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Registered number: 10797543 (England and Wales)














MAGNOLIA SOFTWARE UK LIMITED

DIRECTORS' REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023


 
MAGNOLIA SOFTWARE UK LIMITED
 

 
COMPANY INFORMATION


Directors
A Kugelmann 
D M Hitchcock 
L E Trueman 




Registered number
10797543



Registered office
Birchin Court
5th Floor

19-25 Birchin Lane

London

United Kingdom

EC3V 9DU




Independent auditors
ZEDRA Corporate Reporting Services (UK) Limited






 
MAGNOLIA SOFTWARE UK LIMITED
 


CONTENTS



Page
Balance Sheet
 
1 - 2
Statement of Changes in Equity
 
3
Notes to the Financial Statements
 
4 - 10


 
MAGNOLIA SOFTWARE UK LIMITED
REGISTERED NUMBER:10797543


BALANCE SHEET
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Tangible fixed assets
 5 
7,410
9,135

  
7,410
9,135

Current assets
  

Debtors: amounts falling due within one year
 6 
883,508
862,695

Bank and cash balances
  
454,614
221,279

  
1,338,122
1,083,974

Creditors: amounts falling due within one year
 7 
(4,336,626)
(3,393,533)

Net current liabilities
  
 
 
(2,998,504)
 
 
(2,309,559)

Total assets less current liabilities
  
(2,991,094)
(2,300,424)

  

Net liabilities
  
(2,991,094)
(2,300,424)

Page 1


 
MAGNOLIA SOFTWARE UK LIMITED
REGISTERED NUMBER:10797543

    
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2023

2023
2022
£
£

Capital and reserves
  

Called up share capital 
 8 
1,000
1,000

Capital contribution reserve
 9 
190,765
131,452

Profit and loss account
  
(3,182,859)
(2,432,876)

  
(2,991,094)
(2,300,424)


The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.

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

The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.

The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 


A Kugelmann
Director

Date: 15 April 2024

The notes on pages 4 to 10 form part of these financial statements.
Page 2


 
MAGNOLIA SOFTWARE UK LIMITED
 


STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Capital contribution reserve
Profit and loss account
Total equity

£
£
£
£


At 1 January 2022
1,000
32,979
(1,549,312)
(1,515,333)


Comprehensive income for the year

Loss for the year
-
-
(883,564)
(883,564)

Share based payment
-
98,473
-
98,473



At 1 January 2023
1,000
131,452
(2,432,876)
(2,300,424)


Comprehensive income for the year

Loss for the year
-
-
(749,983)
(749,983)

Share based payment
-
59,313
-
59,313


At 31 December 2023
1,000
190,765
(3,182,859)
(2,991,094)


Page 3


 
MAGNOLIA SOFTWARE UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.Accounting policies

 
1.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 2).

The following principal accounting policies have been applied:

 
1.2

Going concern

At the balance sheet date, Magnolia Software UK Limited is in a net liability position of £2,991,094. This is primarily the result of an intercompany loan balance repayable to the parent company, Magnolia International Ltd.
The Company continues to be loss making and at present does not have sufficient capital to repay this loan, as a result, the Company has received written confirmation from its parent company that it will continue to provide financial support for a period of at least 12 months from the date of signing these financial statements. Furthermore, the directors have assessed the ability of Magnolia International Ltd to provide this support based on their cash flow forecasts and have concluded that the parent will have sufficient working capital to provide the necessary support. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements. 

 
1.3

Turnover

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:

Rendering of services

Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of turnover can be measured reliably;
it is probable that the Company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

  
1.4

Management recharges

Costs incurred in the performance of global sales contracts are recharged to the parent company. This is recognised as other operating income. 

Page 4


 
MAGNOLIA SOFTWARE UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.Accounting policies (continued)

 
1.5

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

 
1.6

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

 
1.7

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
1.8

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.

Page 5


 
MAGNOLIA SOFTWARE UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.Accounting policies (continued)

 
1.9

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Company keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

 
1.10

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

The estimated useful lives range as follows:

Computer equipment
-
3
years

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
1.11

Debtors

Short term debtors are measured at transaction price.

 
1.12

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash held on deposit by service providers is included within bank and cash balances, as these amounts are highly liquid and repayable without penalty on notice of not more than 24 hours.

Page 6


 
MAGNOLIA SOFTWARE UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.Accounting policies (continued)

  
1.13

Creditors

Short term creditors are measured at the transaction price. Amounts owed to group undertakings are in relation to intercompany loans. No interest is charged on the loans, which are repayable on demand. 


2.


Judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of financial statements requires management to make judgements, estimates and assumptions that may affect the presentation of information. Estimates and associated assumptions can be based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form a basis for making the judgements about the carrying value of assets and liabilities that are not readily apparent from other sources.
Share based payment
Certain employees of the Company participate in the parent company's Employee Stock Option Plan. FRS 102, requires that equity settled share based payments are accounted for at their fair value at the date of grant. Management used their judgement to determine the appropriate fair value at the date of grant. This involved assessing the Group's share price by reference to an EBITDA multiple of 12 and applying a lack of marketability discount of 44%. These are significant assumptions which have the ability to cause material misstatement in these financial statements.


3.


Auditors' information

The auditors' report on the financial statements for the year ended 31 December 2023 was unqualified.

The audit report was signed on 15 April 2024 by Edward Wallis ACA (Senior Statutory Auditor) on behalf of ZEDRA Corporate Reporting Services (UK) Limited.


4.


Employees

The average monthly number of employees during the year was 17 (2022 - 15).

Page 7


 
MAGNOLIA SOFTWARE UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

5.


Tangible fixed assets





Computer equipment

£



Cost or valuation


At 1 January 2023
41,534


Additions
4,372



At 31 December 2023

45,906



Depreciation


At 1 January 2023
32,399


Charge for the year on owned assets
6,097



At 31 December 2023

38,496



Net book value



At 31 December 2023
7,410



At 31 December 2022
9,135

Page 8


 
MAGNOLIA SOFTWARE UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

6.


Debtors

2023
2022
£
£


Trade debtors
841,893
778,419

Other debtors
30,523
59,831

Prepayments and accrued income
11,092
24,445

883,508
862,695



7.


Creditors: Amounts falling due within one year

2023
2022
£
£

Trade creditors
12,904
16,471

Amounts owed to group undertakings
3,026,041
2,425,564

Other taxation and social security
236,927
191,576

Other creditors
9,754
8,260

Accruals and deferred income
1,051,000
751,662

4,336,626
3,393,533



8.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



1,000 (2022 - 1,000) Ordinary shares of £1.00 each
1,000
1,000



9.


Capital contribution reserve

Certain employees of the Company along with other group employees have been granted options over the shares in the Company's parent. The options are granted at a determined fair value and 25% of the options are exercisable one year after the date of grant, vesting continues monthly thereafter for a further three years.
An expense equivalent to the fair value of the share options granted is recognised evenly over the vesting period with a corresponding amount being recognised in the capital contribution reserve.

Page 9


 
MAGNOLIA SOFTWARE UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

10.


Commitments under operating leases

At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£


Not later than one year
107,688
99,855

107,688
99,855


11.


Controlling party

Magnolia International Ltd is the parent company of the smallest group for which consolidated financial statements are drawn up of which the Company is a member. The registered office of the parent company is 2 Oslo-Strasse, Munchenstein, Switzerland, 4142.


12.


Post balance sheet events

In January 2024, the decision was made by senior management to restructure the UK business so that the UK sales region was integrated into the wider EMEA region. As a result, the Company entered into post settlement proceedings with employees and agreed to pay compensation payments totalling £41,250. This is a non-adjusting post balance sheet event. 
There were no adjusting or other non-adjusting events occurring between the end of the reporting period and the date these financial statements were approved.
 
Page 10