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COMPANY INFORMATION
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CONTENTS
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GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The Directors present their Strategic report together with the audited financial statements for the year ended 31 December 2023.
Airfinity's principal activity is that of predictive health intelligence and data analytics software for infectious diseases.
After a few years of very rapid growth, in 2023, Airfinity experienced a more challenging year with slower yet still positive revenue growth. The company achieved a 21.5% increase in revenue compared to the previous year (£6.6m from £5.4m). This growth can be attributed to Airfinity's ability to successfully navigate the aftermath of the global pandemic and its strategic decision to diversify its product offerings as well focusing strongly on Big Pharma clients as a target segment with a more customised analytical offering. Moving away from focusing solely on COVID-19, Airfinity continued to expand its focus to include wider infectious diseases and biorisk analytics, which proved to be a beneficial move for the company in retaining and expanding revenue.
The company also established operations in the US which is the fastest growing market and presents large opportunities. Airfinity's commitment to controlling overheads has been evident. Workforce hiring was highly focused on improving team quality through attrition while maintaining overall staffing levels which resulted in only a 4% increase in team cost as compared to the prior year. In addition, Airfinity effectively managed all other costs by continuing to operate in a hybrid work environment, mitigating any adverse impacts on utilities and facilities expenses. During the year, Airfinity also completed a successful fundraising event by securing loan notes from existing shareholders. The closing cash position at the end of 2023 was £2.32 million, slightly lower than the previous year's closing cash position. This decrease reflects the incurred loss for the year and working capital changes, as indicated in the financial statements.
Airfinity's management regularly discusses both financial and non-financial risks that could have a significant impact on the company. Some of the key risks identified during the year are as follows:
a. Margin Erosion: The transition of the COVID-19 phase from a pandemic to a more endemic situation has caused a focus shift of governments and other institutions with budgets and resources being reallocated. This has caused a slowdown in revenue growth across 2023. To mitigate this, Airfinity has been focusing on diversifying its product offerings to reduce the dependency on COVID-19 data subscriptions and the non-COVID revenue portion has grown consistently throughout 2023. b. Cashflow: As Airfinity's business heavily focuses on Research and Development (R&D) to support revenue growth, there is a potential for fast-paced cash burn. To address this, management closely monitors cashflows and takes proactive measures to maintain adequate cash reserves for short to medium-term needs. Should anticipated fundraising events not materialise, R&D spend will be adjusted accordingly to ensure working capital is managed effectively. c. Competition in the Market: Airfinity operates in a competitive market environment, making the development of new product ranges and maintaining strong customer relationships crucial to the company's success. Airfinity's emphasis on providing value-added services has been well-regarded by customers, contributing to customer retention and satisfaction.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Airfinity's performance in 2023 is reflected through various Key Performance Indicators (KPIs):
a. Annual Recurring Revenue (ARR): To mitigate the shift in focus away from COVID-19 by governments around the world, Airfinity has been diversifying is product offerings and non-COVID related revenue has grown consistently (42% year on year) throughout 2023. b. Gross Margin: Airfinity maintained a healthy gross margin of 95%, similar to the previous year, highlighting effective cost management and strong gross profitability. c. Customer Retention: In Airfinity's most significant client segment, "Pharma," customer retention retained a respectable 99% in non-COVID-19 products with an average contract length of 1 year. This indicates a solid customer satisfaction level and a successful focus on customer retention strategies despite the shift away from COVID-19. In conclusion, Airfinity had a solid year in 2023 despite a more challenging market environment, characterized by stable booked revenue, a stronger client base, effective cost management, and the continued focus on diversifying infectious disease coverage and biorisk analytics. Despite facing certain risks and uncertainties, the company's strategic approach and dedication to innovation have yielded positive results.
Airfinity is strategically positioning itself for a future marked by innovation and expansion. By transitioning from a concentrated focus on COVID-19 to a broader engagement with infectious diseases and biorisk analytics, the company is continuing to broaden both its product offerings and customer reach.
To enable the Company to achieve its aims, further fundraising events would have to be realised and this will be a key focus for the Directors accordingly. Central to Airfinity's forward-looking strategy is a commitment to technological advancements, fueling innovation in product development and enhancing data analytics capabilities. As part of this, we will continue expanding our backend systems, establishing upstream data integrations, and centralizing our data engineering flows for new products. Leveraging robust revenue growth and a diversified portfolio, the company is well-aligned to fulfill the Board's expectations for international growth, specifically in the US, laying the groundwork for success on a global scale.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The directors who served during the year were:
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £3,224,459 (2022 - loss £3,282,806).
In accordance with Section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 the Strategic Report preceding the Directors' Report Includes information that would have formerly have been included in the business review and the principal risk and uncertainties sections of the Directors' report.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
There have been no significant events affecting the Group since the year end.
Under section 487(2) of the Companies Act 2006, Menzies LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AIRFINITY LIMITED
We have audited the financial statements of Airfinity Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard 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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. 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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AIRFINITY LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AIRFINITY LIMITED (CONTINUED)
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 Auditors' 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 Group 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:
The Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most significant including:
∙The Companies Act 2006;
∙Financial Reporting Standard 102;
∙UK employment legislation;
∙UK health and safety legislation; and
∙General Data Protection Regulations.
We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
∙We understood how the Group are complying with those legal and regulatory frameworks by making inquiries to management and those responsible for legal and compliance procedures.
∙The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any issues in this area.
∙We assessed the susceptibility of the Group's financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:
°Identifying and assessing the design effectiveness of controls that management has in place to prevent and detect fraud;
°Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process;
°Challenging assumptions and judgments made by management in its significant accounting estimates; and
°Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
∙Management override of controls to manipulate results; and
∙Timing of revenue recognition.
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 Auditors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AIRFINITY LIMITED (CONTINUED)
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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditor
1st Floor
Midas House
62 Goldsworth Road
Surrey
GU21 6LQ
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 29 form part of these financial statements.
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COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 29 form part of these financial statements.
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