Company registration number 09922859 (England and Wales)
GUMGUM UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
GUMGUM UK LIMITED
COMPANY INFORMATION
Directors
Mr P A Schraeder
Mr P S Gildea
R Garrett
(Appointed 13 March 2023)
Company number
09922859
Registered office
c/o Craufurd Hale Group
Ground Floor, Arena Court
Crown Lane
MAIDENHEAD
SL6 8QZ
Auditor
Craufurd Hale Audit Services Limited
C/O Craufurd Hale Group
Ground Floor, Arena Court
Crown Lane
MAIDENHEAD
SL6 8QZ
Business address
The Corner Building
Farringdon Road
LONDON
EC1M 3LN
GUMGUM UK LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of income and retained earnings
9
Balance sheet
10
Statement of cash flows
12
Notes to the financial statements
13 - 24
GUMGUM UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -

Introduction and Business Review

 

The Directors present their Strategic Report on the Company for the year ended 31 December 2022.

 

GumGum UK Limited (hereafter “the Company”) is based in the UK and is the UK operating company for its ultimate parent company GumGum Inc., LLC registered in the US. The principal activities of the Company is to provide a platform that delivers the next generation of contextual intelligence, industry leading engaging ad creatives, and the ability to measure and optimize advertising campaigns to better understand consumer’s mindset that captures attention and drives action and outcomes.

Business Review

The Company continued its growth strategy by completing a series of integrations with new acquisitions. Revenue and markets have opened up to the company and the company is meeting their demands with effective solutions. Revenues have increased by £3.46m and customer retention and new business development have had a positive impact on the performance in the UK.

Objectives and strategies

GumGum’s mission is to empower advertisers to deliver creative advertising campaigns that capture consumer attention without the use of personal data, across current and future emerging digital environments at scale.

Principal risks and uncertainties

People

In any organisation, the Company’s performance relies on the selection, development, and retention of highly talented employees. To ensure the retention of its staff, the Company actively encourages employee rewards for key individuals, invests in personal development through a structured training program and provides individuals with opportunities to work on challenging assignments around the world. Maintaining the quality when hiring is of the greatest importance to the Company. The Company relies on an in-house People team and external providers to ensure that employees can excel.

 

Information Technology

Delivery of the Company’s online products internationally requires a robust underlying network infrastructure. The risk of service unavailability has been mitigated through off-site third-party hosting which provides power, network and hardware resilience coupled with best practice security measures. This is logically separate from the provision of internal IT services to the Company’s employees. IT security risks are mitigated by an internal audit team.

 

Cashflow risk

The Company remains exposed to working capital risk which has been, and continues to be, mitigated through rigorous client debt management, client relationship management and clear accountabilities for chasing and ensuring payment. Management regularly reviews the cash flow for the Company. The Company has support from its parent company to assist with any cash deficit and where needed cash is provided to support the needs of the individual entities.

 

Economic risks

Prudent management has resulted in quick reactions to uncertainties brought about by the pandemic. Our technology infrastructure and capital management has provided flexible working arrangements globally. This agile, diverse, and collaborative approach puts us in a strong position to weather economic uncertainties.

 

 

 

GUMGUM UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Financial key performance indicators (KPI's)

The Company’s full year turnover, excluding management recharges, increased by 25% compared to the prior year as a result of the JustPremium acquisition and following the recovery of revenue from the impact of the covid pandemic.

 

Gross profit, excluding management recharges, as a percentage of revenue was 46% (2021: 66%).

 

The Company's full year 2022 results show a pre-tax profit of £1.62m which is a £0.9m increase on the prior year. No dividend was paid during the year (2021: £nil).

 

 

2022

2021

Turnover

£17.5m

£14.0m

Gross Profit

£8.0m

£9.3m

EBITDA

£1.69m

£0.71m

 

 

 

 

 

 

 

 

 

 

On behalf of the board

Mr P S Gildea
Director
4 March 2024
GUMGUM UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2022.

Principal activities

The principal activity of the company continued to be that of being an artificial intelligence company.

Results and dividends

The results for the year are set out on page 9.

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:

Mr P A Schraeder
Mr P S Gildea
R Garrett
(Appointed 13 March 2023)
Auditor

The auditor, Craufurd Hale Audit Services Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of directors' responsibilities

The directors are responsible for preparing the annual 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 the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 period. In preparing these financial statements, the directors are required to:

 

 

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 also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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.

GUMGUM UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
On behalf of the board
Mr P S Gildea
R Garrett
Director
Director
4 March 2024
GUMGUM UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF GUMGUM UK LIMITED
- 5 -
Opinion

We have audited the financial statements of GumGum UK Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of income and retained earnings, the balance sheet, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

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 the ethical requirements that are relevant to our audit of the financial statements in the UK, including the 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

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 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.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

GUMGUM UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF GUMGUM UK LIMITED
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for 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 the directors 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 or error, and to issue an auditor's report that includes our opinion. 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 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

GUMGUM UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF GUMGUM UK LIMITED
- 7 -

Fraud and breaches of laws and regulations - ability to detect

Identifying and responding to risks of material misstatement due to fraud

 

To identify risks of material misstatement due to fraud ("fraud risks") we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

- Enquiry of management and those charged with governance around actual and potential litigation and claims.

- Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations.

- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.

- Using analytical procedures to identify any unusual or unexpected relationships.

- Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.

 

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.

 

As required by auditing standards, and taking into account our overall knowledge of the control environment, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make in appropriate accounting entries.

 

We did not identify any additional fraud risks.

 

We performed procedures including identifying journal entries to test based on risk criteria and comparing identified entries to supporting documentation. These included those posted to unrelated accounts, those posted containing key words, and those posted to an account linked to a fraud risk.

 

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

 

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience, and through discussions with the directors and other management (as required by auditing standards), and from inspection of the Company's regulatory and legal correspondence and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations.

 

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.

 

The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation) and tax legislation, and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

 

We did not identify any others where the consequences of non-compliance alone could have a material effect on amounts or disclosures in the financial statements.

 

Context of the ability of the audit to detect fraud or breaches of law or regulation

 

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 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 remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

GUMGUM UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF GUMGUM UK LIMITED
- 8 -

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.

Paul Fagan FCCA (Senior Statutory Auditor)
For and on behalf of Craufurd Hale Audit Services Limited
6 March 2024
Chartered Accountants
Statutory Auditor
C/O Craufurd Hale Group
Ground Floor, Arena Court
Crown Lane
MAIDENHEAD
SL6 8QZ
GUMGUM UK LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
Notes
£
£
Turnover
3
17,492,432
14,032,752
Cost of sales
(9,507,579)
(4,726,830)
Gross profit
7,984,853
9,305,922
Administrative expenses
(8,452,427)
(9,820,342)
Other operating income
2,137,079
1,210,984
Operating profit
4
1,669,505
696,564
Interest receivable and similar income
7
2,982
-
0
Interest payable and similar expenses
8
(106,297)
(350)
Profit before taxation
1,566,190
696,214
Tax on profit
9
(365,280)
(382,739)
Profit for the financial year
1,200,910
313,475
Retained earnings brought forward
(5,696,000)
(6,009,475)
Retained earnings carried forward
(4,495,090)
(5,696,000)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

GUMGUM UK LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
10
36,494
26,756
Investments
11
1
1
36,495
26,757
Current assets
Debtors
13
9,486,990
7,508,633
Cash at bank and in hand
3,150,738
695,784
12,637,728
8,204,417
Creditors: amounts falling due within one year
14
(13,303,762)
(10,531,998)
Net current liabilities
(666,034)
(2,327,581)
Total assets less current liabilities
(629,539)
(2,300,824)
Creditors: amounts falling due after more than one year
15
(3,865,549)
(3,395,174)
Net liabilities
(4,495,088)
(5,695,998)
Capital and reserves
Called up share capital
18
2
2
Profit and loss reserves
(4,495,090)
(5,696,000)
Total equity
(4,495,088)
(5,695,998)
The financial statements were approved by the board of directors and authorised for issue on 4 March 2024 and are signed on its behalf by:
Mr P S Gildea
R Garrett
Director
Director
Company Registration No. 09922859
GUMGUM UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2021
2
(6,009,475)
(6,009,473)
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
313,475
313,475
Balance at 31 December 2021
2
(5,696,000)
(5,695,998)
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
1,200,910
1,200,910
Balance at 31 December 2022
2
(4,495,090)
(4,495,088)
GUMGUM UK LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
2,120,535
264,795
Interest paid
(106,297)
(350)
Net cash inflow from operating activities
2,014,238
264,445
Investing activities
Purchase of tangible fixed assets
(33,397)
(13,229)
Proceeds from disposal of tangible fixed assets
756
-
0
Purchase of subsidiaries
-
0
(3,295,980)
Interest received
2,982
-
0
Net cash used in investing activities
(29,659)
(3,309,209)
Financing activities
Proceeds from borrowings
470,375
3,395,174
Net cash generated from financing activities
470,375
3,395,174
Net increase in cash and cash equivalents
2,454,954
350,410
Cash and cash equivalents at beginning of year
695,784
345,374
Cash and cash equivalents at end of year
3,150,738
695,784
GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 13 -
1
Accounting policies
Company information

GumGum UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is c/o Craufurd Hale Group, Ground Floor, Arena Court, Crown Lane, MAIDENHEAD, SL6 8QZ. The business address is First Floor, the Corner Building, 91 and 93 Farringdon Road, London EC1M 3LN.

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.

The company has taken advantage of the exemption under section 405 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

1.2
Going concern

At the balance sheet date, the company has net current liabilities and net liabilities. The directors of the parent company, GumGum, Inc have confirmed that they will not seek repayment of the loan included within creditors: amounts falling due within one year (as disclosed in notes 14 and 15) until the company is in a position to make repayments. The directors of the parent company have also confirmed that the parent company has the ability and will continue to provide financial support to the company to ensure it can meet its liabilities as and when they fall due for at least 12 months from the date of the approval of the financial statements. true

 

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources and available funding from the parent company to continue in operational existence for the foreseeable future.

 

On the above basis the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT. The fair value of consideration takes into account discounts.

 

The Company generates revenue primarily by delivering brand advertising impressions, including advertising impressions delivered via real-time bidding, and on a smaller scale, through performance based campaigns on third party websites. These revenues can be broken into two categories:

 

Direct revenue

The Company enters into agreements with advertisers to deliver managed advertising campaigns at negotiated prices with certain performance requirements over a specified period of time. The Company sets the pricing and is responsible for performance delivery. The company invoices the advertisers in arrears at the end of each month for impressions filled in that month. Revenue from direct revenue is recognised once the performance obligations have been fulfilled.

 

Platform revenue

The Company generates revenue from transactions where it enables the purchase and sale of digital advertising inventory using real time bidding. The total volume of spending between buyers and sellers in these transactions is referred to as advertising spend. The company keeps a percentage of the total advertising spend, net of related platform fee, and remits the remainder to the seller of the advertising inventory. The Company recognises revenue upon fulfilment of its performance obligations which occurs at the point in time an advert renders and is counted as a paid impression.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation.

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:

Computer equipment
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 profit or loss.

1.5
Fixed asset investments

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

As disclosed in note 11, the investment in the subsidiary company has been impaired to £1.

1.6
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.

GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.7
Cash at bank and in hand

Cash at bank and in hand represents cash held with banks.

1.8
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.

Basic financial assets

Basic financial assets, which include debtors , bank balances and amount receivable from fellow group companies are measured at transaction price including transaction costs. Financial assets are classified as receivable within one year and are not amortised.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, 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 profit or loss.

 

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 profit or loss.

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.

Basic financial liabilities

Basic financial liabilities, including creditors, and loans from fellow group companies, are initially recognised at transaction price. Financial liabilities are not amortised.

 

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 on the basis that payment is due within one year or less.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
1.9
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs.

1.10
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.

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. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

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.

1.11
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense.

1.12
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.13
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.

1.14
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.

GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
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.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Impairment of fixed asset investment

As disclosed in note 11, the directors undertook an impairment review on the fixed asset investment purchased in the prior year. In using their judgement they determined that the value of the shares purchased in the prior year were impaired and the directors therefore reduced the value of the investment in the prior year to the nominal share value of £1.

3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Advertising
17,492,432
14,032,752
2022
2021
£
£
Turnover analysed by geographical market
UK
13,202,969
10,742,223
USA
4,160,681
3,067,053
Europe
94,605
200,938
Rest of the World
34,177
22,538
17,492,432
14,032,752
2022
2021
£
£
Other revenue
Interest income
2,982
-
GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(399,927)
9,944
Depreciation of owned tangible fixed assets
19,291
15,931
Loss on disposal of tangible fixed assets
3,612
-
Operating lease charges
326,272
307,233
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
11,000
9,500
For other services
Other taxation services
630
750
All other non-audit services
7,486
7,061
8,116
7,811
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2022
2021
Number
Number
Sales and Operations
57
25
Administrative
3
-
Executive
4
3
Total
64
28

Their aggregate remuneration comprised:

2022
2021
£
£
Wages and salaries
5,575,051
2,915,443
Social security costs
755,165
327,499
Pension costs
143,755
27,524
6,473,971
3,270,466
GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
7
Interest receivable and similar income
2022
2021
£
£
Interest income
Other interest income
2,982
-
0
8
Interest payable and similar expenses
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
355
350
Interest payable to group undertakings
76,713
-
0
77,068
350
Other finance costs:
Other interest
29,229
-
0
106,297
350
9
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
54,861
-
0
Deferred tax
Origination and reversal of timing differences
310,419
382,739
Total tax charge
365,280
382,739

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
1,566,190
696,214
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
297,576
132,281
Tax effect of expenses that are not deductible in determining taxable profit
76,687
679,129
Tax effect of utilisation of tax losses not previously recognised
(315,503)
(811,375)
Permanent capital allowances in excess of depreciation
(3,899)
(35)
Deferred tax adjustments in respect of prior years
310,419
382,739
Taxation charge for the year
365,280
382,739
GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
10
Tangible fixed assets
Computer equipment
£
Cost
At 1 January 2022
116,635
Additions
33,397
Disposals
(13,671)
At 31 December 2022
136,361
Depreciation and impairment
At 1 January 2022
89,879
Depreciation charged in the year
19,291
Eliminated in respect of disposals
(9,303)
At 31 December 2022
99,867
Carrying amount
At 31 December 2022
36,494
At 31 December 2021
26,756
11
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
12
1
1

In the prior year the company purchased the entire share capital of Just Premium Limited (the subsidiary company), a company incorporated and registered in England and Wales. The assets and customer base were transferred to the company in the prior year at which point the subsidiary company became dormant. As the subsidiary company was deemed to be dormant, the directors made the decision to impair the investment in the prior year on the basis that the value of the investment in the subsidiary company was reduced to the nominal share capital value of £1. The value of the impairment included in the prior years financial statements was £3,295,979.

12
Subsidiaries

Details of the company's subsidiaries at 31 December 2022 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
JUSTPREMIUM LIMITED
The Corner Building, Farringdon Road, London, England, EC1M 3LN
Ordinary
100.00

JUSTPREMIUM UK Limited was dormant in the year and did not trade.

GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
13
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
8,122,913
4,148,890
Amounts owed by group undertakings
1,249,798
2,893,997
Other debtors
97,000
146,914
Prepayments and accrued income
17,279
8,413
9,486,990
7,198,214
Deferred tax asset (note 16)
-
0
310,419
9,486,990
7,508,633
14
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
2,664,737
1,334,735
Amounts owed to group undertakings
7,366,642
6,742,035
Corporation tax
54,861
-
0
Other taxation and social security
831,644
426,333
Other creditors
73,801
27,353
Accruals
2,312,077
2,001,542
13,303,762
10,531,998
15
Creditors: amounts falling due after more than one year
2022
2021
£
£
Other borrowings
3,865,549
3,395,174

There are no formal repayment terms in place in respect of the parent company loan. The parent company have confirmed that they do not seek repayment within 12 months of the balance sheet date.

16
Deferred taxation

The following are the major deferred tax assets recognised by the company and movements thereon:

Assets
Assets
2022
2021
Balances:
£
£
Tax losses
-
310,419
GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
16
Deferred taxation
(Continued)
- 22 -
2022
Movements in the year:
£
Asset at 1 January 2022
(310,419)
Charge to profit or loss
310,419
Liability at 31 December 2022
-

 

17
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
143,755
27,524

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.

18
Share capital
2022
2021
£
£
Ordinary share capital
Issued and fully paid
2 Ordinary shares of £1 each
2
2
19
Operating lease commitments
Lessee

Included in other debtors is a £97,200 (2021: £97,200) property lease security deposit that relates to the non-cancellable operating lease commitment.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2022
2021
£
£
Within one year
55,438
297,000
GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
20
Related party transactions
Remuneration of key management personnel

Key management personnel are regarded as the director of accounting and general manager for EMEA . The gross remuneration of key management personnel is as follows:

2022
2021
£
£
Aggregate compensation
375,760
-
0
Other information

The company has taken advantage of the exemption in FRS 102 Section 33.1A from the requirement to disclose transactions with wholly owned group companies.

21
Ultimate controlling party

GumGum UK Limited is a wholly-owned subsidiary of GumGum, Inc, a company registered in the USA. GumGum, Inc are located at 1314 7th Street, Santa Monica CA 90401, USA. Group accounts are not publicly available.

22
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
1,200,910
313,475
Adjustments for:
Taxation charged
365,280
382,739
Finance costs
106,297
350
Investment income
(2,982)
-
0
Loss on disposal of tangible fixed assets
3,612
-
Depreciation and impairment of tangible fixed assets
19,291
15,931
Other gains and losses
-
3,295,979
Movements in working capital:
Increase in debtors
(2,288,776)
(2,555,688)
Increase/(decrease) in creditors
2,716,903
(1,029,316)
Decrease in deferred income
-
(158,675)
Cash generated from operations
2,120,535
264,795
GUMGUM UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
23
Analysis of changes in net debt
1 January 2022
Cash flows
31 December 2022
£
£
£
Cash at bank and in hand
695,784
2,454,954
3,150,738
Borrowings excluding overdrafts
(3,395,174)
(470,375)
(3,865,549)
(2,699,390)
1,984,579
(714,811)
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