UserTesting Technologies Limited
Annual Report and Financial Statements
For the year ended 31 December 2023
Company Registration No. 06984058 (England and Wales)
UserTesting Technologies Limited
Company Information
Directors
Gustavo Alberelli
Peter Boyes
James Larson
Arthur Rohde III
Andrew MacMillan
(Appointed 1 February 2023)
Hal O'Donnell
(Appointed 22 August 2023)
Sameer Kumar
(Appointed 1 May 2024)
Secretary
Canute Secretaries Limited
Company number
06984058
Registered office
Unit 11
Royal Mills
Redhill Street
Manchester
M4 5BA
Auditor
Moore Kingston Smith LLP
6th Floor
9 Appold Street
London
EC2A 2AP
UserTesting Technologies Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 29
UserTesting Technologies Limited
Strategic Report
For the year ended 31 December 2023
Page 1
The directors present the strategic report for the year ended 31 December 2023.
Fair review of the business
UserTesting Technologies Limited is a wholly owned subsidiary of UserZoom Technologies Inc, a company incorporated in the United States of America.
UserTesting is a fast growing insights platform offering a wide range of capabilities, resources and expertise allowing companies to build better product, customer, employee and brand experiences. UserTesting Technologies Limited operates a software as a service model, with most of its customers signing up to a 12 month subscription.
There are three key income streams for UserTesting Technologies Limited comprising; Software, Sourcing and Services.
During the period ended December 2023, UserTesting Technologies Limited’s turnover increased by £1.3m (7%), a strong YoY increase fuelled by both existing customer expansion and new customer acquisition. The EMEA region continues to be a key focus area for the wider group with continued investment to help accelerate market growth. In 2023, there was a strategic restructure following the combination of UserTesting and UserZoom. This included the TUPE transfer of all non-sales staff from UserTesting Technologies Limited (formerly UserZoom Limited) to User Testing Limited and all sales staff moving in the opposite direction in February 2023. Following the transfer, there was a restructuring exercise that resulted in a reduction of overall headcount, albeit the average headcount for UserTesting Technologies Limited remained largely consistent year-on-year. Cash and cash equivalents held by the business increased by £2.1m driven by an increase in intercompany payables in the year. At the balance sheet date the company had net assets of £2,433,588.
Principal risks and uncertainties
The directors have overall responsibility for identifying, evaluating and managing major business risks comprising;
Price risk - driven by inflationary pressures of goods and services in the UK. The FP&A team are responsible for the review and approval of expenses in the business, thus ensuring costs are within budget.
Technological risk - ensuring all IT systems are up to date to help underpin future growth. The Group IT team constantly review the systems used and update them on a timely basis.
People risk - ensuring we are doing all we can to retain key personnel in the business. The business continues to review and benchmark both salaries and benefits to ensure we remain competitive in the market, coupled with continued investment to help develop staff to improve retention.
Key performance indicators
A comparison of KPIs in the 2023 and 2022 financial periods shown below:
| | | |
| | | |
| | | Countback of sales invoices raised during the period |
Return on capital employed (ROCE %) | | | |
The directors also regularly review both Annual Recurring Revenue (ARR) and Cash EBITDA at a Group level.
UserTesting Technologies Limited
Strategic Report (Continued)
For the year ended 31 December 2023
Page 2
Hal O'Donnell
Director
29 July 2024
UserTesting Technologies Limited
Directors' Report
For the year ended 31 December 2023
Page 3
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of providing Experience Insights Management solutions to digital teams and businesses.
On 21 August 2023 the company changed its name from UserZoom Limited to UserTesting Technologies Limited.
Results and dividends
The results for the year are set out on page 10.
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:
Gregory Hampton
(Resigned 1 January 2024)
Alfonso de la Nuez Magarzo
(Resigned 17 March 2023)
Jamie Mellalieu
(Resigned 17 March 2023)
Gustavo Alberelli
Peter Boyes
James Larson
David Murphy III
(Resigned 22 August 2023)
Arthur Rohde III
Laurie Mae Schultz
(Resigned 22 August 2023)
David Tse
(Resigned 22 August 2023)
Samuel Todd
(Resigned 25 April 2023)
Andrew MacMillan
(Appointed 1 February 2023)
Hal O'Donnell
(Appointed 22 August 2023)
Logan Gregoire-Wright
(Appointed 5 May 2023 and resigned 30 April 2024)
Daniel Smoot
(Appointed 1 February 2023 and resigned 22 August 2023)
Sameer Kumar
(Appointed 1 May 2024)
Auditor
In accordance with the company's articles, a resolution proposing that Moore Kingston Smith LLP be reappointed as auditor of the company will be put at a General Meeting.
UserTesting Technologies Limited
Directors' Report (Continued)
For the year ended 31 December 2023
Page 4
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.
On behalf of the board
Hal O'Donnell
Director
29 July 2024
UserTesting Technologies Limited
Directors' Responsibilities Statement
For the year ended 31 December 2023
Page 5
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:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
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.
UserTesting Technologies Limited
Independent Auditor's Report
To the Members of UserTesting Technologies Limited
Page 6
Opinion
We have audited the financial statements of UserTesting Technologies Limited (the 'company') for the year ended 31 December 2023 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, 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 FRS 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:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
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 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.
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.
UserTesting Technologies Limited
Independent Auditor's Report (Continued)
To the Members of UserTesting Technologies Limited
Page 7
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
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:
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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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.
UserTesting Technologies Limited
Independent Auditor's Report (Continued)
To the Members of UserTesting Technologies Limited
Page 8
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.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
UserTesting Technologies Limited
Independent Auditor's Report (Continued)
To the Members of UserTesting Technologies Limited
Page 9
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
This 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.
Thomas Moore
Senior Statutory Auditor
for and on behalf of Moore Kingston Smith LLP
30 July 2024
Chartered Accountants
Statutory Auditor
6th Floor
9 Appold Street
London
EC2A 2AP
UserTesting Technologies Limited
Statement of Comprehensive Income
For the year ended 31 December 2023
Page 10
2023
2022
Notes
£
£
Turnover
3
18,830,516
17,525,528
Cost of sales
(1,289,066)
(2,123,076)
Gross profit
17,541,450
15,402,452
Administrative expenses
(17,150,244)
(14,948,987)
Operating profit
4
391,206
453,465
Interest receivable and similar income
8
462
43
Profit before taxation
391,668
453,508
Tax on profit
9
(156,117)
(275,634)
Profit for the financial year
235,551
177,874
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
UserTesting Technologies Limited
Balance Sheet
As at 31 December 2023
Page 11
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
60,440
105,809
Current assets
Debtors
12
28,587,239
14,132,644
Cash at bank and in hand
4,116,580
2,019,256
32,703,819
16,151,900
Creditors: amounts falling due within one year
13
(30,230,860)
(14,251,708)
Net current assets
2,472,959
1,900,192
Total assets less current liabilities
2,533,399
2,006,001
Creditors: amounts falling due after more than one year
14
(59,740)
(4,660)
Provisions for liabilities
Provisions
15
(40,071)
(21,660)
(40,071)
(21,660)
Net assets
2,433,588
1,979,681
Capital and reserves
Called up share capital
18
50,000
50,000
Profit and loss reserves
2,383,588
1,929,681
Total equity
2,433,588
1,979,681
The financial statements were approved by the board of directors and authorised for issue on 29 July 2024 and are signed on its behalf by:
Hal O'Donnell
Director
Company Registration No. 06984058
UserTesting Technologies Limited
Statement of Changes in Equity
For the year ended 31 December 2023
Page 12
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
50,000
218,078
268,078
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
177,874
177,874
Credit to equity for equity settled share-based payments
17
-
1,533,729
1,533,729
Balance at 31 December 2022
50,000
1,929,681
1,979,681
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
235,551
235,551
Credit to equity for equity settled share-based payments
17
-
218,356
218,356
Balance at 31 December 2023
50,000
2,383,588
2,433,588
UserTesting Technologies Limited
Statement of Cash Flows
For the year ended 31 December 2023
Page 13
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
23
2,373,246
(5,071,958)
Income taxes paid
(276,384)
(77,289)
Net cash inflow/(outflow) from operating activities
2,096,862
(5,149,247)
Investing activities
Purchase of tangible fixed assets
-
(88,592)
Interest received
462
43
Net cash generated from/(used in) investing activities
462
(88,549)
Net increase/(decrease) in cash and cash equivalents
2,097,324
(5,237,796)
Cash and cash equivalents at beginning of year
2,019,256
7,257,052
Cash and cash equivalents at end of year
4,116,580
2,019,256
UserTesting Technologies Limited
Notes to the Financial Statements
For the year ended 31 December 2023
Page 14
1
Accounting policies
Company information
UserTesting Technologies Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 11, Royal Mills, Redhill Street, Manchester, United Kingdom, M4 5BA.
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.
1.2
Going concern
The financial statements are prepared on a going concern basis which assumes the company will continue in operational existence for the foreseeable future. The company made a profit for the year ended 31 December 2023 of £true235,551 (2022: £177,874), and had net assets of £2,433,588 (2022: £1,979,681).
In addition, the company is supported by its ultimate parent company, UzerZoom Technologies Inc, which has confirmed in writing that it will continue to provide financial support to the company as required, in order to enable it to continue to trade and meet its liabilities as they fall due for at least twelve months from the date of approval of the financial statements. The parent company has also confirmed that it will not call in amounts owed to it by the company, or its fellow group companies, until the company can repay these amounts without compromising its ability to trade and meet its liabilities as they fall due.
Therefore, at 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. 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 services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 15
Software and related services revenue consist of revenue from subscription fees earned from customers accessing the company’s cloud platform service and the associated purchase of sourcing credits. Customers are not able to take possession of the software or transfer hosting to a third party. Subscription revenue is a stand-ready obligation to provide a series of distinct software-as-a-service periods that are substantially the same and have the same pattern of transfer of control to the customer, and as such is accounted for as a series. The company recognises software-as-a-service revenue ratably over the subscription term beginning on the date the service is made available to the customer (“over time”). Revenues from sourcing credits are recognised upon completion of the participant survey (“point in time”).
Professional services revenue consists of revenue from stand-alone projects. Revenue from milestone-based professional services projects are recognised over time using hours to measure satisfaction of the performance obligation. Revenue from professional services projects containing a specific deliverable are recognised upon transfer of the deliverable to the customer.
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 profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible 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.
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 16
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 at bank and in hand
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.
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 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.
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 17
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, 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. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 18
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.
1.10
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 19
1.13
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
1.14
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.
1.15
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.
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 20
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Valuation of intangibles and impairment
The company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. The company has considered relevant impacts to its estimates related to the impairment assessment of goodwill, intangible assets and other long-lived assets. The company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of approval of these financial statements. These estimates may change as new events occur and additional information is obtained. On an ongoing basis, the company evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.
Deferred commissions
Sales commission paid to employees, being an incremental cost of obtaining a contract, is recognised as an asset and amortised over the period of benefit, being three years. The period of benefit was estimated by considering factors such as; the contractual term, historical customer attrition rates, the useful life of the company's technology, and the impact of competition in its industry to name a few. A weighted average is then applied to each of these metrics to calculate a period benefit of three years.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Software and related services
11,913,254
10,739,282
Professional services
6,528,434
5,563,153
Management fees
388,828
1,223,093
18,830,516
17,525,528
2023
2022
£
£
Other significant revenue
Interest income
462
43
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 21
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Exchange losses
185,770
98,377
Fees payable to the company's auditor for the audit of the company's financial statements
54,850
35,000
Depreciation of owned tangible fixed assets
45,369
38,020
Amortisation of intangible assets
-
458,117
Share-based payments
218,356
1,533,729
Operating lease charges
256,007
224,149
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
41,500
35,000
Underaccrual of prior year fees
13,350
-
For other services
Taxation compliance services
3,250
3,000
All other non-audit services
3,750
3,500
7,000
6,500
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 22
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
76
80
Their aggregate remuneration comprised:
2023
2022
Restated
£
£
Wages and salaries
9,132,924
10,035,498
Social security costs
1,162,795
1,993,831
Pension costs
242,549
178,607
10,538,268
12,207,936
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
175,628
451,176
Company pension contributions to defined contribution schemes
1,382
10,984
Compensation for loss of office
184,252
361,262
462,160
The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 1 (2022 - 1).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
175,628
451,176
Company pension contributions to defined contribution schemes
1,382
10,984
Compensation for loss of office
184,252
-
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 23
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
462
43
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
462
43
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
156,117
303,644
Adjustments in respect of prior periods
(28,010)
Total current tax
156,117
275,634
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:
2023
2022
£
£
Profit before taxation
391,668
453,508
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
92,120
86,167
Tax effect of expenses that are not deductible in determining taxable profit
2,016
1,003
Permanent capital allowances in excess of depreciation
(47)
(21,882)
Depreciation on assets not qualifying for tax allowances
10,671
7,224
Amortisation on assets not qualifying for tax allowances
87,042
Under/(over) provided in prior years
(28,010)
Share scheme adjustments
51,357
144,090
Taxation charge for the year
156,117
275,634
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 24
10
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2023 and 31 December 2023
2,290,588
Amortisation and impairment
At 1 January 2023 and 31 December 2023
2,290,588
Carrying amount
At 31 December 2023
At 31 December 2022
11
Tangible fixed assets
Fixtures and fittings
Computers
Total
£
£
£
Cost
At 1 January 2023 and 31 December 2023
50,143
120,885
171,028
Depreciation and impairment
At 1 January 2023
28,695
36,524
65,219
Depreciation charged in the year
5,074
40,295
45,369
At 31 December 2023
33,769
76,819
110,588
Carrying amount
At 31 December 2023
16,374
44,066
60,440
At 31 December 2022
21,448
84,361
105,809
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
11,442,758
2,957,109
Amounts owed by group undertakings
13,958,821
8,420,095
Other debtors
1,455,680
1,588,078
Prepayments and accrued income
201,352
135,732
27,058,611
13,101,014
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
12
Debtors
(Continued)
Page 25
2023
2022
Amounts falling due after more than one year:
£
£
Other debtors
1,528,628
1,031,630
Total debtors
28,587,239
14,132,644
13
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
3,388
192,789
Amounts owed to group undertakings
10,394,976
2,345,275
Corporation tax
154,777
275,634
Other taxation and social security
1,901,441
844,778
Other creditors
632,076
1,097,128
Accruals and deferred income
17,144,202
9,496,104
30,230,860
14,251,708
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Deferred income
59,740
4,660
15
Provisions for liabilities
2023
2022
£
£
Dilapidations provision
40,071
21,660
Movements on provisions:
Dilapidations provision
£
At 1 January 2023
21,660
Additional provisions in the year
18,411
At 31 December 2023
40,071
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 26
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
242,549
178,607
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.
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 27
17
Share-based payment transactions
During the prior year the incentive scheme in place crystallised on an exit event. 1,566,753 options were exercised and 1,624,119 were cancelled on the exit event at a weighted average exercise price of £0.55, leaving none outstanding at 31 December 2022. This included 544,090 options held by the directors at a weighted average exercise price of £0.25.
A new incentive scheme was then put in place with both time-vesting and performance-vesting conditions. This scheme is summarised below.
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 January 2023
2,260,500
0.03
Granted
1,334,500
2,260,500
0.03
0.03
Forfeited
(38,484)
0.03
Transferred
(1,642,985)
0.03
Outstanding at 31 December 2023
1,913,531
2,260,500
0.03
0.03
Exercisable at 31 December 2023
At the balance sheet date the directors held no share options (2022: 500,000).
Time-based units vest in equal instalments annually on the anniversary of the option over four years. The performance-based units also vest in equal instalments annually on the anniversary of the option over four years, but are dependent on achieving certain performance criteria.
The weighted average fair value of options granted during the year was £1.25 (2022: £1.94). Fair value was measured using the Black-Scholes option pricing model.
Inputs were as follows:
2023
2022
Weighted average share price
1.25
1.94
Weighted average exercise price
0.03
0.03
Expected volatility (%)
76.00
71.00
Expected life
4.00
4.00
Risk free rate (%)
4.60
2.70
During the year the company recognised total share-based payment expenses of £218,356 (2022: £1,533,729) which related to equity settled share based payment transactions, of which £45,486 related to options held by directors of the company (2022: £198,693).
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 28
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
50,000
50,000
50,000
50,000
19
Operating lease commitments
Lessee
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:
2023
2022
£
£
Within one year
59,264
168,100
Between two and five years
59,264
59,264
227,364
20
Charges
The company's bankers hold a fixed and floating charge over one of the bank accounts of the company. At the balance sheet date the potential liability to them was £nil (2022: £nil).
21
Related party transactions
The company has taken advantage of the exemption available in accordance with FRS 102 section 33 'Related Party Disclosures' not to disclose transactions entered into between two or more members of the group, as the company is a wholly owned subsidiary undertaking of the group with which it is party to the transactions.
22
Ultimate controlling party
The immediate parent company is UserZoom Technologies Inc, a company incorporated in the United States of America. The registered office is 1484 Pollard Rd #271, Los Gatos, CA, 95032-1031.
There is no single controlling party.
UserTesting Technologies Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 29
23
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit for the year after tax
235,551
177,874
Adjustments for:
Taxation charged
155,527
275,634
Investment income
(462)
(43)
Amortisation and impairment of intangible assets
-
458,117
Depreciation and impairment of tangible fixed assets
45,369
38,020
(Gain)/loss on sale of investments
-
226,000
Equity settled share based payment expense
218,356
1,533,729
Increase in provisions
18,411
21,660
Movements in working capital:
Increase in debtors
(14,454,595)
(3,237,146)
Increase/(decrease) in creditors
16,155,089
(4,565,803)
Cash generated from/(absorbed by) operations
2,373,246
(5,071,958)
24
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
2,019,256
2,097,324
4,116,580
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