Company Registration No. SC440534 (Scotland)
INTELLIGENT GROWTH SOLUTIONS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
INTELLIGENT GROWTH SOLUTIONS LIMITED
COMPANY INFORMATION
Directors
Mr B R Richardson
Mr S Krishnan
Mr J G Watson
Mr J Mraz
Ms A Zopp
Mr D S Levin
Ms S Hotson
(Appointed 31 January 2024)
Mr J S Thomson
(Appointed 31 January 2024)
Mr A T Lloyd
(Appointed 31 January 2024)
Secretary
Thorntons Law LLP
Company number
SC440534
Registered office
Kinburn Castle
Doubledykes Road
St Andrews
Fife
KY16 9DR
Independent auditors
PricewaterhouseCoopers LLP
Level 4
Atria One
144 Morrison Street
Edinburgh
EH3 8EX
INTELLIGENT GROWTH SOLUTIONS LIMITED
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5 - 6
Directors' responsibilities statement
7
Independent auditors' report
8 - 11
Group statement of comprehensive income
12
Group statement of financial position
13
Company statement of financial position
14
Group statement of changes in equity
15
Company statement of changes in equity
16
Group statement of cash flows
17
Company statement of cash flows
18
Notes to the financial statements
19 - 48
INTELLIGENT GROWTH SOLUTIONS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

1. Overview

Intelligent Growth Solutions Limited (IGS) operates within the vertical farming technology sector, delivering sustainable and innovative agricultural solutions across various regions. The group's primary activities include the design, construction, and support of vertical farms, leveraging advanced technologies and science to optimise crop yields and resource efficiency. The group’s main product is a Growth Tower, which is available in several sizes and configurations to meet customer’s design requirements, crop range, and scale-needs.

 

Group Accounts:

These financial statements of Intelligent Growth Solutions Limited include consolidated accounts of its subsidiary undertakings being Intelligent Growth Solutions Inc. registered in the USA and Intelligent Growth Solutions Pte. Ltd. registered in Singapore.

 

2. Risks and Uncertainties

 

Principal Risks:

The group faces several principal risks and uncertainties, which are actively managed to mitigate their impact:

 

Liquidity Risk: The group is experiencing the growth phase of its evolution and as such, faces liquidity risk arising from the time required to convert opportunities to signed contracts and subsequently, potential delays between signing and commencement of contracts due to the complex nature of the contracts. The Board approves and closely monitors performance against an annual budget and up-to-date cash flow forecasts, enabling it to monitor and closely manage liquidity risk.

 

Strategic review of liquidity risk also recognises the balance between over-capitalising, at a high cost of capital, with the need for future anticipated capital requirements. As such the Board monitors the group’s cash position and plans for fundraising activity accordingly.

 

Market Risk: The group is exposed to direct and indirect market risk across the business. The market the group operates in is emerging, and as such there is increased volatility and less clarity in its shape than more established and mature consumer and business markets. This in turn increases the level of uncertainty when making forecasts of market demand.

 

The group is also exposed to wider secondary market risks which impact customers such as wholesale and retail food prices, food costs, the availability of capital, and price of electricity which can all impact on demand for the group’s product. The group assesses customer market and operational risk exposure when evaluating sales opportunities.

 

Operational Risk: Challenges in supply chain, production processes, and logistics can impact project delivery. The group maintains robust supplier relationships and contingency plans to address these risks. Deployment of the product takes place on customer sites and is dependent on customer readiness with respect to the buildings Growth Towers are deployed in, utilities and services, and access to the customer site. The group manages these risks via contracting terms which allow for remedies in the event of customer delays impacting on build timelines.

 

Financial Risk: The group deploys its product in overseas territories, has a global supply chain and has operations overseas. As such, the group has some exposure to currency fluctuations from contracts denominated in foreign currency, as well as operational costs and supply chain. The group matches these cashflows where possible and any residual risk will either be accepted or hedged based on the size of the exposure and overall risk.

 

The group is also potentially exposed to international import tariff fluctuations, however, seeks to minimise the impact of these, both contractually and by having operations within the territories which can be expanded appropriately.

 

Interest rate changes can impact profitability. Other than fixed rate convertible loan notes, the group has no cash interest bearing debt and as such direct interest rate exposure is limited to interest earned on deposit balances.

INTELLIGENT GROWTH SOLUTIONS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

3. Balanced and Comprehensive Business Review

During the financial year, the group successfully delivered operational farms in North America, the UK, and Germany. In addition, the group signed heads of terms for its first “GigaFarm” project in the UAE, positioning the group for significant growth in the wider region in the coming years. A “GigaFarm” is defined as a project which has the capability to grow over 1 billion plants in a year – these are projects which are an order of magnitude larger than existing projects the group has deployed to date.

 

Revenue increased by over 200% compared to the previous year from £3.9m to £12.1m. Overall gross margin improved to 2% as compared to -18% in the prior period. Administrative expenses increased by 36% from £20.8m to £28.3m leading to an operating loss for the year of £30.2m compared to previous year of £21.3m. The group continues to invest in its product both in terms of direct engineering of the product as well as crop science and data science for measuring and improving its performance.

 

Year-End Position:

At the end of the financial year, the group had a cash at bank balance of £474k (2022: £7,554k), which is less than the cash required to fund the group’s operations for one month. Following the reporting date the group announced a Series C equity fundraise with the first close on the 12th January 2024, and final close on the 2nd February 2024. The round was oversubscribed from internal investors and raised £22.5m putting the group in a position to fund the business in readiness to deliver into the “GigaFarm” and other opportunities ahead of it.

 

In October 2024, the group raised £5,000,000 from the issue of Convertible Loan Notes. In February 2025, the group approved the raising of a further £15,000,000 from the issue of new Convertible Loan Notes, of which £8,500,000 was received at first close in February 2025, to bridge the liquidity gap arising from delays in contract commencement.

 

Increased levels of inventory reflect long lead items and active construction projects.

 

Strategic initiatives focused on innovation and customer satisfaction continue to drive business success with the group delivering research both through operational cashflow and grant funding.

 

Going Concern:

The directors have high confidence, at the time of filing, in the group continuing to operate as a going concern. During 2024, the group has signed and announced significant customer supply contracts and continues to benefit from the financial support of its institutional and other shareholders.

 

Notwithstanding the above, the directors refer to Note 1.3 of the Notes to the Accounts regarding matters considered in the going concern assessment.

 

4. Key Performance Indicators

 

Key Performance Indicators

The group employs several Key Performance Indicators (KPIs) to enable it to monitor the performance of the business and the product versus the business plan. The group uses a balanced scorecard approach of financial and non-financial metrics based upon those which most influence business outcomes and over which the group has the most control. The group does not disclose this data publicly owing to the risk it will prejudice the group and expose data to competitors.

INTELLIGENT GROWTH SOLUTIONS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

4. Key Performance Indicators (continued)

 

Financial and current performance

The business focuses on the following KPIs when reviewing its actual performance and variances to budget. These are key in understanding the growth path and trajectory of the business, alongside the level of market traction. Since vertical farming is a developing industry, this data is currently the best available indicator of market penetration.

 

Revenue and gross margin per project/tower: this gives a view of the profitability of individual projects and their contribution.

 

Bill of Materials: this is the overall cost of sales for a given Growth Tower and is monitored to understand the levels of cost inflation and economies of scale that the group has in its product offering.

 

Number of towers deployed: this is directly linked to revenues and demonstrates the commercial traction of the product. This is monitored and forecast on a by region basis.

 

Qualifying research investment: this is continuously monitored for potential R&D tax credits and for understanding the amount of operating expenditure which is invested in improving the group’s intellectual property.

 

Cash runway: the number of months of cash the group has on hand to fund ongoing operations before needing to raise further funds.

 

Product monitoring:

The group also monitors several KPIs to do with the operation, efficiency, and quality of the product. This ensures that the product aligns to customer demands and expectations and feeds into the product management lifecycle, with the performance of the product directly influencing marketing efforts, and the voice of the customer feeding back into product development. A few of the key product performance KPIs are outlined below:

 

Number of crop recipes: these are monitored both for quantity and quality to ensure the crop portfolio performs to a high enough standard to be commercially viable. Quality is monitored primarily by the following two metrics, albeit unstructured data also plays a part in crop quality e.g. taste, smell, appearance, nutrition:

 

Yield in kg per m2 per year: this captures the productivity of specific crop recipes to understand capital efficiency of the product. In some instances (e.g. starter plugs) number of units / m2 may be more appropriate:

 

Efficiency in kWh per kg: this captures the operating efficiency of the product with the cost of electricity typically being the highest operating cost for a customer.

 

5. Financial Instruments

 

Financial Risk Management Objectives:

The group's primary financial risk management objective is to minimise potential adverse effects on its financial performance. The group enters forward exchange contracts with respect to large cashflows over which the group has certainty of amount and timing to manage foreign exchange risk. There were no outstanding derivative contracts as at the reporting date.

INTELLIGENT GROWTH SOLUTIONS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

6. Other Matters

 

Strategic Importance:

Innovation: Continuous investment in R&D to develop cutting-edge vertical farming technologies.

 

Customer Relationships: Strengthening relationships through enhanced service delivery and customer support.

 

Sustainability: Commitment to sustainable farming practices and reducing environmental impact. As evidence of this, the group achieved B Corp certification which demonstrates the group’s high social and environmental performance.

 

ISO accreditation: During the year, the group achieved accreditation of its Quality Management System (ISO9001) and Environmental Management System (ISO14001).

On behalf of the board

Mr A T Lloyd
Director
18 March 2025
INTELLIGENT GROWTH SOLUTIONS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -

The directors present their annual report and audited consolidated financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the group is the research and development, productisation and supply of systems and services using science and technology, for industrial applications, principally in sustainable Controlled Environment Agriculture.

 

Accounting Reference Date

On 20 December 2024, the company changed its accounting reference date to 30 December under s392 of the Companies Act 2006 to ensure compliance with s442 of the Companies Act 2006. The comparative figures presented in the financial statements (including related notes) are entirely comparable.

Results and dividends

The results for the year are set out on page 12.

No ordinary dividends were paid (2022: nil). The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr B R Richardson
Mr S Krishnan
Mr J G Watson
Mr D Farquhar
(Resigned 31 January 2024)
Mr J Mraz
Ms A Zopp
Mr D S Levin
Ms S Hotson
(Appointed 31 January 2024)
Mr J S Thomson
(Appointed 31 January 2024)
Mr A T Lloyd
(Appointed 31 January 2024)
Qualifying third party indemnity provisions

The group has made qualifying third party indemnity provisions for the benefit of its directors which were made during the year and remain in force at the reporting date.

Post reporting date events

In January and February 2024, the company issued 9,414,225 C Ordinary shares at 0.1p each for a total consideration of £22,499,935. In October 2024, the group raised £5,000,000 from the issue of Convertible Loan Notes. In February 2025, the group approved the raising of £15,000,000 from the issue of Convertible Loan Notes of which £8,500,000 was received at first close in February 2025. In February 2025, the company granted a Bond and Floating charge over the company’s assets in favour of S2G Builders Food & Agriculture Fund III LP, as Security Trustee for investors issued with Convertible Loan Notes at first close in February 2025.

INTELLIGENT GROWTH SOLUTIONS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
Future developments

During the year the group reviewed the product and geographic coverage of the business. The group views its main Growth Tower product as stable and ready for market. Iterative updates have been made since the prior period. These will continue to improve product performance and resilience. The group is focussed on its most promising markets with hybrid growing in North America and “GigaFarm” opportunities across territories, in particular, in the Middle East and Northern Europe. This is where the group’s primary effort and resource will be spent in terms of product market fit, product development, and sales & marketing. Servicing deployments and customers in the Middle East region may require the group to scale operations in the region with some presence in-country, particularly given the potential size of the opportunities available there.

 

The group will continue to serve existing customers in current deployments and is positioned for inbound sales in other territories and verticals.

Research and development

Our commitment to innovation and advancement continues to drive our group's growth and position us as a leader in the industry, with specific focus in the following areas:

 

Independent auditors

In accordance with section 485 of the Companies Act 2006, a resolution for the appointment of independent auditors will be put to the members.

Strategic report

The group has chosen, in accordance with section 414C(11) Companies Act 2006, to set out in the group’s strategic report information required by Schedule 7 of the Large and Medium-sized companies and groups (Accounts and Reports) Regulations 2008 to be contained in the directors’ report. It has done so in respect of principal risks and uncertainties, financial risk management, financial key performance indicators and research and development.

On behalf of the board
Mr A T Lloyd
Director
18 March 2025
INTELLIGENT GROWTH SOLUTIONS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -

Statement of directors’ responsibilities in respect of the financial statements

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation. 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group and the company financial statements in accordance with UK-adopted International accounting standards. 

Under company law, directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period. In preparing the financial statements, the directors are required to: 

The directors are responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 

The directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. 

Directors’ confirmations 

In the case of each director in office at the date the directors’ report is approved: 

INTELLIGENT GROWTH SOLUTIONS LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF INTELLIGENT GROWTH SOLUTIONS LIMITED
- 8 -
Report on the audit of the financial statements
Opinion

In our opinion, Intelligent Growth Solutions Limited’s group financial statements and company financial statements (the “financial statements”):

 

We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual Report”), which comprise: the group and company statement of financial position as at 31 December 2023; the group statement of comprehensive income, the group and company statement of changes in equity and the group and company statement of cash flows for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Independence

We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Material uncertainty related to going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 1.3 to the financial statements concerning the group’s and the company’s ability to continue as a going concern. The directors have considered the group’s cash flow forecast to the end of 2026, therefore including the period of 12 months from the date of approval of the financial statements. The Group has recently signed and announced significant customer supply contracts, however, these contracts are contingent on customer funding and there is no guarantee that they will commence within the anticipated timescales. In addition, the Group is in active discussions in pursuit of a further fund raise via Convertible Loan Notes. The directors have determined that they have a reasonable expectation that the Group and Company have sufficient cash reserves to commence customer contracts and secure additional funding, however, this is not guaranteed and without such customer contracts or additional funding, forecast cash reserves could be exhausted by the second half of 2025. These conditions, along with the other matters explained in note 1.3 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the group’s and the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group and the company were unable to continue as a going concern.

 

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

INTELLIGENT GROWTH SOLUTIONS LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF INTELLIGENT GROWTH SOLUTIONS LIMITED
- 9 -

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic report and Directors' report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

 

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.

Strategic report and Directors' Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' report for the year ended 31 December 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

 

In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' report.

Responsibilities for the financial statements and the audit

 

Responsibilities of the directors for the financial statements

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 in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.

INTELLIGENT GROWTH SOLUTIONS LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF INTELLIGENT GROWTH SOLUTIONS LIMITED
- 10 -
Responsibilities for the financial statements and the audit (continued)

Auditors’ 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 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 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.

 

Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to UK tax legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to manipulation of revenue to improve the reported performance of the company, for example through journal entries. Audit procedures performed by the engagement team included:

 

 

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

 

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

INTELLIGENT GROWTH SOLUTIONS LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF INTELLIGENT GROWTH SOLUTIONS LIMITED
- 11 -
Other required reporting
Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

 

 

We have no exceptions to report arising from this responsibility.

Thomas Kendall (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
18 March 2025
INTELLIGENT GROWTH SOLUTIONS LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
Revenue
3
12,120,409
3,924,903
Cost of sales
(11,853,860)
(4,616,590)
Gross profit/(loss)
266,549
(691,687)
Other operating income
971,331
194,350
Administrative expenses
(28,251,073)
(20,801,442)
Impairment losses on financial and contract assets
21
(3,147,579)
-
Operating loss
4
(30,160,772)
(21,298,779)
Finance income
7
168,365
3,145
Finance costs
8
(415,995)
(115,001)
Loss before taxation
(30,408,402)
(21,410,635)
Income tax credit
9
666,963
1,212,654
Loss and total comprehensive expense for the year
(29,741,439)
(20,197,981)
Loss for the financial year is all attributable to the owners of the parent company.
Total comprehensive expense for the year is all attributable to the owners of the parent company.
INTELLIGENT GROWTH SOLUTIONS LIMITED
GROUP STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 13 -
2023
2022
Notes
£
£
Non-current assets
Intangible assets
10
439,390
1,757,561
Property, plant and equipment
11
3,552,943
2,979,563
Investments
12
50
50
Finance lease receivables
15
-
0
216,103
Deferred tax asset
20
100,398
100,398
4,092,781
5,053,675
Current assets
Inventories
14
7,483,578
4,805,361
Trade and other receivables
16
2,187,375
3,019,870
Current tax recoverable
2,018,041
1,946,006
Cash and cash equivalents
474,296
7,554,127
12,163,290
17,325,364
Current liabilities
Trade and other payables
17
11,136,949
7,422,872
Convertible loan notes
18
6,828,604
-
0
Lease liabilities
19
345,762
342,395
18,311,315
7,765,267
Net current (liabilities)/assets
(6,148,025)
9,560,097
Non-current liabilities
Lease liabilities
19
1,125,563
711,220
Net (liabilities)/assets
(3,180,807)
13,902,552
Equity
Called up share capital
23
6,139
5,841
Share premium account
23
63,772,981
54,156,255
Accumulated losses
23
(66,959,927)
(40,259,544)
Total (deficit)/equity
(3,180,807)
13,902,552
The financial statements were approved by the board of directors and authorised for issue on 18 March 2025 and are signed on its behalf by:
Mr A T Lloyd
Director
INTELLIGENT GROWTH SOLUTIONS LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 14 -
2023
2022
Notes
£
£
Non-current assets
Intangible assets
10
439,390
1,757,561
Property, plant and equipment
11
3,095,909
2,979,563
Investments
12
51
51
Finance lease receivables
15
-
0
216,103
Other receivables
16
2,048,941
-
0
5,584,291
4,953,278
Current assets
Inventories
14
7,483,578
4,805,361
Trade and other receivables
16
2,172,052
3,670,651
Current tax recoverable
2,018,041
1,946,006
Cash and cash equivalents
474,274
7,554,127
12,147,945
17,976,145
Current liabilities
Trade and other payables
17
11,003,720
7,422,872
Convertible loan notes
18
6,828,604
-
0
Lease liabilities
19
249,225
342,395
18,081,549
7,765,267
Net current (liabilities)/assets
(5,933,604)
10,210,878
Non-current liabilities
Lease liabilities
19
698,373
711,220
Net (liabilities)/assets
(1,047,686)
14,452,936
Equity
Called up share capital
23
6,139
5,841
Share premium account
23
63,772,981
54,156,255
Accumulated losses
23
(64,826,806)
(39,709,160)
Total (deficit)/equity
(1,047,686)
14,452,936

As permitted by s408 Companies Act 2006, the truecompany has not presented its own income statement and related notes. The company’s loss for the year was £28,158,702 (2022: £19,647,597 loss).

The financial statements were approved by the board of directors and authorised for issue on 18 March 2025 and are signed on its behalf by:
Mr A T Lloyd
Director
Company Registration No. SC440534
INTELLIGENT GROWTH SOLUTIONS LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
Share capital
Share premium account
Accumulated losses
Total
Notes
£
£
£
£
Balance at 1 January 2022
5,780
53,911,552
(21,809,648)
32,107,684
Year ended 31 December 2022:
Loss and total comprehensive expense for the year
-
-
(20,197,981)
(20,197,981)
Issue of share capital
23
61
244,703
-
244,764
Credit to equity for equity settled share-based payments
22
-
-
1,748,085
1,748,085
Balance at 31 December 2022
5,841
54,156,255
(40,259,544)
13,902,552
Year ended 31 December 2023:
Loss and total comprehensive expense for the year
-
-
(29,741,439)
(29,741,439)
Issue of share capital
23
298
9,616,726
-
9,617,024
Credit to equity for equity settled share-based payments
22
-
-
3,041,056
3,041,056
Balance at 31 December 2023
6,139
63,772,981
(66,959,927)
(3,180,807)
INTELLIGENT GROWTH SOLUTIONS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
Share capital
Share premium account
Accumulated losses
Total
Notes
£
£
£
£
Balance at 1 January 2022
5,780
53,911,552
(21,809,648)
32,107,684
Year ended 31 December 2022:
Loss and total comprehensive expense for the year
-
-
(19,647,597)
(19,647,597)
Issue of share capital
23
61
244,703
-
244,764
Credit to equity for equity settled share-based payments
22
-
-
1,748,085
1,748,085
Balance at 31 December 2022
5,841
54,156,255
(39,709,160)
14,452,936
Year ended 31 December 2023:
Loss and total comprehensive expense for the year
-
-
(28,158,702)
(28,158,702)
Issue of share capital
23
298
9,616,726
-
9,617,024
Credit to equity for equity settled share-based payments
22
-
-
3,041,056
3,041,056
Balance at 31 December 2023
6,139
63,772,981
(64,826,806)
(1,047,686)
INTELLIGENT GROWTH SOLUTIONS LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
27
(22,986,361)
(18,691,073)
Interest paid
(50,847)
(1,240)
Payment of lease liabilities
(562,907)
(405,831)
Tax refunded/(paid)
892,689
-
Net cash used in from operating activities
(22,707,426)
(19,098,144)
Investing activities
Purchase of property, plant and equipment
(595,544)
(1,379,357)
Proceeds on disposal of property, plant and equipment
-
0
2,022
Interest received
19,048
722
Net cash used in investing activities
(576,496)
(1,376,613)
Financing activities
Proceeds from issue of shares
9,666,158
245,264
Share issue costs
(49,134)
(500)
Issue of convertible loans
6,660,523
-
0
Net cash generated from financing activities
16,277,547
244,764
Net decrease in cash and cash equivalents
(7,006,375)
(20,229,993)
Cash and cash equivalents at beginning of year
7,554,127
26,585,879
Effect of foreign exchange rates
(73,456)
1,198,241
Cash and cash equivalents at end of year
474,296
7,554,127
INTELLIGENT GROWTH SOLUTIONS LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
28
(23,092,230)
(18,691,073)
Interest paid
(44,078)
(1,240)
Payment of lease liabilities
(468,048)
(405,831)
Tax refunded/(paid)
896,908
-
Net cash used in from operating activities
(22,707,448)
(19,098,144)
Investing activities
Purchase of property, plant and equipment
(595,544)
(1,379,357)
Proceeds on disposal of property, plant and equipment
-
0
2,022
Interest received
19,048
722
Net cash used in investing activities
(576,496)
(1,376,613)
Financing activities
Proceeds from issue of shares
9,666,158
245,264
Share issue costs
(49,134)
(500)
Issue of convertible loans
6,660,523
-
0
Net cash generated from financing activities
16,277,547
244,764
Net decrease in cash and cash equivalents
(7,006,397)
(20,229,993)
Cash and cash equivalents at beginning of year
7,554,127
26,585,879
Effect of foreign exchange rates
(73,456)
1,198,241
Cash and cash equivalents at end of year
474,274
7,554,127
INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
1
Accounting policies
Company information

Intelligent Growth Solutions Limited is a private company limited by shares incorporated and domiciled in the United Kingdom. The registered office is Kinburn Castle, Doubledykes Road, St Andrews, Fife, KY16 9DR. The company's principal activities and nature of its operations are disclosed in the directors' report.

 

The group consists of Intelligent Growth Solutions Limited and all of its subsidiaries.

1.1
Accounting convention

The financial statements have been prepared in accordance with UK-adopted International Accounting Standards (IFRS) and the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

The financial statements are prepared in sterling, which is the functional currency of the group and the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The material accounting policies adopted are set out below. These policies have been applied consistently to all the years presented, unless otherwise stated.

The group has adopted amendments to IAS 1 and IFRS Practice Statement 2 requiring that an entity discloses its material accounting policies, instead of its significant accounting policies.

 

New standards not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting period and have not been early adopted by the group. These standards are not expected to have a material impact on the group in the current or future reporting periods or on foreseeable future transactions.

1.2
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company together with all entities controlled by the parent company (its subsidiaries, as detailed in note 13).

 

All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
1.3
Going concern

The financial statements have been prepared on a going concern basis.true

 

In considering whether it is appropriate to prepare the financial statement upon a basis of going concern, the directors have considered the group’s cash flow forecast to the end of 2026, therefore including the period of 12 months from the date of approval of the financial statements.

 

The directors have considered the principal risks to these cash flow projections in a sensitivity analysis, the most severe but plausible of which relates to delays to the securing and commencement of customer contracts and/or the inability to raise funding to bridge any liquidity gap to the group generating positive cash flows from operations.

 

At the date of approval, the group has recently signed and announced significant customer supply contracts which the directors consider have a high probability of contributing to revenue and profitability during the going concern period. These contracts, however, are contingent on customer funding and so there is no guarantee that they will commence within the anticipated timescales.

 

The group prepares an annual budget and periodic cash flow forecasts. This enables the Board to monitor cash requirements and plan for fundraising activity accordingly, although future funding is not guaranteed. 

 

As disclosed in note 25, the group has raised £22,499,935 from the issue of C Ordinary shares in January and February 2024, £5,000,000 of additional funding in October 2024, through the issue of Convertible Loan Notes and approved the raising of £15,000,000 in February 2025 through the issue of additional Convertible Loan Notes, of which £8,500,000 was received at first close in February 2025. At the time of signing of the financial statements, the group is in active discussions in pursuit of a further fund raise via this instrument. The success of this fund raise is dependent on several factors, including the progress on commencement of customer contracts.

 

At the time of signing the directors have a reasonable expectation that the group and company has sufficient cash reserves to allow time to commence key customer contracts and to secure additional funding, however this is not guaranteed and without such customer contracts or additional funding, forecast cash reserves could be exhausted by the second half of 2025. As a result, the directors consider that these matters give rise to a material uncertainty which may cast significant doubt about the group and company’s ability to continue as a going concern.

 

The directors continue to adopt the going concern basis of accounting in the financial statements, which do not include the adjustments that would result if the group or the company were unable to continue as a going concern.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -
1.4
Revenue

Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.

 

Revenue is measured based on the consideration specified in a contract with a customer. The consideration represents the transaction price which is typically fixed and does not contain variable components. Transaction price is allocated between multiple performance obligations based on the prices indicated in a customer contract which represent stand-alone selling prices.

Revenue consists of the design and installation of growth towers, the maintenance of growth towers and other consulting services.

 

Revenue from the design and installation of growth towers are considered interdependent and are recognised as a single performance obligation and recognised over time. Revenue is calculated using the input method based on the group's efforts to the satisfaction of a performance obligation. The group calculates costs incurred on a contract and excludes cost of the materials not delivered to the customer's site. Revenue on uninstalled materials is recognised upon delivery to the customer's site at an amount equal to cost.

 

Revenue from the maintenance of growth towers, licence fees and other professional services is recognised over the period of service or licence and measured using a time based method.

Contract assets represent consideration receivable from clients for goods or services transferred. Contract liabilities represent consideration received from clients in advance of work done. The group has applied practical expedients to recognise incremental costs of obtaining a contract as an expense and to not adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

1.5
Intangible assets other than goodwill

An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the group and that its cost can be measured reliably. The asset is deemed to be identifiable when it is separable or when it arises from contractual or other legal rights.

 

Development costs are capitalised as an intangible asset only if the following conditions are met:

 

1) an asset is created that can be identified;

2) it is probable that the asset created will generate future economic benefits;

3) it is technically and commercially feasible;

4) sufficient resources are available to complete the development;

5) the directly attributable development costs of an asset can be measured reliably;

6) there is an intention and ability to complete an asset and use or sell it.

 

Where the criteria are not met, costs are recognised as an expense in the statement of comprehensive income in the period in which it is incurred.

 

Amortisation of intangible assets is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following basis:

 

Development costs            3 years straight line basis

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 22 -
1.6
Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold improvements
on a straight-line basis over the lease term
Plant and machinery
3-5 years straight-line basis
Right-of-use assets
on a straight-line basis over the lease term

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of comprehensive income.

1.7
Non-current investments

Investments are stated at cost, less provision for any diminution in value.

1.8
Impairment of tangible and intangible assets

At each reporting end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.9
Inventories

Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Costs incurred in bringing each product to its present location and condition are accounted for, as follows:

 

Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 23 -
1.10
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand and deposits held at call with banks. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

1.11
Financial assets

Financial assets are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.

Financial assets held at amortised cost

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Impairment of financial assets

An impairment loss is recognised for the expected credit losses on financial assets when there is an increased probability that the counterparty will be unable to settle an instrument's contractual cash flows on the contractual due dates, a reduction in the amounts expected to be recovered, or both.

 

The probability of default and expected amounts recoverable are assessed using reasonable and supportable past and forward-looking information that is available without undue cost or effort. The expected credit loss is a probability-weighted amount determined from a range of outcomes and takes into account the time value of money.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

1.12
Financial liabilities

Financial liabilities are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.

Financial liabilities held at amortised cost

Financial liabilities, including trade payables, convertible loans that do not contain equity element and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 24 -
1.13
Convertible loan notes

The component parts of a financial instrument issued by the group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. An instrument with a conversion option that will be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the group's own equity instrument is a financial liability.

 

An embedded warrant is a component of a hybrid convertible loan that also includes a non-derivative host debt liability. Embedded warrants are initially bifurcated from the host debt liability at their fair value and are subsequently treated as financial liabilities measured at fair value through profit or loss. The host debt liability is subsequently measured at amortised cost.

 

Transaction costs that relate to the issue of the convertible loan notes with embedded warrants are allocated fully to the host debt liability.

1.14
Equity instruments

Equity instruments issued by the parent company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer payable at the discretion of the company.

1.15
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

1.16
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

1.17
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.18
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 25 -
1.19
Leases

At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the group's estimate of the amount expected to be payable under a residual value guarantee; or the group's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets (when the value of the underlying asset, if new, is £5,000 or less). The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

When the group acts as a lessor, leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees, over the major part of the economic life of the asset. All other leases are classified as operating leases. Where the group is a manufacturer of the leased assets, revenue and a corresponding lease receivable are recognised at the commencement date and are equal to the lower of the present value of the lease payments discounted using a market rate of interest or the fair value of the underlying assets. Finance income is recognised on lease receivable over the lease term. Lease repayments are deducted from lease receivable balance.

1.20
Grants

Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 26 -
1.21
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Critical accounting estimates and judgements

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Measurement of lease liabilities

In determining the lease term the directors assess whether they are reasonably certain to exercise, or not to exercise, options to extend or terminate a lease. This assessment is made at the start of the lease and is re-assessed if significant events or changes in circumstances occur that are within the lessee's control.

 

The directors applied a discount rate of 10-12% (2022: 10%) to all new leases, as it represented the group's incremental cost of borrowing at the date of inception of new lease contracts, the carrying amount of the lease liabilities is disclosed in note 19.

Share-based payment transactions

The group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments disclosed in note 22 would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.

Deferred tax asset recognition

The group recognised a deferred tax asset of £100,398 (2022: £100,398) in relation to unused tax losses of Intelligent Growth Solutions Inc. In relation to Intelligent Growth Solutions Limited standalone tax position, no deferred tax asset has been recognised due to the uncertainty of the probability that taxable profit will be available against which the deductible temporary difference can be utilised. As at 31 December 2023 the amount of unused tax losses carried forward was £56,528,247 (2022: £34,856,784).

Impairment of non-financial assets

At each financial year end, the group assesses whether there is any indication that non-financial assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the group estimates the assets' recoverable amount. If the carrying amount is below recoverable amount, the group should recognise the impairment loss. As at 31 December 2023, no impairment of non-financial assets were recognised by the group.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Critical accounting estimates and judgements
(Continued)
- 27 -
Impairment of financial assets

During the year, the group recognised an impairment of £3,147,579 (2022: £nil) in relation to receivables for a particular customer that entered liquidation. Details on the impairment are disclosed in notes 15 and 16.

Measurement of convertible loans

The liability component of the convertible loan notes is measured at amortised cost on the basis of the repayment of notes at redemption price equal to principal and interest.

 

The estimated fair value of the embedded warrants related to the issue of convertible loan notes at the point of recognition and at the year end was calculated by using a Black-Scholes model. Management determined the share price for the fair value calculation using the latest fund raise price. The expected life of the warrants was directly linked to expected redemption dates of the convertible loan note. Other assumptions used are disclosed in note 18.

 

Embedded derivative in relation to holder put option on occurrence of a realisation event was assessed by management as not material as at 31 December 2023.

3
Revenue
2023
2022
£
£
Revenue analysed by class of business
Design and installation of growth towers
11,853,890
3,780,636
Other services
266,519
144,267
12,120,409
3,924,903
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
2,844,933
2,002,361
Europe
1,635,576
1,383,403
USA
7,639,900
539,139
12,120,409
3,924,903

All revenue relates to revenue recognised over time. There are no break clauses therefore all revenue allocated to performance obligations that are unsatisfied or partly satisfied at the year end is expected to be recognised in the next financial year. This amount represents contract liabilities and is equal to the amounts in note 17. Contract assets relate to performance obligations partially satisfied but not yet invoiced.

 

Revenue recognised in the year that was included in the opening contract liability balance was £3,122,607 (2022: £3,739,965).

 

Customers are required to transfer advance payments at a certain percentages of total fees indicated in the contracts upon order confirmation, submission of the designs and commencement of construction and installation of growth towers. This therefore creates contract liabilities to be recognised in the financial statements.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
4
Operating loss
2023
2022
£
£
Operating loss for the year is stated after charging/(crediting):
Exchange losses/(gains)
137,377
(1,316,703)
Research and development costs
1,380,197
446,204
Government grants
(668,274)
(193,168)
Fees payable to the company's auditors for the audit of the company's financial statements
45,000
39,000
Depreciation of property, plant and equipment
838,443
584,109
Loss on disposal of property, plant and equipment
-
662
Amortisation of intangible assets (included within administrative expenses)
1,318,171
1,318,171
Cost of inventories recognised as an expense
11,853,860
4,616,590
Share-based payments
3,041,056
1,748,085

Government grants income received during the year (2022: £193,168) relates to the funds received for innovation and research activities. The grants were used towards the group's working capital costs and ongoing business in line with the cash flows. There were no unfulfilled conditions of the grant at the end of the year.

5
Employees

The average monthly number of persons (including directors) employed by the group during the year was:

2023
2022
Number
Number
Customer delight
61
45
Great products
144
107
Functional excellence
20
18
Executive and administrative
5
6
Total
230
176

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
15,859,640
11,868,564
Social security costs
1,530,078
1,215,519
Pension costs
1,342,594
888,888
18,732,312
13,972,971
INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 29 -
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
212,776
360,496
Company pension contributions to defined contribution schemes
26,128
24,200
238,904
384,696

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022: 1).

Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
212,776
298,307
Company pension contributions to defined contribution schemes
26,128
24,200
7
Finance income
2023
2022
£
£
Interest income
Bank deposits
17,260
722
Interest on finance lease receivable
149,317
2,423
Other interest income
1,788
-
Total finance income
168,365
3,145
8
Finance costs
2023
2022
£
£
Interest on convertible loan notes
199,219
-
Interest on lease liabilities
165,929
113,761
Other interest payable
50,847
1,240
Total finance costs
415,995
115,001
INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
9
Income tax credit
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(674,460)
(1,045,820)
Adjustments in respect of prior periods
-
0
(66,436)
Total UK current tax
(674,460)
(1,112,256)
Foreign taxes and reliefs
7,497
-
0
(666,963)
(1,112,256)
Deferred tax
Origination and reversal of temporary differences
-
0
(111,426)
Adjustment in respect of prior periods
-
0
11,028
-
0
(100,398)
Total tax (credit)
(666,963)
(1,212,654)

 

The credit for the year can be reconciled to the loss per the statement of comprehensive income as follows:

2023
2022
£
£
Loss before taxation
(30,408,402)
(21,410,635)
Expected tax credit based on a corporation tax rate of 23.52% (2022: 19.00%)
(7,152,056)
(4,068,021)
Effect of expenses not deductible in determining taxable profit
99,308
62,865
Adjustment in respect of prior years
-
(55,408)
Share based payment charge
715,256
332,136
Effect of overseas tax rates
7,497
(6,113)
R&D SME relief
(20,997)
(461,028)
Amounts not recognised
5,684,029
2,982,915
Taxation credit for the year
(666,963)
(1,212,654)

At the reporting date, the group had unused tax losses of £56,528,247 (2022: £34,856,784) available to offset against future profits. No deferred tax has been recognised due to no taxable income being foreseen.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
10
Intangible assets
Group and company
Development costs
£
Cost
At 1 January 2022
3,954,513
At 31 December 2022
3,954,513
At 31 December 2023
3,954,513
Accumulated amortisation
At 1 January 2022
878,781
Charge for the year
1,318,171
At 31 December 2022
2,196,952
Charge for the year
1,318,171
At 31 December 2023
3,515,123
Carrying amount
At 31 December 2023
439,390
At 31 December 2022
1,757,561
At 31 December 2021
3,075,732

Development costs relate to the development of growth towers and related technology. The amounts were capitalised from the date the criteria for capitalisation under IAS 38: Intangible Assets were satisfied to the date when the first growth tower was completed and accepted by the client. Amortisation has been charged on the asset from this point forward under a 3-year expected useful life. The remaining useful life was 0.3 years at 31 December 2023. No impairment was recognised during the year.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
11
Property, plant and equipment
Group and company
Leasehold improvements
Plant and machinery
Right-of-use assets
Total
£
£
£
£
Cost
At 1 January 2022
506,613
546,263
1,184,900
2,237,776
Additions
1,006,060
373,297
259,206
1,638,563
Disposals
-
0
(3,087)
-
0
(3,087)
At 31 December 2022
1,512,673
916,473
1,444,106
3,873,252
Additions
164,166
431,378
827,183
1,422,727
Foreign currency adjustments
-
0
-
0
(13,352)
(13,352)
At 31 December 2023
1,676,839
1,347,851
2,257,937
5,282,627
Accumulated depreciation
At 1 January 2022
8,302
178,983
122,698
309,983
Charge for the year
70,228
176,491
337,390
584,109
Eliminated on disposal
-
0
(403)
-
0
(403)
At 31 December 2022
78,530
355,071
460,088
893,689
Charge for the year
140,326
222,052
476,065
838,443
Foreign currency adjustments
-
0
-
0
(2,448)
(2,448)
At 31 December 2023
218,856
577,123
933,705
1,729,684
Carrying amount
At 31 December 2023
1,457,983
770,728
1,324,232
3,552,943
At 31 December 2022
1,434,143
561,402
984,018
2,979,563
At 31 December 2021
498,311
367,280
1,062,202
1,927,793

Right-of-use assets relate to the lease of land, office premises and industrial units.

12
Investments
Group
Company
2023
2022
2023
2022
£
£
£
£
Investments in subsidiaries
-
0
-
0
1
1
Other investments
50
50
50
50
50
50
51
51

Other investments relate to a membership in a farming association that provides access to preferential rates on certain equipment.

Details of the company's principal operating subsidiaries are included in note 13.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
12
Investments
(Continued)
- 33 -
Movements in non-current investments
Shares in group undertakings
Other investments
Total
£
£
£
Cost or valuation
At 1 January 2023 & 31 December 2023
1
50
51
Carrying amount
At 31 December 2023
1
50
51
At 31 December 2022
1
50
51
13
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Intelligent Growth Solutions Inc.
251 Little Falls Drive, Wilmington, New Castle, Delaware 19808, USA
Ordinary
100.00
Intelligent Growth Solutions Pte. Ltd.
160 Robinson Road, #14-04, Singapore, 068914
Ordinary
100.00

Principal activity of both subsidiaries is the research and development, productisation and supply of systems and services using science and technology, for industrial applications, principally in sustainable Controlled Environment Agriculture.

14
Inventories
Group and company
2023
2022
£
£
Raw materials
5,355,604
4,805,361
Work in progress
2,127,974
-
7,483,578
4,805,361

Raw materials are presented net of £101,237 (2022: £nil) provision for slow moving and obsolete inventory.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 34 -
15
Finance lease receivables
Group and company
2023
2022
£
£
Gross amounts receivable under finance leases:
Two to three years
-
237,398
Unearned finance income
-
(21,295)
Net investment
-
216,103
Finance lease receivables are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
2023
2022
£
£
Non-current assets
-
216,103
-
216,103

During the prior year, the group entered into a financial leasing arrangement with a customer for certain components of the growth towers (trays). The agreement covers multiple drawdowns and has a total expected term of 6.4 years. The title for the leased assets will pass to the customer once all the repayments on the contract are made. Repayments were allocated to each drawdown on a first in first out basis. Market rate of 7% and 10% were used to calculate present value of the drawdowns during the year.

 

During the year, the group recognised an impairment of £2,312,305 (2022: £nil) in relation to the remaining lease receivable due to the customer entering liquidation.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 35 -
16
Trade and other receivables
Group
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Trade receivables
868,293
1,222,997
-
-
Contract assets
-
422,103
-
-
VAT recoverable
106,408
481,615
-
-
Other receivables
109,483
74,208
-
-
Prepayments
1,103,191
818,947
-
-
2,187,375
3,019,870
-
-
Company
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Trade receivables
868,293
1,222,997
-
-
Contract assets
-
422,103
-
-
VAT recoverable
106,408
481,615
-
-
Amounts owed by subsidiary undertakings
-
650,781
2,048,941
-
Other receivables
96,522
74,208
-
-
Prepayments
1,100,829
818,947
-
-
2,172,052
3,670,651
2,048,941
-

All trade receivables recognised in the year are generated from contracts with customers. Standard credit terms for trade receivables are 30 days from invoice date, although certain credit terms are contract-specific. The directors consider that the carrying amount of trade and other receivables approximates to their fair value. A loss allowance of £698,833 (2022: £nil) has been recognised on trade receivables due to a customer entering liquidation. The nature of the majority of the group's revenues is such that they either receive payment in advance of the provision of service and / or are able to cease the provision of services in the event that agreed credit terms are not adhered to (which would be defined as a circumstance of default). This means the credit risk exposure of the group is low. As a result of no further loss allowance arising, the directors have concluded that no further disclosures of credit risk exposure under IFRS 7: Financial Instruments are required.

 

Contract assets relate to growth towers installed but not invoiced due to a final site testing pending. During the year, the group recognised an impairment of £136,441 (2022: £nil) in relation to the contract assets balance due to a customer entering liquidation.

 

During the year, the company recognised an impairment of amounts owed from its subsidiary, Intelligent Growth Solutions Pte. Ltd, of £324,752 (2022: £nil). Amounts owed by subsidiary undertakings are unsecured, interest free and repayable on demand. At the year end, the company reclassified remaining amounts owed by its subsidiaries as non-current based on expectation of repayment.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 36 -
17
Trade and other payables
Group
Company
2023
2022
2023
2022
£
£
£
£
Trade payables
6,137,295
1,578,931
6,064,378
1,578,931
Contract liabilities
3,412,254
3,739,965
3,412,254
3,739,965
Accruals
934,663
1,580,232
875,518
1,580,232
Social security and other taxation
406,289
448,744
405,122
448,744
Other payables
215,310
75,000
215,310
75,000
Warrant liabilities (note 18)
31,138
-
31,138
-
11,136,949
7,422,872
11,003,720
7,422,872

The directors consider that the carrying amount of trade and other payables approximates to their fair value.

 

Contract liabilities arise on the contracts for the design and installation of growth towers in advance of work being completed, where the expected term of the contract crosses the year end. All contract liabilities will be fulfilled within twelve months of the balance sheet date. The movement in contract liabilities reflects the stage of execution of the contracts at the reporting date.

 

Included within accruals is £119,319 (2022: £130,686) relating to pension commitments at the year end.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 37 -
18
Convertible loan notes

The net proceeds received from the issue of the convertible loan notes have been split between the financial liability element and embedded warrants as follows:

The liability component is measured at amortised cost, and the difference between the carrying amount of the liability at the date of issue and the amount reported in the statement of financial position represents the effective interest rate less interest paid to that date.

The inputs into the Black-Scholes model for embedded warrants valuation were as follows:

 

Weighted average share price        £0.02        

Weighted average exercise price        £0.001        

Expected volatility            60%        

Expected life                1 year        

Risk free rate                5%        

Expected dividends            Nil        

Movements and balance at the period end
Liability
£
Liability component at 1 January 2023
-
Issue of convertible loan notes
6,820,091
Transaction costs
(159,568)
Embedded warrant liability
(31,138)
Interest charged
199,219
Liability component at 31 December 2023
6,828,604
Liability component due within 12 months
6,828,604
INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 38 -
19
Lease liabilities
Group
Company
2023
2022
2023
2022
£
£
£
£
Maturity analysis
Within one year
476,980
428,632
325,502
428,632
In two to five years
1,084,206
599,900
574,398
599,900
In over five years
362,667
325,833
362,667
325,833
Total undiscounted liabilities
1,923,853
1,354,365
1,262,567
1,354,365
Future finance charges and other adjustments
(452,528)
(300,750)
(314,969)
(300,750)
Lease liabilities in the financial statements
1,471,325
1,053,615
947,598
1,053,615

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

Group
Company
2023
2022
2023
2022
£
£
£
£
Current liabilities
345,762
342,395
249,225
342,395
Non-current liabilities
1,125,563
711,220
698,373
711,220
1,471,325
1,053,615
947,598
1,053,615
Group
2023
2022
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
165,929
113,761

The group capitalised expenses in relation to the following leases:

 

 

An incremental borrowing rate of 10-12% (2022: 10%) was used to calculate the present value of lease liabilities.

 

The total cash outflow for leases during the year was £562,907 (2022: £405,831). The group incurred expenses of £148,409 (2022: £118,741) in relation to short-term leases. At the year end the commitments in relation to short-term leases were £28,874 (2022: £12,363).

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 39 -
20
Deferred tax asset

The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior years.

Tax losses
£
Deferred tax balance at 1 January 2022
-
Deferred tax movements in prior year
Credit to profit or loss
(100,398)
Deferred tax asset at 1 January 2023 and 31 December 2023
(100,398)
INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 40 -
21
Financial risk management
Changes in liabilities arising from financing activities
The following table details the changes in the group's and the company's liabilities arising from financing activities.
Borrowings
Leases
Total
£
£
£
Liabilities as at 1 January 2022
-
1,086,479
1,086,479
New leases
-
259,206
259,206
Accrued interest
-
113,761
113,761
Lease repayments
-
(405,831)
(405,831)
Liabilities as at 31 December 2022
-
1,053,615
1,053,615
New loans (financing cash flows)
6,660,523
-
6,660,523
New leases
-
827,183
827,183
Accrued interest
199,219
165,929
365,148
Embedded warrant liability
(31,138)
-
(31,138)
Lease repayments
-
(562,907)
(562,907)
Foreign currency retranslation
-
(12,495)
(12,495)
Liabilities as at 31 December 2023
6,828,604
1,471,325
8,299,929
Financial instruments
2023
2022
£
£
Financial assets measured at amortised cost - group
Cash and cash equivalents
474,296
7,554,127
Trade receivables
868,293
1,222,997
Other receivables
109,483
74,208
Lease receivables
-
216,103
1,452,072
9,067,435
2023
2022
£
£
as restated
Financial assets measured at amortised cost - company
Cash and cash equivalents
474,274
7,554,127
Trade receivables
868,293
1,222,997
Amounts owed by subsidiary undertakings
2,048,941
650,781
Other receivables
96,522
74,208
Lease receivables
-
216,103
3,488,030
9,718,216
The company restated prior year presentation of financial assets measured at amortised costs to exclude contract assets which do not meet the definition of financial assets.
INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
21
Financial risk management
(Continued)
- 41 -
2023
2022
£
£
Financial liabilities measured at amortised cost - group
Trade payables
(6,137,295)
(1,578,931)
Accruals
(934,663)
(1,580,232)
Other payables
(215,310)
(75,000)
Lease liabilities
(1,471,325)
(1,053,615)
Convertible loan notes
(6,828,604)
-
(15,587,197)
(4,287,778)
2023
2022
£
£
Financial liabilities measured at amortised cost - company
Trade payables
(6,064,378)
(1,578,931)
Accruals
(875,518)
(1,580,232)
Other payables
(215,310)
(75,000)
Lease liabilities
(947,598)
(1,053,615)
Convertible loan notes
(6,828,604)
-
(14,931,408)
(4,287,778)
2023
2022
£
£
Financial liabilities measured at fair value through profit or loss - company and group
Warrant liabilities
(31,138)
-
INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
21
Financial risk management
(Continued)
- 42 -

The group’s operations expose it to a number of financial risks including market risk (foreign currency risk and interest rate risk), credit risk and liquidity risk. The group manages these risks through an effective risk management programme which is coordinated by the Board of Directors.

 

Liquidity risk

 

The group closely monitors its access to bank and other credit facilities in comparison to its outstanding commitments on a regular basis to ensure that it has sufficient funds to meet the obligations as they fall due.

 

The Board receives regular debt management forecasts which estimate the cash inflows and outflows for the next twelve months, so that management can ensure that sufficient funding is in place as it is required.

 

Interest rate profile

 

The group has no interest bearing financial assets other than cash deposits of £456,738 (2022: £81) invested at an approximate rate of 1.23% (2022: 0.19%). The group funds are invested in deposit accounts with the objective of maintaining a balance between accessibility of funds and competitive rates of return.

 

During the year the group utilised convertible loan notes to finance its development. Interest at the rate of 12% is charged on those loans. Movement in group's borrowings is disclosed in note 18.

 

Credit risk

 

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss for the group. Credit risk predominantly arises from trade receivables and cash and cash equivalents.

 

The group assesses the credit quality of each customer before accepting any terms of trade. Internal procedures are performed taking into account their financial position as well as their reputation within the industry and external credit ratings are obtained. The group operates a robust credit control system.

 

Impairment of financial assets in assessed in line with group policies described in notes 1 and 16. During the year an impairment of £3,147,579 (2022: nil) was recognised by the group on credit-impaired assets in relation to finance lease receivables £2,312,305 (2022: £nil), contract assets £136,441 (2022: £nil) and trade receivables £698,833 (2022: £nil).

 

Cash and cash equivalents are held with large and stable financial institutions.

 

The group's maximum exposure to credit risk relating to its financial assets and financial liabilities is equal to their carrying value.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
21
Financial risk management
(Continued)
- 43 -

Foreign currency risk

 

The group operates in a number of markets across the world and is exposed to foreign currency exchange risk arising from various currency exposures, in particular with respect to the US dollar and the Euro. The group is exposed to foreign currency risk arising from commercial transactions and recognised assets and liabilities which are denominated in a currency other than the group’s functional currency. The Board monitors the exposure to foreign currency risk and at the year end date considered the risk to be £555,110 (2022: £nil) which relates to outstanding trade payables less outstanding trade receivables denominated in foreign currency. The group maintains bank accounts in foreign currency to mitigate this risk with the balance of £16,485 (2022: £1,402,498) at the year end. As a result of a partial natural hedge between the different currencies, the group is reasonably protected against currency fluctuations.

 

Maturity of financial assets and financial liabilities

 

The maturity profile of the group's financial liabilities as at 31 December 2023 and 31 December 2022 can be determined from notes 17 and 19.

 

The main financial assets are cash, accounts receivable and contract assets. Cash is held mainly in current accounts and short-term deposits. The group would normally expect that sufficient cash is generated in the operating cycle to meet cash flows through effective cash management.

22
Share-based payment transactions

The group operates equity-settled share option schemes. Options vest only if the employee remains in employment with the group at the vesting date. The options lapse at the end of the day before the tenth anniversary of the grant date. There are several types of vesting conditions:

 

a) 40% of options vest on the first anniversary of the grant date, 20% of options vest on the second anniversary of the grant date, 20% of options vest on the third anniversary of the grant date, 20% of options vest on the exit event;

 

b) 30% of options vest on the first anniversary of the grant date, 15% of options vest on the second anniversary of the grant date, 15% of options vest on the third anniversary of the grant date, 40% of options vest on the exit event;

 

c) 33% of options vest on the first anniversary of the grant date, 33% of options vest on the second anniversary of the grant date, 33% of options vest on the third anniversary of the grant date;

 

d) 100% of options vest on the grant date;

 

e) 100% of options vest on the exit date.

 

Options become exercisable upon vesting. Unvested options held by individuals who cease employment forfeit unless determined by the Board.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
22
Share-based payment transactions
(Continued)
- 44 -
Number of share options
Weighted average exercise price
2023
2022
2023
2022
£
£
Outstanding at 1 January
1,365,270
1,173,531
9.33
7.72
Granted in the period
10,000
275,360
4.00
15.00
Forfeited in the period
(92,869)
(22,305)
14.59
9.58
Exercised in the period
-
(61,316)
-
4.00
Outstanding at 31 December
1,282,401
1,365,270
8.91
9.32
Exercisable at 31 December
702,064
516,976
6.71
5.11

The options outstanding at 31 December 2023 had an exercise price ranging from £4 to £15 (2022: from £4 to £15), and a remaining contractual life of 6.96 years (2022: 8.01 years). The weighted average fair value of each option granted during the year was £2.39 (2022: £24.08).

 

The estimate of the grant date fair value of each option is based on the Black-Scholes model. Options granted during the year vested immediately, therefore, their fair value was equal to the share price at the date of the grant, being £2.39 per share. The inputs into the Black-Scholes model in the prior year are as follows:

 

 

2022

 

Weighted average share price        £33.09        

Weighted average exercise price        £15.00        

Expected volatility            60%        

Expected life                5 years        

Risk free rate                4.36%        

Expected dividends            Nil        

 

 

Expected volatility was determined by estimating the expected change in the share price of the company over the expected life of each option. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

During the year, the group recognised total share-based payment expenses of £3,041,056 (2022: £1,748,085). Service conditions are taken into account by adjusting the number of options expected to vest at each reporting date.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 45 -
23
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of 0.1p each
2,773,888
2,766,795
2,774
2,767
A Ordinary of 0.1p each
1,458,333
1,458,333
1,458
1,458
B Ordinary of 0.1p each
1,907,269
1,616,008
1,907
1,616
6,139,490
5,841,136
6,139
5,841

Ordinary shares carry the right to vote and are entitled pari passu to dividend payments or any other distributions, including on winding up of the company.

 

Ordinary A and Ordinary B shares carry the right to vote and contain preferential dividend rights, including on winding up of the company.

Reconciliation of movements during the year:
Ordinary
Ordinary A
Ordinary B
Number
Number
Number
At 1 January 2022
2,705,479
1,458,333
1,616,008
Issue of fully paid shares
61,316
-
-
At 31 December 2022
2,766,795
1,458,333
1,616,008
Issue of fully paid shares
7,093
-
291,261
At 31 December 2023
2,773,888
1,458,333
1,907,269

During the year, the company incurred £49,134 (2022: £500) of share issue costs.

 

Share premium account

Consideration received for shares issued above their nominal value net of transaction costs.

 

Accumulated losses

Cumulative profit and loss net of distributions to owners, including the cumulative share-based payment expense.

INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 46 -
24
Capital risk management

The group’s capital management objectives are:

 

Management assesses the group’s capital requirements in order to maintain an efficient overall financing structure appropriate to the stage of the business and in accordance with its business plan. In order to maintain or adjust the capital structure, the group may issue new shares to fund its ongoing research and development activities and business growth.

The group is funded principally by equity although convertible loans have been utilised during the review period of these financial statements. At the end of the financial year, convertible loans of £6,828,604 were outstanding (2022: £nil), The capital structure consists of equity, comprising issued share capital with different classes of shares and a share premium account. During the year, the value of equity has increased from £54,162,096 to £63,779,120 due to new shares issued.

The group is not subject to externally imposed capital requirements.

25
Events after the reporting date

In January and February 2024, the company issued 9,414,225 C Ordinary shares at 0.1p each for a total consideration of £22,499,935. In October 2024, the group raised £5,000,000 from the issue of Convertible Loan Notes. In February 2025, the group approved the raising of £15,000,000 from the further issue of Convertible Loan Notes, of which £8,500,000 was received at first close in February 2025. In February 2025, the company granted a Bond and Floating charge over the company’s assets in favour of S2G Builders Food & Agriculture Fund III LP, as Security Trustee for investors issued with Convertible Loan Notes at first close in February 2025.

26
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

2023
2022
£
£
Short-term employee benefits
954,117
1,234,527
Post-employment benefits
120,169
117,866
Share-based payments
(72,206)
(82,163)
1,002,080
1,270,230
INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 47 -
27
Cash absorbed by operations - group
2023
2022
£
£
Loss for the year after tax
(29,741,439)
(20,197,981)
Adjustments for:
Taxation credited
(666,963)
(1,212,654)
R&D expenditure credit
(297,761)
-
Finance costs
415,995
115,001
Investment income
(168,365)
(3,145)
(Gain)/loss on disposal of property, plant and equipment
-
662
Amortisation of intangible assets
1,318,171
1,318,171
Depreciation of property, plant and equipment
838,443
584,109
Foreign exchange loss/(gains) on cash equivalents
73,456
(1,198,241)
Impairment of financial assets
3,147,579
-
Equity settled share based payment expense
3,041,056
1,748,085
Drawdown on lease receivable - non-cash
(1,946,885)
-
Movements in working capital:
Increase in inventories
(2,678,217)
(1,855,220)
Decrease/(increase) in contract assets
285,662
(422,103)
(Increase)/decrease in trade and other receivables
(288,441)
359,359
(Decrease)/increase in contract liabilities
(327,711)
1,049,774
Increase in trade and other payables
4,009,059
1,023,110
Cash absorbed by operations
(22,986,361)
(18,691,073)
INTELLIGENT GROWTH SOLUTIONS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 48 -
28
Cash absorbed by operations - company
2023
2022
£
£
Loss for the year after tax
(28,158,702)
(19,647,597)
Adjustments for:
Taxation credited
(671,182)
(1,112,256)
R&D expenditure credit
(297,761)
-
Finance costs
351,131
115,001
Investment income
(168,365)
(3,145)
(Gain)/loss on disposal of property, plant and equipment
-
662
Amortisation of intangible assets
1,318,171
1,318,171
Depreciation of property, plant and equipment
733,395
584,109
Foreign exchange loss/(gains) on cash equivalents
73,456
(1,198,241)
Impairment of financial assets
3,472,331
-
Equity settled share based payment expense
3,041,056
1,748,085
Drawdown on lease receivable - non-cash
(1,946,885)
-
Movements in working capital:
Increase in inventories
(2,678,217)
(1,855,220)
Decrease/(increase) in contract assets
285,662
(422,103)
Increase in trade and other receivables
(1,996,030)
(291,423)
(Decrease)/increase in contract liabilities
(327,711)
1,049,774
Increase in trade and other payables
3,877,421
1,023,110
Cash absorbed by operations
(23,092,230)
(18,691,073)
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