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COMPANY REGISTRATION NUMBER: 03801746
Welcom Digital Limited
Filleted Unaudited Financial Statements
31 December 2022
Welcom Digital Limited
Statement of Financial Position
31 December 2022
2022
2021
Note
£
£
£
Fixed assets
Tangible assets
6
121,807
177,055
Investments
7
100
100
---------
---------
121,907
177,155
Current assets
Debtors
8
1,406,959
2,379,220
Cash at bank and in hand
707,210
129,891
------------
------------
2,114,169
2,509,111
Creditors: amounts falling due within one year
9
1,571,516
1,833,595
------------
------------
Net current assets
542,653
675,516
---------
---------
Total assets less current liabilities
664,560
852,671
Provisions
Taxation including deferred tax
( 350,769)
( 350,769)
------------
------------
Net assets
1,015,329
1,203,440
------------
------------
Capital and reserves
Called up share capital
113,000
113,000
Share premium account
10
865,938
865,938
Profit and loss account
10
36,391
224,502
------------
------------
Shareholders funds
1,015,329
1,203,440
------------
------------
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies' regime and in accordance with Section 1A of FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.
In accordance with section 444 of the Companies Act 2006, the statement of comprehensive income has not been delivered.
For the year ending 31 December 2022 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.
Directors' responsibilities:
- 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 ;
- The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of financial statements .
Welcom Digital Limited
Statement of Financial Position (continued)
31 December 2022
These financial statements were approved by the board of directors and authorised for issue on 23 November 2023 , and are signed on behalf of the board by:
Mr N A Welch
Director
Company registration number: 03801746
Welcom Digital Limited
Notes to the Financial Statements
Year ended 31 December 2022
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is The Exchange, Station Parade, Harrogate, HG1 1TS.
2. Statement of compliance
These financial statements have been prepared in compliance with Section 1A of FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Employee ownership trust
Welcom Employee Ownership Trust has been established with the object of ensuring that shares in the company are held for the benefit of the company's employees and that the eligible employees shall have an interest in the company's business.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Goodwill
-
20% straight line
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Fixtures and fittings
-
20% straight line
Computer Equipment
-
33% straight line
Servers
-
20% straight line
Investments
Fixed asset investments are initially recorded at cost, and subsequently stated at cost less any accumulated impairment losses.
Listed investments are measured at fair value with changes in fair value being recognised in profit or loss.
Investments in associates
Investments in associates accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Investments in associates accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value recognised in other comprehensive income/profit or loss. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the associate arising before or after the date of acquisition.
Investments in joint ventures
Investments in jointly controlled entities accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Investments in jointly controlled entities accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value recognised in other comprehensive income/profit or loss. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the joint venture arising before or after the date of acquisition.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.
Government grants
Government grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received. Government grants are recognised using the accrual model and the performance model. Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable. Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset. Under the performance model, where the grant does not impose specified future performance-related conditions on the recipient, it is recognised in income when the grant proceeds are received or receivable. Where the grant does impose specified future performance-related conditions on the recipient, it is recognised in income only when the performance-related conditions have been met. Where grants received are prior to satisfying the revenue recognition criteria, they are recognised as a liability.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
Financial instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
4. Employee numbers
The average number of persons employed by the company during the year amounted to 41 (2021: 44 ).
5. Intangible assets
Goodwill
£
Cost
At 1 January 2022 and 31 December 2022
3,250,000
------------
Amortisation
At 1 January 2022 and 31 December 2022
3,250,000
------------
Carrying amount
At 31 December 2022
------------
At 31 December 2021
------------
The addition to goodwill arose on the acquisition of the trade of Welcom Software LLP in 2014.
6. Tangible assets
Fixtures and fittings
Equipment
Servers
Total
£
£
£
£
Cost
At 1 January 2022
93,442
623,098
89,748
806,288
Additions
6,262
10,056
16,318
Disposals
( 4,944)
( 40,572)
( 45,516)
--------
---------
--------
---------
At 31 December 2022
94,760
592,582
89,748
777,090
--------
---------
--------
---------
Depreciation
At 1 January 2022
48,327
516,007
64,899
629,233
Charge for the year
5,788
47,772
15,251
68,811
Disposals
( 2,189)
( 40,572)
( 42,761)
--------
---------
--------
---------
At 31 December 2022
51,926
523,207
80,150
655,283
--------
---------
--------
---------
Carrying amount
At 31 December 2022
42,834
69,375
9,598
121,807
--------
---------
--------
---------
At 31 December 2021
45,115
107,091
24,849
177,055
--------
---------
--------
---------
7. Investments
Other investments other than loans
£
Cost
At 1 January 2022 and 31 December 2022
100
----
Impairment
At 1 January 2022 and 31 December 2022
----
Carrying amount
At 31 December 2022
100
----
At 31 December 2021
100
----
8. Debtors
2022
2021
£
£
Trade debtors
1,031,520
1,423,090
Amounts owed by group undertakings and undertakings in which the company has a participating interest
78,391
1,026
Other debtors
297,048
955,104
------------
------------
1,406,959
2,379,220
------------
------------
9. Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
191,373
110,951
Amounts owed to group undertakings and undertakings in which the company has a participating interest
307,620
Corporation tax
19,306
Social security and other taxes
260,440
85,194
Other creditors
1,100,397
1,329,830
------------
------------
1,571,516
1,833,595
------------
------------
10. Reserves
Share premium account - This reserve records the amount above the nominal value received for shares sold, less transaction costs. Profit and loss account - This reserve records retained earnings and accumulated losses.
11. Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
2022
2021
£
£
Not later than 1 year
47,160
47,160
Later than 1 year and not later than 5 years
78,600
125,760
---------
---------
125,760
172,920
---------
---------
12. Related party transactions
The company made a gift of £620,000 (2021: £605,894) to the Welcom Employee Ownership Trust. Future gifts will be made at the discretion of the company Directors based on cashflows and the performance of the business. No other transactions with related parties were undertaken such as are required to be disclosed under FRS 102 Section 1(A).
13. Controlling party
The company is controlled by Welcom Software Holdings Limited who is under the control of Welcom Trustees Limited, being the trustee of Welcom Employee Ownership Trust.