DEV.L Regulatory News (DEV)

Dev Clever Holdings plc 

Christopher JeffriesChief Executive Officer and Executive ChairmanNicholas YdlibiFinance Director 

+44 (0) 845 459 0774 

+44 (0) 330 058 2922 

Novum Securities Limited - Joint BrokerColin Rowbury 

+44 (0) 20 7399 9400

Pello Capital - Joint Broker

Daniel Gee

+44 (0) 203 700 2534

Note

Year ended 31 October 2019

Year ended 31 October 2018

£

£

Continuing operations

Revenue

4

480,585

467,286

Cost of sales

5

(521,782)

(260,999)

Gross profit

(41,197)

206,287

Administrative expenses

5

(999,660)

(716,224)

Loss from operations

(1,040,857)

(509,937)

Finance income

8

811

-

Finance expense

8

(24,601)

(30,192)

Loss before tax

(1,064,647)

(540,129)

Tax credit

10

45,016

42,408

Loss for the period from continuing operations

(1,019,631)

(497,721)

Other comprehensive income:

Items not reclassified to profit or loss in subsequent periods:

Total other comprehensive income for the period

-

-

Total comprehensive income for the period attributable to shareholders

(1,019,631)

(497,721)

Earnings per share

Basic (pence per share)

11

(0.29)

(0.20)

Diluted (pence per share)

11

(0.29)

(0.20)

Adjusted basic (pence per share)

11

(0.23)

(0.14)

Adjusted diluted (pence per share)

11

(0.23)

(0.14)

Note

As at 31 October 2019

As at 31 October 2018

£

£

Non-current assets:

Intangible assets

12

157,673

131,477

Property, plant & equipment

13

41,706

29,756

Investments

14

1,125

-

200,504

161,233

Current assets:

Inventories

6,200

-

Trade and other receivables

15

156,614

182,084

Cash and cash equivalents

496,707

72,689

659,521

254,773

Total assets

860,025

416,006

Current liabilities:

Trade and other payables

16

(136,084)

(149,440)

Loans and borrowings, amounts falling due within one year

17

(47,727)

(257,694)

(183,811)

(407,134)

Non-current liabilities:

Loans and borrowings, amounts falling due after more than one year

17

(89,847)

(131,699)

Deferred tax

18

(16,464)

(28,114)

(106,311)

(159,813)

Total liabilities

(290,122)

(566,947)

Net assets

569,903

(150,941)

Share capital

20

3,884,017

100

Merger reserve

20

(2,499,900)

-

Share premium reserve

20

246,246

-

Share based payments reserve

20

110,212

-

Retained earnings

20

(1,170,672)

(151,041)

Total equity to shareholders

569,903

(150,941)

Note

As at 31 October 2019

£

Non-current assets:

Investments

14

2,500,000

2,500,000

Current assets:

Trade and other receivables

15

1,425,472

Cash and cash equivalents

325,374

1,750,846

Total assets

4,250,846

Current liabilities:

Trade and other payables

16

(72,112)

(72,112)

Total liabilities

(72,112)

Net assets

4,178,734

Share capital

20

3,884,017

Share premium reserve

20

246,246

Share based payments reserve

20

110,212

Retained earnings

20

(61,741)

Total equity to shareholders

4,178,734

Share capital

Merger reserve

Share premium reserve

Share-based payment reserve

Retained earnings

Total

£

£

£

£

£

£

Balance as at 01 November 2017

100

-

-

-

371,680

371,780

Loss after taxation for the period

-

-

-

-

(497,721)

(497,721)

-

-

-

-

(497,721)

(497,721)

Transactions with owners recognised in equity:

Dividends paid

-

-

-

-

(25,000)

(25,000)

-

-

-

-

(25,000)

(25,000)

Balance at 01 November 2018

100

-

-

-

(151,041)

(150,941)

Acquired on acquisition of subsidiary (1)

2,499,900

(2,499,900)

-

-

-

-

Pre IPO, IPO and subscription

1,013,000

-

-

-

-

1,013,000

Conversion of convertible loan facility

220,000

-

-

-

-

220,000

Issue of warrants

22,900

-

-

-

-

22,900

Placing

128,117

-

246,246

-

-

374,363

Share based payments

-

-

-

110,212

-

110,212

Loss after taxation for the period

-

-

-

-

(1,019,631)

(1,019,631)

3,883,917

(2,499,900)

246,246

110,212

(1,019,631)

720,844

Transactions with owners recognised in equity:

Dividends paid

-

-

-

-

-

-

-

-

-

-

-

-

Balance at 31 October 2019

3,884,017

(2,499,900)

246,246

110,212

(1,170,672)

569,903

(1) The acquisition of Dev Clever Limited by Dev Clever Holdings plc has been accounted for using the reverse acquisition method (see note 2). As a result, the prior year comparative changes in equity reflect the share capital and reserves movements for Dev Clever Limited and the movements arising from the incorporation of Dev Clever Holdings and its subsequent acquisition of Dev Clever Limited have been reported in the consolidated statement of changes in equity in the current period.

Share capital

Share premium reserve

Share-based payment reserve

Retained earnings

Total

£

£

£

£

£

On incorporation on 26 September 2018

-

-

Shares issued on acquisition of Dev Clever Limited

2,500,000

2,500,000

Pre IPO, IPO and subscription

1,013,000

-

-

-

1,013,000

Conversion of convertible loan facility

220,000

-

-

-

220,000

Issue of warrants

22,900

-

-

-

22,900

Placing

128,117

246,246

-

-

374,363

Share based payments

-

-

110,212

-

110,212

Loss after taxation for the period

-

-

-

(61,741)

(61,741)

3,884,017

246,246

110,212

(61,741)

4,178,734

Transactions with owners recognised in equity:

Dividends paid

-

-

-

-

-

-

-

-

-

-

Balance at 31 October 2019

3,884,017

246,246

110,212

(61,741)

4,178,734

Year ended 31 October 2019

Year ended 31 October 2018

£

£

Cash flows from operating activities:

Loss before tax

(1,064,647)

(540,129)

Adjustments for:

Depreciation

14,692

11,656

Amortisation of intangibles

11,207

-

Impairment of intangibles

174,085

-

Finance Income

(811)

-

Finance expense

24,601

30,192

Share-based payment expenses

110,212

-

(Increase) / decrease in inventories

(6,200)

-

(Increase) / decrease in trade and other

receivables

(37,221)

23,777

Increase / (decrease) in trade and other payables

(18,723)

95,730

Income tax received

96,058

60,042

Net cash flows from operating activities

(696,747)

(318,732)

Cash flows from investing activities:

Payments to acquire property, plant and equipment

(26,642)

(19,372)

Payments to develop intangible assets

(211,488)

(131,477)

Payments to acquire investments

(1,125)

-

Net cash flows used in investing activities

(239,255)

(150,849)

Cash flows from financing activities:

Net proceeds from issue of equity

1,421,362

-

Proceeds from borrowings

-

462,413

Repayment of borrowings

(31,818)

(123,020)

Interest received

811

-

Interest paid

(30,335)

(24,458)

Dividends paid

-

(25,000)

Net cash flows from financing activities

1,360,020

289,935

Net increase/(decrease) in cash and cash equivalents in the year

424,018

(179,646)

Cash and cash equivalents at beginning of period

72,689

252,335

Cash and cash equivalents at end of period

496,707

72,689

Cash and cash equivalents

496,707

72,689

Year ended 31 October 2019

£

Cash flows from operating activities:

Loss before tax

(61,741)

Adjustments for:

Finance Income

(52,431)

Share-based payment expenses

110,212

(Increase) / decrease in trade and other

receivables

(18,654)

Increase / (decrease) in trade and other payables

61,013

Net cash flows from operating activities

38,399

Cash flows from investing activities:

Loans to subsidiary undertakings

(1,233,000)

Repayments of loan from subsidiary undertaking

98,596

Net cash flows used in investing activities

(1,134,404)

Cash flows from financing activities:

Net proceeds from issue of equity

1,421,362

Interest received

17

Net cash flows from financing activities

1,421,379

Net increase/(decrease) in cash and cash equivalents in the year

325,374

Cash and cash equivalents at beginning of period

-

Cash and cash equivalents at end of period

325,374

Cash and cash equivalents

325,374

1

General Information

Dev Clever Holdings Plc ("the Company") is publicly traded on the Standard List of the London Stock Exchange. The Company is incorporated and domiciled in England and Wales. Its registered office is Ventura House, Ventura Park Road, Tamworth, Staffordshire, B78 3HL and the registered number is 11589976.

The Company is the parent company of Dev Clever Limited ("DevClever"). Dev Clever is incorporated and domiciled in England and Wales with the same registered office as the Company.

The Group is principally engaged in the development of immersive software products that deliver customer engagement, through both its careers platform Launchyourcareer.com, supported by VICTAR VR, and its Engage platform, that provides brands and merchants with fully controlled promotions and incentives through gamification.

2

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

These consolidated financial statements have been prepared on a going concern basis under the historical cost convention, and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU and the International Financial Reporting Interpretations Committee ("IFRIC") interpretations issued by the International Accounting Standards Board ("IASB") that are effective or issued and early adopted as at the date of these financial statements and in accordance with the provisions of the Companies Act 2006.

The preparation of financial statements requires management to exercise its judgement in the process of applying accounting policies. The areas involving a higher degree of judgement, or areas where assumptions and estimates are significant to the financial information, are disclosed in note 3.

The presentational and functional currency of the Company is Sterling. Results in these financial statements have been prepared to the nearest £1.

Basis of consolidation

IFRS 3 Business Combination requires that a transaction in which a company with substantial operations ('operating company') arranges to be acquired by a shell company should be analysed to determine whether it is a business combination. The Directors believe the acquisition of DevClever Limited by Dev Clever Holdings in a share for share exchange of the entire share capital of both entities, indicates that DevClever Limited is the accounting acquiror. The Directors have also concluded that, as Dev Clever Holdings has no other assets or liabilities other than its holding in DevClever Limited, it does not satisfy the definition of a business. As a result, the acquisition does not meet the definition of a business combination under IFRS 3 and falls outside the scope of IFRS 3. The Directors have therefore considered the requirements of IFRS 10 for the production of consolidated accounts through the application of the reverse acquisition methodology but without the need for recognising goodwill. As a result:

• the consolidated financial statements of the legal parent, Dev Clever Holdings plc have been prepared as a continuation of the financial statements of the operating company, DevClever Limited. The opening net assets of Dev Clever Limited have been recognised at book value and a merger reserve has been established to write down the nominal value of equity in Dev Clever Holdings, at the time of the acquisition, to the nominal value of the share capital in Dev Clever Limited, at that time.

• the opening net assets of Dev Clever Limited have been recognised at book value.

• a merger reserve has been established to write down the nominal value of equity in Dev Clever Holdings, at the time of the acquisition, to the nominal value of the share capital in Dev Clever Limited, at that time. The merger reserve of £2,499,900 represents the difference between the nominal value of equity in Dev Clever Holdings of £2,500,000 and the nominal value of equity in Dev Clever Limited of £100.

The consolidated financial statements incorporate those of Dev Clever Holdings plc and its subsidiary DevClever Limited. All financial statements are made up to 31 October 2019. Where necessary, adjustments are made to the financial statements of subsidiary to bring the accounting policies used into line with those used by other parts of the Group.

The Company accounts have been prepared for the period from incorporation on 26th September 2018 to 31 October 2019. There were no material transactions in Dev Clever Holdings plc from the date of incorporation until the 31 October 2018, other than the share for share exchange resulting in the merger reserve disclosed above. In preparing the consolidated accounts utilising the reverse acquisition methodology, the Directors have determined that the year ended 31 October 2019 and the comparative period of the year ending 31 October 2018 provides the most meaningful and appropriate information for users of the accounts.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities, generally accompanied by a shareholding giving rise to the majority of voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date on which control ceases. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the elements of control.

Adoption of new and revised standards

The Company has adopted all recognition, measurement and disclosure requirements of IFRS as adopted by the EU, including any new and revised standards and Interpretations of IFRS in effect for financial periods commencing on or after 1 January 2018. Within these financial statements, the Company has adopted the following standards and amendments for the first time:

• IFRS 15 Revenue from Contracts with Customers.

• IAS 7 Disclosure Initiative (amendments

• IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses (amendments)

• IFRS 9 - Financial Instruments

• IFRS 3 Business Combinations

The Company has adopted IFRS 15 for the current year and applied it retrospectively for the preceding financial year in accordance with IFRS 15 C3(b) however no material adjustments were identified between the requirements of IFRS 15 and the methods applied by the Company in the application of IAS 18. There was no impact on the Company financial statements in respect of IAS 7, IAS 12 or IFRS 9.

Standards which are in issue but not yet effective

Standard

Description

Effective date for annual periods beginning on or after

IFRS 16

Leases - new standard. The standard requires lessees to account for leases under a single on-balance sheet model in a similar way to finance leases under IAS 17. At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right of use asset. The Company currently leases its office premises. The Directors expect that the adoption of this standard will increase the Company's non-current assets, current and long-term liabilities in the statement of financial position. In the income statement, operating expenses will be reduced, amortisation and interest expense will be increased.

The total value of the leased asset as at 1 November 2019 is estimated at between £90k and £100k and the associated lease liability is estimated at a similar value. This represents management's best estimate at the time of preparing these financial statements and will be re-assessed during the 2020 financial year and subject to audit.

01-Jan-19

IAS 12

Amendments to IAS 12, "Income Taxes" resulting from Annual improvements 2015-2017 Cycle (income tax consequences of dividends)

01-Jan-19

IFRIC 23

Uncertainty over Income Tax Treatments

01-Jan-19

IFRS 3

Amendments to IFRS 3 "Business Combinations" to clarify the definition of a business

01-Jan-20

IAS 1

Amendments to IAS 1, "Presentation of Financial Statements" regarding the definition of "material"

01-Jan-20

IAS 8

Amendments to IAS 8, "Accounting Policies, Changes in Accounting Estimates and errors" regarding the definition of "material"

01-Jan-20

The Group has not early adopted any of the above standards. The Directors have assessed the impact of IFRS 16 (as disclosed in the table above) and continue to assess the impact of the remaining amendments on future financial statements.

Going concern

As part of their going concern review the Directors have followed the guidelines published by the Financial Reporting Council entitled "Guidance on Risk Management and Internal Control and Related Financial and Business Reporting".

The Directors have prepared detailed financial forecasts and cash flows looking at least 12 months from the date of approval of these financial statements. In developing these forecasts, the Directors have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period.

On the basis of the above projections, the Directors are confident that the Company has sufficient working capital to honour all of its obligations to creditors as and when they fall due. In reaching this conclusion, the Directors have considered the forecast cash headroom, the resources available to the Company and the potential impact of changes in forecast growth and other assumptions, including the potential to avoid or defer certain costs and to reduce discretionary spend as mitigating actions in the event of such changes. Accordingly, the Directors continue to adopt the going concern basis in preparing these consolidated financial statements.

Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sales of goods of services in the ordinary course of the Company's activities. Revenue is measured at as the fair value of the consideration received or receivable and is shown net of value added taxes, rebates and discounts.

Under IFRS 15 - Revenue from Contracts with Customers, five stages of revenue recognition have been applied to the Group's revenue:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract;

Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and that the revenue can be reliably measured and specific criteria have been met for each of the group's activities as described below. The Company bases its estimates on historical results taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Commercial development projects, customisation of software and set up fees

Client-driven development entails direct co-operation between the development team and the client towards a client-defined goal. Such agreements are individually evaluated to determine if revenue is recognised at a point in time or over time based on the delivery of contractual milestones that are aligned to the satisfaction of performance obligations within the underlying contract / project brief

Software subscription fees

Software is licenced to customers via subscription on fixed term agreements. Revenue is recognised when the client has obtained control of the licence and the ability to use and obtain substantially all the benefits from it. The client obtains control when a contract is agreed, the licence delivered, and the client has the right to use it.

Support, maintenance and hosting contracts

Revenue is recognised in accordance with the performance obligations contained with the associated support, maintenance and hosting agreement. Revenue is typically recognised based on time elapsed and thus rateably over the term of the agreement. Under our standardised support agreement, our performance obligation is to stand ready to provide technical product support and unspecified updates, upgrades and enhancements on a when-and-if-available basis. Our customers simultaneously receive and consume the benefit of these support services as we perform.

Operating profit

Operating profit comprises the Company's revenue for the provision of services, less the costs of providing those services and administrative overheads, including depreciation and amortisation of the Company's non-current assets.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

A business segment is a group of assets and operations, engaged in providing products or services that are subject to risks and returns that are different from those of other operating segments.

The Board of Directors assess the performance of the operating segments based on the measures of revenue, gross profit, operating profit and assets employed.

Finance costs

Finance costs represent the cost of borrowings and are accounted for on an amortised cost basis in the income statement using the effective interest rate.

Dividends

Dividends to the Company's shareholders are recognised when the dividends are approved for payment.

Earnings per share

Earnings per share represents the portion of the Company's profit / (loss) from continuing operations attributable to each outstanding share of the Company's ordinary share capital.

Diluted earnings per share represents the portion of the Company's profit / (loss) from continuing operations attributable to each outstanding share of the Company's ordinary share capital after taking into consideration the conversion of all outstanding employee share options and advisor warrants.

Adjusted earnings per share is an internal management measure of earnings per share in which the profit / (loss) from continuing operations has been adjusted to remove the effect of certain non-operating income and expenses. In determining the adjusted earnings per share, management has removed the costs associated with the Company's IPO of £112,770 (2018: £135,773) and the share-based payments expense incurred in the period of £110,212 (2018: £nil).

Property, plant and equipment

Purchased property, plant and equipment is stated at cost less accumulated depreciation and any provision for impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is charged so as to write off the costs of assets over their estimated useful lives, on the following bases:

Computer equipment

1 to 3 years

Straight line

Fixtures and fittings

15%

Reducing balance

The asset's residual values and useful economic lives are reviewed by the Directors and adjusted, if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable value.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within other (losses) or gains in the income statement. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.

Intangible assets: Internal Use Software - Software Development

An internally generated development intangible asset arising from the Company's product development is recognised if, and only if, the Company can demonstrate all of the following:

• the technical feasibility of completing the intangible asset so that it will be available for use or sale

• its intention to complete the intangible asset and use or sell it

• its ability to use or sell the intangible asset

• how the intangible asset will generate probable future economic benefits

• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset

• its ability to measure reliably the expenditure attributable to the intangible asset during its development

Internally generated development intangible assets are amortised, as a cost of sale, on a straight-line basis over their useful lives of up to three years. Amortisation is charged to the income statement from when the asset becomes available to use.

Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Impairment of property, plant and equipment, and intangible assets

At each balance sheet date, the Company reviews the carrying amounts of its assets annually 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). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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. In the case of a cash-generating unit, any impairment loss is charged first to any goodwill in the cash-generating unit and then pro rata to the other assets of the cash- generating unit.

Investments

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company's balance sheet. On disposal, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

Financial instruments

Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Company becomes party to the contractual provisions of the instrument. Financial assets are de-recognised when the contracted rights to the cash flows from the financial asset expire or when the contracted rights to those assets are transferred. Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired. Financial assets and financial liabilities are initially measured at their fair value. Transaction costs attributable to the acquisition of a financial asset or financial liability are added or deducted from the fair value of the financial asset or financial liability.

At each reporting date, financial assets are reviewed to assess whether there is objective evidence of impairment. If any such evidence exists, impairment loss is determined and recognised based on the classification of the financial asset.

Loans and receivables (including trade receivables, prepayments, deposits and other receivables, cash and bank balances) are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. At each reporting date subsequent to initial recognition, loans and receivables are carried at amortised cost using the effective interest method, unless when there is objective evidence that the asset is impaired. Impairment is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. Impairment losses are reversed in subsequent periods when an increase in the asset's recoverable amount can be related objectively to an event occurring after the impairment is recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

(a) Trade and other receivables

Trade and other receivables are recognised at their fair value. Appropriate provisions for estimated irrecoverable amounts are recognised in the statement of comprehensive income when there is objective evidence that the assets are impaired. Trade and other receivables are shown in note 19 as "loans and receivables".

(b) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits held on call with banks. Cash and cash equivalents are shown in note 19 as "loans and receivables".

Financial liabilities and equity

(c) Trade and other payables

Trade payables are recognised at their fair value. Trade and other payables are shown in note 19 as "other financial liabilities".

(d) Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the income statement.

(e) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of issue costs.

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the expected period of the lease. Any lease incentives received are recognised as part of the total expense, over the term of the lease.

Employee benefits

The Company operates a defined contribution auto-enrolment pension scheme for employees of the Company. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension costs charged in the income statement are the contributions payable to the scheme in respect of the accounting period.

Current tax

The tax currently payable is based on taxable profit or loss for the year. Taxable profit or loss differs from the profit or loss for the financial year as reported in the statement of total comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Where tax credits are received in respect of allowable research and development expenditure, these are recognised in the statement of comprehensive income.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Equity

Equity comprises the following:

• Share capital, representing the number of shares subscribed at nominal value;

• Merger reserve, relating to the adjustment required to account the acquisition of DevClever Limited as a reverse acquisition

• Share premium, representing the additional amount of funds received in excess of the nominal value of the shares and recorded net of associated transaction costs;

• Share-based payment reserve, relating to the charge for share based payments arising on the grant of employee share options and advisor warrants, in accordance with International Financial Reporting Standard 2;

• Retained income represents the cumulative earnings of the Group attributable to equity shareholders.

Share based payments

The costs of equity settled transactions are measured at their fair value at the date at which they are granted. The cost of advisor warrants is recognised at the grant date as they are issued in respect of services already received. The cost of equity settled transactions with employees is charged to the income statement as an expense over the vesting period, on a straight-line basis, which ends of the date on which the relevant employees become fully entitled to the award. Non-market vesting conditions are taken into consideration by adjusting the numbers of options expected to vest, at each statement of financial position date, such that the cumulative charge recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition. The movement in cumulative expense since the previous reporting date is recognised in the statement of comprehensive income within administration expenses with a corresponding entry in the statement of financial position in the relevant share-based payment reserve.

Fair value is determined using the Black-Scholes model, details of which are given in note 9.

3

Critical accounting estimate and judgements

The preparation of these consolidated financial statements requires the Directors to make judgements and estimates that affect the reported amounts of assets and liabilities at each reporting date and the reported amounts of revenue during the reporting periods. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results could differ from these estimates. Information about such judgements and estimations are contained in individual accounting policies. The key judgements and sources of estimation uncertainty that could cause an adjustment to be required to the carrying amount of assets or liabilities within the next accounting period are outlined below:

Capitalisation of development costs

The Group recognises costs incurred on development projects as an intangible asset which satisfies the requirements of IAS 38. The calculation of the costs incurred includes the time spent by certain employees on the development project, as recorded through their timesheets. The decision whether to capitalise and how to determine the period of economic benefit of a development project requires an assessment of the commercial viability of the project and the prospect of selling the related software to new or existing customers.

The Group capitalised £204,058 of internal development costs in the year (2018: £127,795)

Impairment of internally generated intangible assets

An impairment review of the Company's development costs is undertaken at least annually. This review involves the use of judgement to consider the future projected income streams that will result from the aforementioned costs. The expected future cash flows are modelled and discounted over the expected life of the assets in order to test for impairment. An impairment charge of £174,085 was made in the year (2018: £nil) to write down the previously capitalised development costs associated with the Group's gaming experiences due to the decision taken by the Board to suspend further development activity in this area and to concentrate on accelerating the development of the Group's careers education platforms.

Share-based payments

During the period, the Group has issued share-based incentives to employees and advisors in the form of employee share options and advisor warrants. The Directors have applied the Black Scholes pricing model to assess the costs associated with the share-based payments. The Black Scholes model is dependent upon a number of inputs where the Directors have to exercise their judgement, specifically:

• risk free investment rate

• expected share price volatility at the time of the grant

• expected dividend yield

• expected level of redemption

The assumptions applied by the Directors, and the associated costs recognised in the financial statements are outlined in note 9 to these financial statements.

Amortisation of intangible assets

The periods of amortisation adopted to write down capitalised intangible assets and capitalised staff costs requires judgements to be made in respect of estimating the useful lives of the intangible assets to determine the appropriate amortisation rate. Capitalised development cost is amortised on a straight-line basis over the period during which the economic benefits are expected to be received, which has been estimated at 3 years.

4

Revenue

2019

2018

£

£

Development and set up fees

311,941

332,930

Subscription, hosting and support fees

168,644

134,356

480,585

467,286

In the year to 31 October 2019, revenue from 3 of the Company's major customers represented more than 10% of the Company's revenue. Revenue related to those customers was £83,358, £79,720 and £45,388 respectively. In the year to 31 October 2018, revenue from 2 of the

Company's major customers accounted for more than 10% of the Company's revenue. Revenue relating to those customers was £151,972 and £ 76,852 respectively.

All revenues are from external customers and can be attributed to the following geographical locations, based on the customers' location as follows:

2019

2018

£

£

United Kingdom

434,413

449,776

Rest of Europe

77

8,000

Asia Pacific

11,095

9,510

USA

35,000

-

480,585

467,286

5

Expenses by nature

2019

2018

£

£

Cost of sales

Salary and other employee costs

370,598

-

Third party contractors

143,982

240,636

Less: software development costs capitalised

(202,143)

(13,961)

Amortisation of software

11,207

-

Impairment of capitalised software development costs

174,085

-

Direct materials and charges

24,053

34,324

Total cost of sales

521,782

260,999

Administration expenses

Salary and other employee costs

435,975

406,177

Third party contractors

10,000

-

Depreciation

14,692

11,656

Legal, professional and regulatory fees

305,208

153,906

Information technology and telecommunications

92,844

34,207

Advertising and promotion

41,738

24,620|

Travel expenses

24,121

13,853

Premises

61,217

62,834

Other administration expenses

13,865

8,971

Total administration expenses

999,660

716,224

Auditors remuneration

2019

2018

£

£

Fees payable to the Company's auditor and associates

Corporate finance in relation to reporting accountant work for listing

22,937

35,000

For the audit of the Group and Company financial statements

34,000

-

Other assurance services

1,500

-

58,437

35,000

6

Segmental analysis

The chief operating decision maker considers the Group's segments to be by geographical location and by revenue type.

Year ended 31 October 2019

Educate

Engage

Other

Total

£

£

£

£

Revenue by geographical location

United Kingdom

122,304

117,937

194,172

434,413

Rest of Europe

-

-

77

77

Africa

-

-

-

-

Asia Pacific

-

-

11,095

11,095

USA

-

-

35,000

35,000

122,304

117,937

240,344

480,585

Year ended 31 October 2018

Educate

Engage

Other

Total

£

£

£

£

Revenue by geographical location

United Kingdom

145,121

189,487

105,658

440,266

Rest of Europe

-

-

8,000

8,000

Africa

-

-

-

-

Asia Pacific

-

-

19,020

19,020

USA

-

-

-

-

145,121

189,487

132,678

467,286

Year ended 31 October 2019

Educate

Engage

Other

Total

£

£

£

£

Revenue by type

Development and set up fees

27,043

114,637

170,261

311,941

Subscription, hosting and support fees

95,261

3,300

70,083

168,644

122,304

117,937

240,344

480,585

Cost of sales

(139,404)

(63,620)

(318,758)

(521,782)

Gross profit / (loss) by segment

(17,100)

54,317

(78,414)

(41,197)

Operating loss by segment

(280,747)

(131,156)

(405,120)

(817,023)

Costs not allocated by segment

(202,608)

Total comprehensive income for the period attributable to shareholders

(1,019,631)

Year ended 31 October 2018

Educate

Engage

Other

Total

£

£

£

£

Revenue by type

Development and set up fees

62,519

185,062

85,350

332,931

Subscription, hosting and support fees

82,602

4,425

47,328

134,355

145,121

189,487

132,678

467,286

Cost of sales

(85,613)

(82,228)

(87,637)

(255,478)

Gross profit / (loss) by segment

59,508

107,259

45,041

211,808

Operating loss by segment

(92,620)

(229,858)

(51,686)

(374,164)

Costs not allocated by segment

(123,557)

Total comprehensive income for the period attributable to shareholders

(497,721)

The segmental analysis above reflects the parameters applied by the Board when considering the Group's monthly management accounts. Costs not allocated to segments include share-based payment expenses, listing costs, finance income and expense and taxation expenses.

Year ended 31 October 2019

Educate

Engage

Other

Total

£

£

£

£

Financial position

Net current assets

166,300

112,286

197,124

475,710

Total assets

149,470

99,380

321,053

569,903

Year ended 31 October 2018

Educate

Engage

Other

Total

£

£

£

£

Financial position

Net current assets / (liabilities)

(76,976)

(100,508)

25,123

(152,361)

Total assets

(75,777)

(151,123)

75,959

(150,941)

7

Particulars of staff

The average number of persons employed by the Group, including Directors, during the year was:

2019

2018

No.

No.

Product development

12

12

Sales and administration

9

3

21

15

The aggregate payroll costs of these persons were:

2019

2018

£

£

Wages and salaries

683,114

469,069

Social security costs

64,525

44,471

Pension costs - defined contribution plan

11,217

5,308

Share based payments - employee option expense

47,717

-

806,573

518,848

Being:

Salary and other employee costs reported within cost of sales

370,598

-

Salary and other employee costs reported within administration expenses

435,975

406,177

806,573

406,177

Less: wages and salaries capitalised within software development costs

(186,678)

(112,671)

619,895

293,506

The Company employed two members of staff, being the Non-Executive Directors, at a total cost of £31,355.

Key management remuneration

Remuneration of the key management team, including Directors, during the year was as follows

2019

2018

£

£

Aggregate emoluments including short-term employee benefits

197,400

104,721

Social security costs

21,987

11,254

Pension costs - defined contribution plan

2,190

851

Share based payments - employee option expense

27,594

-

249,171

116,826

Key management personnel include the Directors and Tim Heaton, the Chief Operating Officer. Tim joined the Company on 1st October 2019.

Directors' remuneration

Remuneration of the Director during the period was as follows:

2019

2018

£

£

Aggregate emoluments including short-term employee benefits

184,000

84,277

Pension costs - defined contribution plan

2,190

824

Directors remuneration

186,190

85,101

Social security costs

20,237

11,254

Share based payments - employee option expense

27,594

-

234,021

96,355

8

Finance income and expense

2019

2018

£

£

Interest receivable on bank deposits

811

-

2019

2018

£

£

Interest expense on financial liabilities measured at amortised cost

24,601

30,192

9

Share-based payments

Share-based payment schemes with employees

During the year ended 31 October 2019, Dev Clever Holdings plc introduced a share-based payment scheme for employees ("the EMI share option plan"). The Scheme was created as part of the listing process to grant existing employee's options over the ordinary shares of the Company and is classified as an equity settled share-based payment plan. The options granted under the Scheme had vesting periods of up to 36 months.

There were 7,955,802 employee options granted during 2019 at an exercise price of £0.01 per share and these vest subject to continued service by the employee over a period of 3 years. Options expire at the end of a period of 10 years from the Grant Date of 14 January 2019 or on the date on which the option holder ceases to be an employee. The options were valued under the Black Scholes Model. The expense recognised in the income statement during the period was £20,123.

Share-based payment expense with Director

On 14 January 2019, Dev Clever Holdings plc granted options to purchase 10m ordinary shares to Nicholas Ydlibi, the Chief Financial Officer and Company Secretary. The options vest in equal annual instalments, subject to continued service, over a period of 3 years and are exercisable at a price of £0.01. The options expire at the end of a period of 10 years from the Grant Date of 14 January 2019 or on the date on which the option holder ceases to be an employee. The options were valued under the Black Scholes Model. The expense recognised in the income statement during the period was £27,594.

Advisor Warrants

As part of the listing process and as set out in the admission document, the Company issued warrants over 2,290,000 shares to its brokers, Pello Capital (formerly Cornhill), at an exercise price of £0.01, subject to expiry on 21 January 2024. The warrants were valued under the Black Scholes model. The expense recognised in the income statement during the period was £10,138. The warrants were exercised on 2 August 2019.

Under its facility agreement with Syminex, and as set out in the admission document, the Company issued warrants over 11,826,264 shares, representing 3% of the fully diluted share capital of the Company on admission. The shares have an exercise price of £0.01 and are subject to expiry on 21 January 2024. The warrants were valued under the Black Scholes model. The expense of £52,357 was recognised in the income statement during the period.

The Company has measured the fair value of the services received as consideration for equity instruments of the Company, indirectly by reference to the fair value of the equity instruments. The table below sets out the options and warrants that were issued during the period and the principal assumptions used in the valuation.

During the period the Group and Company recognised a total expense of £110,212 (2018: £nil) in the income statement in respect to share options and warrants in issue or committed to issuing at the end of the reporting period.

The table below represents the weighted average exercise price (WAEP) of and the movements in share options and warrants during the period:

31 October 2019

No. of options

and warrants

WAEP

Pence

Outstanding at beginning of the period

-

-

Issued in the period

32,072,065

£0.01

Lapsed during the period

-

£0.01

Exercised in the year

(2,290,000)

£0.01

Outstanding at the end of the period

29,782,065

£0.01

Exercisable at the end of the period

11,826,264

£0.01

The fair values of the options and warrants granted have been calculated using the Black Scholes model and applying the inputs shown below:

Type

Options

Warrants

Grant date

14/01/2019

21/01/2019

Number of options/warrants

17,955,801

14,116,264

Share price at grant date

£0.01

£0.01

Exercise price at grant date

£0.01