Company registration number 08945483 (England and Wales)
MINISTRY OF AUTOMATTIC LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
MINISTRY OF AUTOMATTIC LIMITED
COMPANY INFORMATION
Directors
P Sieminski
M Davies
Secretary
J McWilliams
Abogado Nominees Limited
Company number
08945483
Registered office
280 Bishopsgate
London
EC2M 4RB
Auditor
KPMG Ireland
Chartered Accountants
1 Stokes Place
St. Stephen's Green
Dublin 2
D02 DE03
MINISTRY OF AUTOMATTIC LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 7
Profit and loss account
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 21
MINISTRY OF AUTOMATTIC LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Principal activities
The company provides research and development services to other group undertakings that support the WordPress publishing platform and related cloud hosting services and the WooCommerce platform that brings eCommerce functionality to any WordPress site.
Review of the business
The company continued to provide research and development services to other group undertakings. There have been no significant changes in those activities during the year.
Principal risks and uncertainties
The directors consider that the following are the principal risk factors that could materially and adversely affect the Company’s future operating profits or financial position:
The market for the Company’s products is characterised by rapidly changing technology, changes in customer requirements and preferences, and the introduction of new products and services embodying new technologies. The Company is confident that it has put in place a strong management team and suite of products capable of dealing with these market risks as they arise.
The Company has the objective to ensure sufficient working capital exists to achieve company objectives.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company relies on its immediate parent for sufficient liquidity and has received written assurances from its immediate parent that it will continue to provide adequate financial support for a period of at least 12 months from the date of the approval of these financial statements.
The Company has a strategy to manage these risks. The directors are confident that they have put in place a strong management team and suite of products capable of dealing with the above issues as they arise.
Key performance indicators
The key performance indicators used by management to monitor performance are as follows:
- Turnover
- Headcount
Turnover, at £13,584,800, increased by 37% from the prior period.
Headcount, totalling 110, increased by 27.9% from the prior period.
On behalf of the board
.............................................
P Sieminski
Director
30 November 2023
MINISTRY OF AUTOMATTIC LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
P Sieminski
M Davies
In accordance with the Constitution, the directors are not required to retire from the Board by rotation.
Political donations
The Company made no political donations or incurred any political expenditure during the year.
Future developments
There are no significant changes expected to the business in fiscal years 2023 and 2024.
Ultimate parent company
The ultimate parent undertaking is Automattic, Inc., a company incorporated in the USA.
Auditor
KPMG Ireland were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
..............................................
P Sieminski
Director
30 November 2023
MINISTRY OF AUTOMATTIC LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
Statement of directors’ responsibilities in respect of the directors’ report and the financial statements
The directors are responsible for preparing the directors’ report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
Under Company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year.
In preparing the financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal controls as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
On behalf of the board
P Sieminski
Date: 30 November 2023
MINISTRY OF AUTOMATTIC LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MINISTRY OF AUTOMATTIC LIMITED
- 4 -
Opinion
We have audited the financial statements of Ministry of Automattic Limited (‘the Company’) for the year ended December 31, 2022 set out on pages 8 to 21, which comprise the profit and loss account, the balance sheet, the statement of changes in equity and related notes, including the summary of significant accounting policies set out in note 1.
The financial reporting framework that has been applied in their preparation is UK Law and FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
In our opinion:
the financial statements give a true and fair view of the state of the Company’s affairs as at December 31, 2022 and of its profit for the year then ended;
the financial statements have been properly prepared in accordance with FRS 102 ; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with ethical requirements that are relevant to our audit of financial statements in the UK, including the Financial Reporting Council (FRC)’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).
In our evaluation of the directors' conclusions, we considered the inherent risks to the Company’s business model and analysed how those risks might affect the Company’s financial resources or ability to continue operations over the going concern period.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Company will continue in operation.
MINISTRY OF AUTOMATTIC LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MINISTRY OF AUTOMATTIC LIMITED
- 5 -
Detecting irregularities including fraud
We identified the areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements and risks of material misstatement due to fraud, using our understanding of the entity's industry, regulatory environment and other external factors and inquiry with the directors. In addition, our risk assessment procedures included: inquiring with the directors as to the Company's policies and procedures regarding compliance with laws and regulations and prevention and detection of fraud; inquiring whether the directors have knowledge of any actual or suspected non-compliance with laws or regulations or alleged fraud; inspecting the Company's regulatory and legal correspondence; and reading minutes.
We discussed identified laws and regulations, fraud risk factors and the need to remain alert among the audit team.
The Company is subject to laws and regulations that directly affect the financial statements including companies and financial reporting legislation and insert any other relevant areas of direct laws and regulation with explanation as necessary e.g. taxation legislation, distributable profits legislation etc. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items, including assessing the financial statement disclosures and agreeing them to supporting documentation when necessary.
The company, is not subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements.
Auditing standards limit the required audit procedures to identify non-compliance with these non-direct laws and regulations to inquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. These limited procedures did not identify actual or suspected non-compliance.
We assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. As required by auditing standards, we performed procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition. On this audit we do not believe there is a fraud risk related to revenue recognition. We did not identify any additional fraud risks.
In response to risk of fraud, we also performed procedures including: identifying journal entries to test based on risk criteria and comparing the identified entries to supporting documentation; evaluating the business purpose of significant unusual transactions; assessing significant accounting estimates for bias; and assessing the disclosures in the financial statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
The directors are responsible for the other information presented in the Annual Report together with the financial statements. The other information comprises the information included in the strategic report and the directors’ report. The financial statements and our auditor’s report thereon do not comprise part of the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.
MINISTRY OF AUTOMATTIC LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MINISTRY OF AUTOMATTIC LIMITED
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
Based solely on our work on the other information undertaken during the course of the audit:
we have not identified material misstatements in the directors' report or the strategic report;
in our opinion, the information given in the directors’ report and the strategic report is consistent with the financial statements;
in our opinion, the directors’ report and the strategic report have been prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
Respective responsibilities and restrictions on use
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 3, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud, other irregularities or error, and to issue an opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
MINISTRY OF AUTOMATTIC LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MINISTRY OF AUTOMATTIC LIMITED
- 7 -
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Sarah-Jayne Naughton (Senior Statutory Auditor)
30 November 2023
For and on behalf of KPMG Ireland
Statutory Auditor
1 Stokes Place
St. Stephen's Green
Dublin 2
D02 DE03
MINISTRY OF AUTOMATTIC LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 8 -
2022
2021
Notes
£
£
Turnover
3
13,584,800
9,919,878
Administrative expenses
(12,858,772)
(9,540,223)
Profit before taxation
726,028
379,655
Tax on profit
8
(200,301)
(30,179)
Profit for the financial year
525,727
349,476
The profit and loss account has been prepared on the basis that all operations are continuing operations.
The company had no other items of comprehensive income in the current or preceding financial year other than those shown in the profit and loss account and therefore no statement of comprehensive income has been presented.
The notes on pages 11 to 21 form part of these financial statements.
MINISTRY OF AUTOMATTIC LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 9 -
Unaudited
2022
2021
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
9
25,707
28,438
Investments
10
70,833
25,707
99,271
Current assets
Debtors
11
12,226,469
5,515,026
Cash at bank and in hand
834,406
348,768
13,060,875
5,863,794
Creditors: amounts falling due within one year
12
(10,610,124)
(4,023,791)
Net current assets
2,450,751
1,840,003
Total assets less current liabilities
2,476,458
1,939,274
Creditors: amounts falling due after more than one year
13
(537,607)
(526,150)
Net assets
1,938,851
1,413,124
Capital and reserves
Called up share capital
17
100
100
Profit and loss account
1,938,751
1,413,024
Total equity
1,938,851
1,413,124
The notes on pages 11 to 21 form part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 30 November 2023 and are signed on its behalf by:
P Sieminski
Director
Company Registration No. 08945483
MINISTRY OF AUTOMATTIC LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
Called up share capital
Profit and loss account
Total equity
£
£
£
Balance at 1 January 2021
100
1,063,548
1,063,648
Year ended 31 December 2021:
Profit and total comprehensive income
-
349,476
349,476
Balance at 31 December 2021
100
1,413,024
1,413,124
Year ended 31 December 2022:
Profit and total comprehensive income
-
525,727
525,727
Balance at 31 December 2022
100
1,938,751
1,938,851
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
1
Accounting policies
Company information
Ministry of Automattic Limited is a private company limited by shares incorporated in England and Wales. The registered office is 280 Bishopsgate, London, EC2M 4RB.
1.1
Accounting convention
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.
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.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Aut O'Mattic A8C Ireland Limited. These consolidated financial statements are available from its registered office, 25 Herbert Place, Dublin 2, DO2 AY86, Ireland.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The entity is dependent on the parent company, Aut O'Mattic A8C Ireland Limited for its continued business given all turnover is generated from within the group. The directors have received an undertaking from Automattic, Inc. (ultimate parent company) that it will continue to make available such funds as are necessary to enable it to meet its liabilities as they fall due for a period of at least 12 months from approval of these financial statements. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
The entirety of turnover is made up of research and development fees receivable from other group entities.
All turnover is derived from the company's principal activity out of offices in the UK for the parent company.
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
1.4
Tangible fixed assets
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:
Fixtures and fittings
5 Years Straight Line
Computers
3 Years Straight Line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to the statement of income.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, 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. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Cash and cash equivalents
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.
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ 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
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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through the statement of income, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in the statement of income.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in the statement of income.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
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 company after deducting all of its liabilities.
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.7 Financial instruments (continued)
Basic financial liabilities
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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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.
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.9 Taxation (continued)
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 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. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.10
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.13
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 16 -
3
Turnover
2022
2021
£
£
Turnover analysed by geographical market
United States
3,443,388
2,620,902
Ireland
10,141,412
7,298,976
13,584,800
9,919,878
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(11,885)
16,141
Depreciation of owned tangible fixed assets
12,640
20,663
(Profit)/loss on disposal of tangible fixed assets
(725)
3,861
Operating lease charges
15,798
8,631
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
25,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Software engineers and sales support
100
77
Business operations
10
9
Total
110
86
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
10,150,412
7,501,250
Social security costs
1,228,095
929,390
Pension costs
976,838
690,016
12,355,345
9,120,656
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
7
Directors' remuneration
No remuneration was paid to the directors.
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
188,985
134,981
Adjustments in respect of prior periods
59,525
Total current tax
188,985
194,506
Deferred tax
Origination and reversal of timing differences
11,316
(164,327)
Total tax charge
200,301
30,179
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
726,028
379,655
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
137,945
72,134
Tax effect of expenses that are not deductible in determining taxable profit
51,040
63,751
Permanent capital allowances in excess of depreciation
(904)
Under/(over) provided in prior years
59,525
Other temporary differences
11,316
(164,327)
Taxation charge for the year
200,301
30,179
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
9
Tangible fixed assets
Fixtures and fittings
Computers
Total
£
£
£
Cost
At 1 January 2022
22,126
114,643
136,769
Additions
7,719
5,769
13,488
Disposals
(3,694)
(3,694)
At 31 December 2022
26,151
120,412
146,563
Depreciation and impairment
At 1 January 2022
7,257
101,074
108,331
Depreciation charged in the year
4,797
7,843
12,640
Eliminated in respect of disposals
(115)
(115)
At 31 December 2022
11,939
108,917
120,856
Carrying amount
At 31 December 2022
14,212
11,495
25,707
At 31 December 2021
14,869
13,569
28,438
10
Fixed asset investments
2022
2021
£
£
Investments in subsidiaries
70,833
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
10
Fixed asset investments
(Continued)
- 19 -
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 January 2022
250,000
Disposals
(250,000)
At 31 December 2022
-
Impairment
At 1 January 2022
179,167
Impairment losses
70,833
Disposals
(250,000)
At 31 December 2022
-
Carrying amount
At 31 December 2022
-
At 31 December 2021
70,833
11
Debtors
2022
2021
Amounts falling due within one year:
£
£
Amounts owed by group undertakings
11,965,687
5,263,080
Other debtors
8,713
6,701
Prepayments and accrued income
27,330
9,190
12,001,730
5,278,971
Deferred tax asset
224,739
236,055
12,226,469
5,515,026
Amounts due from the company's group undertakings are unsecured, interest free and repayable on demand.
The directors have reclassified an amount of £3,729,209 from Amounts owed by group undertakings to Amounts owed to group undertakings in the prior year to be consistent with the current year presentation.
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
12
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
328
2,643
Amounts owed to group undertakings
10,078,128
3,729,209
Corporation tax
107,116
75,030
Accruals and deferred income
424,552
216,909
10,610,124
4,023,791
Amounts due to the company's group undertakings are unsecured, interest free and payable on demand.
13
Creditors: amounts falling due after more than one year
2022
2021
£
£
Accruals and deferred income
537,607
526,150
14
Related party transactions
The company has taken advantage of the exemption available in accordance with Section 33.1A of Financial Reporting Standard 102 whereby it has not disclosed transactions entered into between two or more members of a group, as the company is a wholly owned subsidiary undertaking of the group to which it is party to the transactions.
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2022
2021
Balances:
£
£
Accelerated capital allowances
(11,502)
(9,616)
Other timing differences
236,241
245,671
224,739
236,055
2022
Movements in the year:
£
Asset at 1 January 2022
(236,055)
Charge to profit or loss
11,316
Asset at 31 December 2022
(224,739)
MINISTRY OF AUTOMATTIC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
16
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
976,838
690,016
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
17
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
18
Ultimate controlling party
The immediate parent undertaking is Aut O'Mattic A8C Ireland Limited, a company incorporated in Ireland.
The ultimate parent undertaking is Automattic, Inc., a company incorporated in the USA.
The smallest group to consolidate these financial statements is Aut O'Mattic A8C Ireland Limited, consolidated financial statements can be obtained from the registered office address at 25 Herbert Place, Dublin 2, DO2 AY86, Ireland.
The largest group to consolidate these financial statements is Automattic, Inc. consolidated financial statements.
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