1. Accounting policies
Basis of measurement and preparation
These financial statements have been prepared in accordance with the provisions of Section 1A (Small Entities) of Financial Reporting Standard 102
Turnover policy
Revenue represents the amount of consideration to which the Company expects to be entitled in exchange for
transferring the promised goods or services to the customer, excluding amounts collected on behalf of third parties
(for example, value-added taxes); the transaction price. The Company includes in the transaction price an amount of
variable consideration as a result of rebates/discounts only to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the
variable consideration is subsequently resolved. Estimations for rebates and discounts are based on the Company's
experience with similar contracts and forecasted sales to the customer.The Company recognises revenue when the parties have approved the contract (in writing, orally or in accordance
with other customary business practices ) and are committed to perform their respective obligations, the Company
can identify each party's rights and the payment terms for the goods or services to be transferred, the contract has
commercial substance (i.e. the risk, timing or amount of the Company's future cash flows is expected to change as a
result of the contract), it is probable that the Company will collect the consideration to which it will be entitled in
exchange for the goods or services that will be transferred to the customer and when specific criteria have been met
for each of the Company's contracts with customers.
The Company bases its estimates on historical results, taking into consideration the type of customer, the type of
transaction and the specifics of each arrangement. In evaluating whether collectability of an amount of consideration
is probable, the Company considers only the customer's ability and intention to pay that amount of consideration
when it is due.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any
resulting increases or decreases in estimates are reflected in the statement of profit or loss and other comprehensive
income in the period in which the circumstances that give rise to the revision become known by Management.
Other accounting policies
Finance income
Interest income is recognised on a timeproportion basis using the effective method.
Finance costs
Interest expense and other borrowing costs are charged to profit or loss as incurred.
Foreign currency translation
Functional and presentation currency
Items included in the Company's financial statements are measured using the currency of the primary
economic environment in which the entity operates 'the functional currency'. The financial statements are
presented in British Pounds GB£, which is the Company's functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at yearend exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Tax
Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the taxation
authorities, using the tax rates and laws that have been enacted, or substantively enacted, by the reporting date.
Financial assets Classification
The Company classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value either through OCI or through profit or loss, and
those to be measured at amortised cost.
The classification and subsequent measurement of debt financial assets depends on: ithe Company's business
model for managing the related assets portfolio and ii the cash flow characteristics of the asset. On initial
recognition, the Company may irrevocably designate a debt financial asset that otherwise meets the requirements to
be measured at amortized cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.
For investments in equity instruments that are not held for trading, the classification will depend on whether the
Company has made an irrevocable election at the time of initial recognition to account for the equity investment at
fair value through other comprehensive income FVOCI. This election is made on an investmentbyinvestment
basis.
All other financial assets are classified as measured at FVTPL.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in
equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair value through other
comprehensive income FVOCI.
Financial assets Recognition and derecognition
All purchases and sales of financial assets that require delivery within the time frame established by regulation or
market convention ''regular way'' purchases and sales are recorded at trade date, which is the date when the
Company commits to deliver a financial instrument. All other purchases and sales are recognised when the entity
becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or
have been transferred and the Company has transferred substantially all the risks and rewards of ownership.
Financial assets Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss FVTPL, transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at
initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if
there is a difference between fair value and transaction price which can be evidenced by other observable current
market transactions in the same instrument or by a valuation technique whose inputs include only data from
observable markets.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash
flows are solely payment of principal and interest.
Financial assets impairment credit loss allowance for ECL
The Company assesses on a forwardlooking basis the ECL for debt instruments including loans measured at
amortised cost and FVOCI and exposure arising from loan commitments and financial guarantee contracts. The
Company measures ECL and recognises credit loss allowance at each reporting date. The measurement of ECL
reflects: i an unbiased and probability weighted amount that is determined by evaluating a range of possible
outcomes, ii time value of money and iii all reasonable and supportable information that is available without
undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of
future conditions.
The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of
the loss is recognised in the statement of profit or loss and other comprehensive income within ''net impairment
losses on financial and contract assets. Subsequent recoveries of amounts for which loss allowance was previously
recognised are credited against the same line item.
Debt instruments carried at amortised cost are presented in the statement of financial position net of the allowance
for ECL. For loan commitments and financial guarantee contracts, a separate provision for ECL is recognised as a
liability in the statement of financial position.
For debt instruments at FVOCI, an allowance for ECL is recognised in profit or loss and it affects fair value gains or
losses recognised in OCI rather than the carrying amount of those instruments.
The impairment methodology applied by the Company for calculating expected credit losses depends on the type of
financial asset assessed for impairment. Specifically:
For trade receivables and contract assets, including trade receivables and contract assets with a significant financing
component, and lease receivables the Company applies the simplified approach permitted by IFRS 9, which requires
lifetime expected credit losses to be recognised from initial recognition of the financial assets.
For all other financial instruments that are subject to impairment under IFRS 9, the Company applies general
approach three stage model for impairment. The Company applies a three stage model for impairment, based on
changes in credit quality since initial recognition. A financial instrument that is not creditimpaired on initial
recognition is classified in Stage 1.
Additionally the Company has decided to use the low credit risk assessment exemption for investment grade financial
assets. Refer to note 6, Credit risk section for a description of how the Company determines low credit risk financial
assets.
Financial assets Reclassification
Financial instruments are reclassified only when the business model for managing those assets changes. The
reclassification has a prospective effect and takes place from the start of the first reporting period following the
change.
Financial assets writeoff
Financial assets are writtenoff, in whole or in part, when the Company exhausted all practical recovery efforts and
has concluded that there is no reasonable expectation of recovery. The writeoff represents a derecognition event.
The Company may writeoff financial assets that are still subject to enforcement activity when the Company seeks to
recover amounts that are contractually due, however, there is no reasonable expectation of recovery.
Financial assets modification
The Company sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The
Company assesses whether the modification of contractual cash flows is substantial considering, among other, the
following factors: any new contractual terms that substantially affect the risk profile of the asset e.g. profit share or
equitybased return, significant change in interest rate, change in the currency denomination, new collateral or
credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a
loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and the
Company derecognises the original financial asset and recognises a new asset at its fair value. The date of
renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes,
including determining whether a SICR has occurred. The Company also assesses whether the new loan or debt
instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised
and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the
difference is attributed to a capital transaction with owners.
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the
originally agreed payments, the Company compares the original and revised expected cash flows to assets whether
the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks
and rewards do not change, the modified asset is not substantially different from the original asset and the
modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting
the modified contractual cash flows by the original effective interest rate, and recognises a modification gain or loss
in profit or loss.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise cash at bank. Cash and cash
equivalents are carried at amortised cost because: i they are held for collection of contractual cash flows and those
cash flows represent SPPI, and ii they are not designated at FVTPL.
Classification as financial assets at amortised cost
These amounts generally arise from transactions outside the usual operating activities of the Company. They are held
with the objective to collect their contractual cash flows and their cash flows represent solely payments of principal
and interest. Accordingly, these are measured at amortised cost using the effective interest method, less provision
for impairment. Financial assets at amortised cost are classified as current assets if they are due within one year or
less or in the normal operating cycle of the business if longer. If not, they are presented as noncurrent assets.
Classification as trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. If collection is expected in one year or less or in the normal operating cycle of the business if longer, they
are classified as current assets. If not, they are presented as noncurrent assets. Trade receivables are recognised
initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss
allowance.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain
significant financing components, in which case they are recognised at fair value. The Company holds the trade
receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at
amortised cost using the effective interest method.
Trade receivables are also subject to the impairment requirements of IFRS 9. The Company applies the IFRS 9
simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables. See note 6, Credit risk section.
Classification as trade receivables continued
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with the Company, and a failure to make contractual payments for a period of greater than 180 days past due.
Trade payables
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the
effective interest rate method.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position
if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention
to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case
with master netting agreements, and the related assets and liabilities are presented gross in the statement of
financial position.
Share capital
Ordinary shares are classified as equity.
Comparatives
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.