fall due have been revised during the six months ended 30 June 2024, however no amounts have been recognised in these condensed consolidated financial statements in respect of any future payments as it is the judgement of management that the liability does not crystallise, and is materially uncertain, until Court approval has been obtained for the related capital reduction and cash return and furthermore, any distribution (and therefore incentive payment) is made at the discretion of the Group. The impact of this judgement is up to 20% of future amounts distributed after the cash returned to shareholders in July 2024. 

*At 31 December 2023

Tax related matters during the six months ended 30 June 2024 relate to the appeal of the decision of the Upper Tier Tribunal against HMRC.  Further details are provided in note 7.

Legal expenses during the period ended 30 June 2023 primarily relate to the costs of the claim against PwC which was found in favour of the defendants.

Split:

Legal disputes and regulatory matters

Provisions at 30 June 2023 and 30 June 2024 relate to the decision of the First Tier VAT Tribunal ("FTT") which found against the Group and that Watchstone's subsidiary WTGIL Limited ("WTGIL") did not make any supplies of telematics devices or related services in the VAT periods 07/2014 to 07/2018.  WTGIL's appeal was dismissed by the FTT and during 2023 this decision was appealed and heard by the Upper Tier Tribunal ("UTT"), which also found against WTGIL.   The Group has since appealed the decision of the UTT after being given leave to do so by the UTT.  At 31 December 2023, provisions included the costs of HMRC at the UTT.  These were paid by 30 June 2024.

In legal cases where the Group is the claimant, costs are not provided as there is no obligation to proceed and the Group is not contractually committed to incur costs. 

Loss for the period from discontinued operations:

In July 2024, the High Court of Justice in England and Wales made an order approving the reduction of the Company's share capital under the Companies Act 2006 which had been proposed to and approved by Shareholders at the AGM held in May 2024.  Accordingly, in July 2024 the Share Premium of the Company was reduced by £3.7m and paid to Shareholders as cash.

As the reduction and Share Premium and related cash outflows were contingent upon court approval being granted, which occurred after the date of these condensed consolidated financial statements, the related entries are not included in the condensed consolidated statement of financial position at 30 June 2024.  The effect of this action was to reduce share premium and cash by £3.7m during July 2024. Furthermore, this action crystallises a payment of £0.2m under the Distribution Incentive Scheme ("DIS") in July 2024.  Details of the DIS are included in the directors' remuneration report on pages 8 and 9 of the consolidated financial statements for the year ended 31 December 2023.