DIALOGUE_EXCHANGE_GLOBAL_ - Accounts

The directors present their annual report and financial statements for the year ended 31 December 2020.

This year was momentous for the business for a number of reasons.

1. The global Covid-19 pandemic struck in late February, making the need to to be able to work remotely paramount for most businesses.  While Dialogue’s platform model was partially built around an anticipated shift towards remote working, the effects of the pandemic acted as an accelerant.

2. The business had planned to undertake its third investment round in the first half of the year.  The global uncertainty caused by the pandemic negatively affected investors outlook and appetite for new investment, and it was a testament to Dialogue’s early traction, visionary business model and team strength that it was able to successfully complete a significant capital raising round by May 2020.  This included attracting several new key strategic investors onto the share register, all of whom have significant and relevant experience and contacts in Dialogue’s chosen market.  As part of this capital raise Dialogue was also able to agree an important option agreement (see note 7) with its software developer, Codibly Spółka z ograniczoną odpowiedzialnością Spółka komandytowa (Codibly) to align mutual business interests of both businesses more closely.  

3. Most importantly, the development of the platform accelerated throughout the year, leading to the launch of the Beta version for testing between several multinational insurers and brokers during November 2020.  Not only were several test insurance contracts placed electronically, including from London, Paris and Geneva, but the early feedback from users on both the broking and underwriting side of the platform has been universally positive which is gratifying.  All test users plan to transition to live use of the platform in January 2021. 

The business was also able to take advantage of the UK government’s Research and Development (R&D) reliefs which support companies that work on innovative projects in science and technology.  This resulted in a tax claim of nearly £81,000 being received by Dialogue during 2020 based on the R&D expenditure incurred in 2019.  On the same basis the company will be lodging its claim for expenditure incurred in 2020 which should result in a further R&D tax refund of around £296,000 later in 2021.  This has been provided for in the accounts (see note 3).

The directors decided to adopt the FRS 102 section 1A reporting standard for the 2020 financial year, which is a year earlier than the requirement to adopt this standard for this company. 

The directors have further noted in 2020 that the development expenditure in 2019 was amortised prior to the platform development work being completed. Under FRS 102 amortisation should not occur until the platform is complete, therefore a restatement has been made to the prior year figures to update this. Details of this correction are reflected in the Statement of Changes in Equity and note 8.

Looking forward to 2021 the company is launching its complex risk platform in January 2021.  This is focused on the Credit and Political Risk Insurance (CPRI) market initially, but once this part of the platform is up and running Dialogue plans to expand its platform into other complex risk classes.  This is made all the more relevant now that Lloyd’s has withdrawn from its plans to set up a complex risk platform/exchange.  The directors believe that the foundation and infrastructure which has been built for the complex CPRI market is ideally suited to a relatively quick and simple expansion into other chosen classes that fit into the complex commercial risk space.  

Dialogue will be pursuing a further fundraising round in the first quarter of 2021 to provide it with the working capital necessary to pursue this lateral expansion as well as refining the CPRI platform as it grows and its clients needs for reporting and analytics become more focused.  The platform is also able to integrate into its clients’ systems for seamless data transfer, a feature that may be requested by clients as the platform grows.  

As mentioned earlier in this report, several new strategic shareholders invested into the company in May 2020.  One of these investors, Dominique Fraisse, has agreed to become non-executive chairman of the company in succession to Kit Brownlees, who remains a director.  Dominique was appointed to the Board on 10th January 2021 and will be helping the company to grow its client base as well as assisting with the fundraising that is to take place in the first quarter of 2021.  We welcome Dominique to the board and thank Kit for his invaluable efforts and advice since the company concluded its first capital raise in April 2019.

In addition, as Dialogue grows, there will be a need to build out its staff with experts in the respective fields that Dialogue is operating within.  Dialogue already has a complement of twelve full time developers via its close working relationship with Codibly.  This resource is planned to grow to over fifteen full time software experts during 2021.  

The directors are looking forward to 2021 being the year in which revenues begin to flow and the results of nearly two years of intensely focused work begin to bear fruit.

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

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the financial statements of Dialogue Exchange Global Limited for the year ended 31 December 2020 which comprise the profit and loss account, the balance sheet, the statement of changes in equity and the related notes from the company’s accounting records and from information and explanations you have given us.

As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed at http://www.icaew.com/en/members/regulations-standards-and-guidance.

This report is made solely to the Board of Directors of Dialogue Exchange Global Limited, as a body, in accordance with the terms of our engagement letter dated 29 April 2019. Our work has been undertaken solely to prepare for your approval the financial statements of Dialogue Exchange Global Limited and state those matters that we have agreed to state to the Board of Directors of Dialogue Exchange Global Limited, as a body, in this report in accordance with ICAEW Technical Release 07/16 AAF. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Dialogue Exchange Global Limited and its Board of Directors as a body, for our work or for this report.

It is your duty to ensure that Dialogue Exchange Global Limited has kept adequate accounting records and to prepare statutory financial statements that give a true and fair view of the assets, liabilities, financial position and profit of Dialogue Exchange Global Limited. You consider that Dialogue Exchange Global Limited is exempt from the statutory audit requirement for the year.

We have not been instructed to carry out an audit or a review of the financial statements of Dialogue Exchange Global Limited. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory financial statements.

For the financial year ended 31 December 2020 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.

The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476.

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

Dialogue Exchange Global Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Tile House, 14A Homefield Road, Wimbledon, London, SW19 4QF.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of 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 principal accounting policies adopted are set out below.

These financial statements for the year ended 31 December 2020 are the first financial statements of Dialogue Exchange Global Limited prepared in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. The date of transition to FRS 102 was 1 December 2018. The reported financial position and financial performance for the previous period are not affected by the transition to FRS 102.

Prior period adjustments are made where material restatements are found in prior year figures. The comparatives are adjusted to allow comparability between periods.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, 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:

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

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

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 end date.

The company takes advantage of HMRC's R&D relief provisions under the SME scheme to which it is entitled under the Corporation Tax Act 2009, part 13.

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.

The average monthly number of staff (including directors) in the company during the year was:

Taxation comprises Corporation Tax and Research and Development relief claims.  At this stage of the company’s development there is no Corporation Tax to pay as the company is still generating losses. The principal value within this category therefore is the company’s claim for R&D tax relief under Corporation Tax Act 2009 Part 13.  The company has been able to demonstrate to HMRC that its software development falls into the relevant category within the SME Scheme and therefore its claims have been submitted on this basis.

The 2019 Research and Development credit was recorded in 2020 due to the 2019 accounts being signed off prior to the Research and Development claim completion.

Convertible creditor is a provision for the Codibly Option agreement.  This gives Codibly the ability to convert the monetary value of certain discounts that it has given, either into equity shares in the company, or to be repaid in cash from a future fundraising round.  Codibly have indicated to the directors that it wishes to convert to equity shares, in which case it will become an equity shareholder with an ownership position of approximately 11%.

The prior comparative figures have been amended to remove £66,539 of intangible asset amortisation, as the asset was under construction throughout the prior and current year.