ACUY RMPAR : Annual Report, December 2023

Acuity RM Group plc

Building Value in Technology

Acuity RM Group plc

Report and Accounts

For the year ended

31 December 2023

Contents

Strategic Report	1
Chairman's Statement	1
Chief Executive's Report	2
Principal Risks and Uncertainties	4
Governance	5
Chairman's Introduction to Governance	5
Board of Directors	7
Corporate Governance Statement	8
Remuneration Report	17
Directors' Report	19
Financial Statements	23
Independent auditor's report to the members of Acuity RM Group plc	23
Group statement of comprehensive income	30
Group statement of financial position	31
Company statement of financial position	33
Group statement of changes in equity	34
Company statement of changes in equity	35
Group statement of cash flows	36
Company statement of cash flows	37
Notes to the Financial Statements	47
Additional Information	62
Advisers and Key Services Providers	62

Strategic Report

Acuity RM Group plc

Strategic Report

Chairman's Statement

I am pleased to present the results of Acuity RM Group plc ("Company" or "Group") for the period ended 31 December 2023.

2023 was a year of significant change for the Group in which it acquired the remaining shares in Acuity Risk Management Limited (Acuity RM), which it did not already own (previously a 25% shareholding). As a result of this transaction, the Group's status changed from an investing to a trading company which should offer benefits for Acuity RM's trading:

• the higher profile of a public company and as a plc similar to the majority of its customers; and
• easier access to finance and at a lower cost, as well as the opportunity to use its shares as a currency;

and for the Group's shareholders:

• trading companies are usually valued on a more attractive basis, a multiple of trading metrics, than investing companies whose valuation typically is a discount to net asset value.

A transaction such as the acquisition of Acuity RM takes up much management time and attention so is disruptive to the underlying business. I would like to thank Simon Marvell and Richard Mayall, founders and senior directors of Acuity RM, for their support.

In the second half of the year new management appointments were made to strengthen the team and provide additional resource to grow the business. Acuity RM won its two largest contracts ever and made significant progress in putting in the infrastructure to facilitate further and faster growth. This will require further investment in 2024 and 2025 to enable it to increase customer numbers and average order value which, in turn, should be reflected in a higher valuation for the business. More detail about Acuity RM and its progress are included in the Chief Executive's report.

The Group's results for the year ended 31 December 2023 reflect the acquisition of the share capital in Acuity RM not already owned by the Group. In 2022, the 25% stake in Acuity RM was shown as an investment, and for the year ended 2023 the results of Acuity RM have been consolidated from the date of acquisition, 25 April 2023.

Board changes

There have been several Board changes during the year. Simon Marvell who co-founded Acuity RM, joined the Group Board on the acquisition of Acuity RM and then retired on 27 June and resigned as a director. The Board would like to acknowledge his contribution to Acuity RM over many years. Even though Simon is now no longer involved in the day to day running of Acuity RM, he has remained as a consultant and non-executive board member of Acuity RM, so it continues to benefit from his knowledge and years of experience. Simon Bennett, who served as a director over three years, retired having overseen the acquisition and the Company's change from an investing to a trading company. The Board would like to thank Simon Marvell and Simon Bennett for their contributions and wishes them well for the future.

Kerry Chambers who had been Commercial Director of Acuity RM for two years stepped up to become Chief Executive of Acuity RM and a Group Board director on 3 July.

Outlook

Acuity RM operates in a large, high growth market with customers in the UK, North America and Germany as well as other territories and is successfully winning new contracts with key customers and forging relationships with partners to accelerate future growth. I would like to thank all shareholders for their continuing support and our advisers who made significant contributions to the major achievements in the year. I look forward to reporting further progress over the coming months.

Shareholders can stay informed by visiting the Group website www.Acuityrmgroup.com .

Angus Forrest

Executive Chairman

12 June 2024

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Strategic Report

Acuity RM Group plc

Chief Executive's Report

Overview

I am delighted to report on Acuity RM's performance for the period ended 31 December 2023, following its acquisition by Acuity RM Group plc. The names of both companies are now aligned with the underlying business. Reflecting on our achievements since assuming the role of CEO, Acuity RM, in July 2023, I am immensely proud of the strategic investments we have made to position our company for sustainable growth and success.

We are excited about the potential for growth in global markets. We already have proven success with high-profile private and public sector clients worldwide in highly regulated and targeted industries and are well positioned to expand on this.

Operating review

Acuity offers an award-winning risk management software platform called STREAM® used for enterprise risk and assurance management. Organisations use it to identify and manage key risks while ensuring compliance with regulations, standards, and contracts. STREAM® is configured to manage certain risks, it collates and analyses all data relating to each risk in real time and provides alerts and alarms for managers to take action when performance deviates from acceptable standards. Implementing STREAM® is quick and easy, with either preconfigured set-ups or custom set up. It enables strategic decision-making, prioritisation of resources and justification of expenditure. Acuity has proven success supporting customers worldwide in highly regulated industries.

The platform is sold in the Governance, Risk, and Compliance (GRC) market, where it ranks among the top GRC products in Gartner's Peer Insights. It scores highly in all categories and has 100% of peers recommending it. The GRC market was worth $14.9bn in 2022 (MarketsandMarkets) and is growing strongly. It is driven by legislation, regulation and best practice.

In the second half of 2023 having identified the key areas for change and investment essential to improve our performance, maintain our technical prowess and grow our customers, orders and revenues, I initiated several changes including:

Technical - recruitment of a new Chief Technology Officer (CTO) who has reviewed our IT technologies and is preparing for a comprehensive software re-write to add new features and improve efficiencies whilst ensuring that the STREAM platform remains at the forefront of GRC technology and maintains the platform's functionality and configurability.

Sales and Marketing - there has been a recruitment campaign to increase internal sales and marketing capability as well as supporting and intensifying our partner programme, a cornerstone of our growth strategy. The focus is on growth: (1) upsell to existing customers, (2) new customers and higher value per contract. I am pleased to report that Acuity RM won its two largest orders in 2023 each valued at c. £500,000.

I believe these actions represent an important investment in our future, positioning us to capitalise on emerging opportunities and navigate evolving market dynamics.

Whilst we continue to demonstrate growth, revenues increased by 14% during the period 1 April 2023 to 31 December 2023 (on an annualised basis compared to the 12 months ended March 2023, Acuity RM's previous financial year end). I am delighted that the following Alternate Performance Indicators (APIs) for future performance demonstrate increasing strength:

	% increase	31 December 2023	31 March 2023
		£'000	£'000
Forward contracted revenue 1	32%	2,900	2,200
Orders won at annual contract value 2	45%	1,600	1,100
Sales pipeline at annual contract value 3	88%	7,900	4,200

The change of year end in order to make both companies' years co-terminus resulted in a nine month period for Acuity RM.

• Forward contracted revenue is deferred income per the balance sheet and forward contracted revenue. Forward contracted revenue is not an IFRS measure.

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Strategic Report

Acuity RM Group plc

• Comparing the nine month period ended December 2023 with the same period in 2022. Orders at annual contract value is not an IFRS measure but is the basis for sales revenue.

• Sales leads are included in the sales pipeline using an industry standard sales qualification methodology. Sales pipeline is not an IFRS measure

We remain committed to innovation, growth, and delivering value to all our stakeholders. We are confident in our ability to seize opportunities, overcome challenges and drive sustainable growth.

I would like to welcome the employees who joined us during the year and acknowledge the contribution of every employee and others who we work with.

Information about the trading business and STREAM® is available on the Acuity RM website www.acuityrm.com .

Kerry Chambers

Chief Executive

Acuity Risk Management Ltd

12 June 2024

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Strategic Report

Acuity RM Group plc

Principal Risks and Uncertainties

The management of the business and the nature of the Group's strategy are subject to risks. The Directors set out below the principal risks identified for the business. Where possible, processes are in place to identify and manage such risks.

The Group operates systems of internal control and reporting to provide assurance that the Board is managing risk whilst achieving its business objectives. No system can fully eliminate risk and, therefore, the understanding of operational risk is central to the management process.

To enable shareholders to appreciate what the business considers are the main operational risks, they are briefly outlined below:

	Risk	Potential impact
Performance risk	The Group fails to perform to	It may need additional funding.
	budget.
	Progress of development is below	Value creation may be delayed.
Reliance on one	forecast.
or a few	A material proportion of revenues	This is a risk all growing businesses
customers
	are lost	face and it could impact cash
	generation and profitability
Reliance on	The Group is not able to retain key	The performance of the Group may
people	individuals with critical skills	deviate from plan.
Market change	Downturn or instability of market	Slow new order wins and reduced
		growth

Mitigation

Monthly reports and meetings monitor performance of all important facets of the business

The Group focuses on PIs and takes action to manage any deviation and revert to plan.

Orders are usually for multi year contracts and the number of larger clients is increasing. The Group operates on a lean cost structure to minimise any such impact.

The key executives are rewarded through a combination of competitive salary and incentive plans.

The Group sells multi-year contracts, so ensuring a certain level of future revenues. ESG and GRC are growing markets driven by legislation, regulation and best practice. STREAM® is very flexible so can be configured to measure a wide range of risks

Cybersecurity	Loss of data or damage to data
Technology	A new product is launched by a
	competitor

Liquidity	The Company cannot raise new
	funds.

Legal, regulatory	The Group's ability to trade in
and political risk	certain territories.

Natural or other	The effect of the disasters are
widespread	uncertain and each one is dealt
disasters	with appropriate action.

Damage to credibility and customer confidence

Greater technical competition.

The Croup may not be able to finance the growth and change as planned.

May impact the Group's ability to fund its operational costs.

The Group keeps abreast of regulatory and other changes which may affect the Group

The impact of disaster is likely to be slower growth and more difficulty making sales.

Acuity uses leading global services with advanced security, to hold data and has accredited processes and systems in place.

The market is large and STREAM® is well liked by analysts and users

The Group is developing new technology and product to continue to offer best in class.

The Group engages the services of brokers to assist with fund raising equity and loan as appropriate.

The Group intends to maintain material cash balances.

The Group may take actions to reduce its cost base.

The Group seeks regular updates on matters which may impact the legal and regulatory framework. It is increasing its sales in overseas markets.

The Group liaises regularly with its relevant advisers.

Software as an industry allows employees to work flexibly to an extent that is not available in most other business sectors. Product development, marketing, sales and general management can all be carried out remotely.

Interest rates	Significant upward changes in	May affect the ability to raise new
	interest rates.	funds.

At present, the Group has minimal borrowings and intends to maintain a significant cash balance

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Governance

Acuity RM Group plc

Governance

Chairman's Introduction to Governance

As Chairman of the Company, I have overall responsibility for ensuring that corporate governance is embedded within the business. Corporate governance is at the heart of this organisation in order to maintain integrity and to ensure we govern effectively such that we can deliver long-term value for our shareholders.

The Company has chosen to adopt the Quoted Companies Alliance's Corporate Governance Code 2018 (the "QCA Code"), and has updated its website to include additional disclosures required by the QCA Code and the AIM Rules for Companies 2022.

The Board recognises the importance of sound corporate governance and applies the ten principles of the QCA Code insofar as reasonably practicable, given the Company's nature and size. Further details on compliance with the principles are provided below. The Company's priority is to generate value for shareholders through developing the Acuity Risk Management Ltd business as explained on page 2 of this report. The Board believes that the QCA Code provides the Company with a practical and rigorous corporate governance framework to support this strategy and the Company's success. The QCA Code sets out 10 principles which are listed below together with a short explanation of how the Company applies each of the principles:

Principle One - Business Model and Strategy

The Board decided in 2022 that the Company's business model and strategy should change from being an investing company to a trading company for reasons explained in the Chairman's statement on page 1 of this report. The acquisition of 100% of Acuity Risk Management Ltd was finalised in April 2023. The business model is now to develop and build the Acuity business organically and potentially by focused acquisition.

Principle Two - Understanding Shareholder Needs and Expectations

The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company's Annual General Meeting.

Investors also have access to current information on the Company though its website wwwacuityrmgroup.com, and via Angus Forrest, who is available to answer investor relations enquiries ([e-mail])

Principle Three - Stakeholder Responsibilities

The Board recognises the long term success of the Company is reliant upon the efforts of the employees of the Group and its contractors, suppliers and regulators. The Management reviews performance of Acuity continually and at every Board meeting.

Principle Four - Risk Management

The Board regularly reviews the risks facing the Group and seeks to avoid or mitigate those risks as appropriate. The Board is responsible for the monitoring of financial performance against budget and forecast and the formulation of the Group's risk appetite including the identification, assessment and monitoring of the principal risks.

In addition to its other roles and responsibilities the Audit and Compliance Committee is responsible to the Board for ensuring that procedures are in place and are being effectively implemented to identify, evaluate and manage any significant risks faced by the Company.

The Directors have established procedures for the purpose of providing a system of internal control. In addition, there are a range of Group policies that are reviewed at least annually by the Board. These policies cover matters including share dealing and insider legislation, conflicts of interest, social media, expenses, treasury, remuneration, risk and compliance. These areas are also included as

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Governance

Acuity RM Group plc

permanent agenda items for report and review at each regular board meeting. The Board currently takes the view that an internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the directors.

Principle Five - A Well-Functioning Board of Directors

As at 31 December 2023 the Board comprised Angus Forrest, Kerry Chambers and two non-executive directors, John Wakefield and Nick Clark. The Quoted Company Alliance Corporate Governance Code recommends that there should be at least two independent directors. All Directors are encouraged to use their judgement and to challenge matters, whether strategic or operational, enabling the Board to discharge its duties and responsibilities effectively.

The time commitment formally required by the Company is an overriding principle that each director will devote as much time as is required to carry out the roles and responsibilities that the director has agreed to take on. This means that Angus Forrest and Kerry Chambers are full time and that the other directors are part time. Biographical details of the current directors are set out below. Executive and non-executive directors are subject to re-election at intervals of no more than three years. The letters of appointment of all directors are available for inspection at the Company's registered office during normal business hours.

The Board meets regularly and is responsible for formulating, reviewing and approving the Company's strategy, budgets, performance, major capital expenditure and corporate actions. The Board meets at least six times per annum. It has established an Audit Committee and a Remuneration Committee, particulars of which appear hereafter. Meetings are open and constructive, with every Director participating fully. The Board agreed that appointments to the Board are made by the Board as a whole and so has not created a Nominations Committee.

Attendance at Board and Committee Meetings

The table on page 8 summarises the number of board and committee meetings held during the year and the attendance record of individual directors:

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Governance

Acuity RM Group plc

Board of Directors

Angus Forrest

Executive Chairman

Angus has been an investor in the technology sector for more than 30 years, specialising in business-to-business sales driven companies. Angus was the Chief Executive of investment company, Billam plc which he co-founded,2000-2006. Billam was the lead investor in Cybit plc, which grew from pre-revenue status to become the leading vehicle telematics business in Europe, through both organic growth and by making selective acquisitions. Billam made 17 investments of which 11 were profitable. Billam changed its name to Energiser Investments in 2008, then to Drumz. Angus is the founder of Acuity RM Group plc (formerly Drumz plc).

John Wakefield

Senior Non-Executive Director

John qualified as a solicitor with McKenna & Co (now CMS) before moving into corporate finance, first with Williams de Broe Limited and then at Rowan Dartington & Co Limited, where he was a founder director and shareholder and head of corporate finance. He was a corporate finance director of WH Ireland Limited until 2016.

He has been a member of the AIM Advisory Group, chairman of the London Stock Exchange Regional Advisory Group for the South West and chairman of South West Angel and Investor Network Limited (SWAIN). John is a non-executive director of Petards Group Plc.

John is chair of the Remuneration Committee and of the Audit Committee.

Nicholas ("Nick") Clark

Non-Executive Director

Nick was appointed as Chief Executive of AIM-listed Aukett Swanke Group plc (LON:AUK) in April 2023 following the acquisition of Torpedo Factory Group Ltd ("TFG"), a company he founded in 1997. ASG is a smart buildings and architecture group formed from a number of acquisitions. Nick is also non-executive joint chairman at Ridgecrest plc, a cash shell.

Prior to starting TFG Nick studied physics at Imperial College graduating with a BSc Hons 2(i), followed by an MPhil in Microelectronic Engineering and Semiconductor Physics at the University of Cambridge.

Nick is a member of the Remuneration Committee and the Audit Committee.

Kerry Chambers*

Executive Director

Kerry is Chief Executive of Acuity Risk Management Ltd. Kerry has over 15 years' experience in building and managing client-facing teams in UK and international markets, accelerating revenue growth through the development of strategic plans, building high performing sales teams and driving operational efficiency.

She joined Acuity Risk Management Ltd in 2021 as commercial director. She became chief executive on 3 July 2023.

* Kerry Chambers was appointed as a director on 3 July 2023.

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Governance

Acuity RM Group plc

Corporate Governance Statement

Board composition and independence

The Board is collectively responsible for the long-term success of the Company and for its leadership, strategy, values, control and management. Board meetings are held at such times as are required for effective monitoring of the Company's operations. All Directors commit the time necessary to fulfil their roles, and this position is kept under review. Given the size of the Board and the scale and nature of the Company's business, the Company does not yet have a separate Nominations Committee.

The Board has considerable experience and expertise in the technology sector and the running of publicly traded companies. John Wakefield and Nick Clark are non-executive directors.

Full biographical details of all directors can be found on page 7 and on our website www.acuityrmgroup.com

Board and Committee attendance

During the year, the Board held six scheduled and two unscheduled meetings. The following table shows the attendance of directors at Board and Committee meetings held during the year:

	Board Meetings		Committees
	Audit	Remuneration
Simon Bennett*	8	2	1
Kerry Chambers*	4	-	-
Nick Clark	8	2	1
Angus Forrest	8	-	-
Nish Malde*	1	-	1
Simon Marvell*	1	-	-
John Wakefield	8	2	1

• Simon Marvell and Kerry Chambers were appointed as directors on 25 April 2023 and 3 July 2023 respectively. Nish Malde, Simon Marvell and Simon Bennett resigned from the Board of the Company on respectively 9 March 2023, 27 June 2023 and 6 October 2023.

Appointment of Directors

The Board deals with all matters relating to the appointment of Directors, including determining the specification, identifying suitable candidates and selection of the appointee. No separate Nomination Committee has yet been formed.

The Articles of Association require each Director to seek re-election after no more than three years in office. The QCA Code recommends that non-executive directors are appointed for a fixed term. The Board considers that shareholders should have the opportunity to vote on the re-appointment of non-executive directors and accordingly each of the present non-executive directors will retire by rotation at least once over the next three years.

Board activities in the year to 31 December 2023

The table on page 13 identifies the matters considered by the Board and notes the consideration given to the key stakeholder groups. One of the focuses for the Board is the impact any decision or action may have on key stakeholder groups represented within the Board's common duty under s172 of the Companies Act 2006. The Board notes the importance of the amount of engagement it has with key shareholder groups and how their respective views may be incorporated into decision making. Whilst considering the necessity of promoting the Company's success for the benefit of its members as a whole, the Board considers the impact of its decisions and policies on key stakeholder groups.

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