REGISTERED NUMBER: |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
MENDIP MEDIA GROUP LTD. |
REGISTERED NUMBER: |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
MENDIP MEDIA GROUP LTD. |
MENDIP MEDIA GROUP LTD. (REGISTERED NUMBER: 02784605) |
CONTENTS OF THE FINANCIAL STATEMENTS |
for the Year Ended 31 December 2023 |
Page |
Company Information | 1 |
Balance Sheet | 2 |
Notes to the Financial Statements | 3 |
MENDIP MEDIA GROUP LTD. |
COMPANY INFORMATION |
for the Year Ended 31 December 2023 |
DIRECTORS: |
SECRETARY: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Statutory Auditors |
Herschel House |
58 Herschel Street |
Slough |
Berkshire |
SL1 1PG |
MENDIP MEDIA GROUP LTD. (REGISTERED NUMBER: 02784605) |
BALANCE SHEET |
31 December 2023 |
31.12.23 | 31.12.22 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 4 |
Tangible assets | 5 |
CURRENT ASSETS |
Debtors | 6 |
Cash at bank and in hand |
CREDITORS |
Amounts falling due within one year | 7 |
NET CURRENT LIABILITIES | ( |
) | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
( |
) |
( |
) |
CAPITAL AND RESERVES |
Called up share capital | 9 |
Capital contribution reserve | 10 |
Retained earnings | 10 | ( |
) | ( |
) |
SHAREHOLDERS' FUNDS | ( |
) | ( |
) |
In accordance with Section 444 of the Companies Act 2006, the Income Statement has not been delivered. |
The financial statements were approved by the Board of Directors and authorised for issue on |
MENDIP MEDIA GROUP LTD. (REGISTERED NUMBER: 02784605) |
NOTES TO THE FINANCIAL STATEMENTS |
for the Year Ended 31 December 2023 |
1. | STATUTORY INFORMATION |
Mendip Media Group Ltd. is a |
The trading address of the company is Aspen House, Pynes Hill, Exeter, EX2 5AY. |
MENDIP MEDIA GROUP LTD. (REGISTERED NUMBER: 02784605) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2023 |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
The financial statements have been prepared on the going concern basis in light of the fact that the parent company, Appen Limited has confirmed to provide financial support to Mendip Media Group Ltd. for at least 12 months and 1 day following the signing of the audit report. |
When making their going concern assessment, the directors have identified that a material uncertainty exists in respect of the parent company's ability to support the company. This is described within the Appen Limited financial statements for the period to 31 December 2023 which are prepared in Australian Dollars, as follows: |
"The Group incurred a loss after tax for the year ended 31 December 2023 of $118,079,000 (31 December 2022 $239,068,000). The Group has net assets of $92,797,000 (31 December 2022 $147,986,000) and net current assets of $59,095,000 (31 December 2022 $59,655,000). |
Cash and cash equivalents at 31 December 2023 were $32,152,000 (31 December 2022 $23,429,000). Operating cash outflow for the year was $22,939,000 (31 December 2022 inflow $18,228,000). Investing cash outflow (including product development costs) for the year was $20,895,000 (31 December 2022 $32,120,000). Financing cash inflow for the year was $52,674,000 (31 December 2022 outflow $9,527,000). |
Following the expiry of the $A10,000,000 debt facility on 3 January 2024, there are no debt facilities in place. |
On 20 January 2024 Appen received notice from a material customer, Google LLC, that as part of a strategic review process it will be terminating its global inbound services contract with Appen, resulting in the cessation of all projects with Appen by 19 March 2024 (refer Note 32.). Revenue recognised for the year ended 31 December 2023 relating to Google LLC was $82,800,000 at 26% gross margin (31 December 2022 $102,700,000 at 27% gross margin). Gross margin refers to revenue less crowd expenses. |
In response, Appen announced on 12 February 2024 it will implement measures to achieve $13.5 million in annualised cost savings. The cost initiatives represent direct and indirect costs associated with the delivery of Google LLC projects. Appen expects to complete 80% of the cost initiatives by March 2024 and the remainder by June 2024. |
Management have prepared 24-month cashflow forecasts underpinning the basis of preparation as a going concern. The forecasts are based on current available information and subject to certain risks and uncertainties which may cause results to differ from those expected, including the following: |
- Achieving revenue forecasts. A large proportion of the Group’s revenue has historically been delivered from the top five customers, being large global technology companies. During the year ended 31 December 2023, approximately 74.8% (2022: 81.9%) of the Group’s revenue was derived from sales to the top five customers. |
Customers can reprioritise spend away from areas of innovation at short notice or reduce/increase spend based on specific short term business goals and strategies. In addition, a substantial part of existing revenue is generated from individual case by case projects rather than long-term contracts, albeit some large projects have been running over multiple years. |
- Achieving additional cost out measures that were announced on 12 February 2024 at the level and timeframe forecast. This risk is assessed as low given cost out measures have been identified and recent proven track record of reducing costs. |
The going concern basis presumes that the Group will continue to fulfil all obligations as and when they fall due for the foreseeable future and that the realisation of assets and settlement of liabilities will occur in the normal course of business. |
MENDIP MEDIA GROUP LTD. (REGISTERED NUMBER: 02784605) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2023 |
The risks to the Board approved cashflow forecasts noted above and the cash demands of the business at certain points through the 24 month cashflow forecast period represents a material uncertainty as to whether the Group would continue as a going concern. |
The directors of Appen consider that the Group will continue to fulfil all obligations as and when they fall due for the foreseeable future and accordingly consider that the Group’s financial statements should be prepared on a going concern basis. Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern." |
Related party exemption |
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group. |
Turnover |
Turnover represents the total invoice value, excluding value added tax, of sales made during the year and derives from the provision of services falling within the company's ordinary activities, based on the completion status. |
Intangible assets |
Costs in relation to other intangibles are capitalised as an asset and amortised on a straight line basis over the period of their expected benefit being three to seven years. |
Development costs are capitalised when the company can demonstrate all of the following: the technical feasibility of completing the asset so that it is available for use or sale; the intention to complete the asset and use or sell it; the ability to use or sell it; how the asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development and to use or sell the asset; and the ability to measure reliably the expenditure attributable to the asset during its development. |
Off the shelf databases are internally generated intangibles and are capitalised only if they meet all of the criteria stated in the preceding paragraph. Costs are capitalised at the direct costs incurred and amortised on a straight line basis over the period of their expected benefit being their finite life of seven years. Amortisation starts at the time that the database is available for use or sale to external customers. |
Tangible fixed assets |
Tangible assets are initially measured at cost. After initial recognition, tangible assets are measured at cost less any accumulated depreciation and any accumulated impairment losses. |
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life. |
Plant and machinery etc - between 3 and 10 years straight line |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
MENDIP MEDIA GROUP LTD. (REGISTERED NUMBER: 02784605) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2023 |
2. | ACCOUNTING POLICIES - continued |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
Hire purchase and leasing commitments |
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Pension costs and other post-retirement benefits |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
Financial instruments |
Basic Financial Instruments as covered by Section 11 of FRS102 are measured at amortised cost. The company does not have any Other Financial Instruments as covered by Section 12 of FRS102. |
Share based payments |
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. |
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. |
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. |
When a share based payment is exercised or cancelled (or in the case of Restricted Stock Units, when vested), a reanalysis is made between the share based payments reserve and retained earnings. |
The share based payment expense is recognised on a reasonable allocation of the group expense. |
3. | EMPLOYEES AND DIRECTORS |
The average number of employees during the year was |
MENDIP MEDIA GROUP LTD. (REGISTERED NUMBER: 02784605) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2023 |
4. | INTANGIBLE FIXED ASSETS |
Other |
intangible |
assets |
£ |
COST |
At 1 January 2023 |
and 31 December 2023 |
AMORTISATION |
At 1 January 2023 |
and 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
5. | TANGIBLE FIXED ASSETS |
Plant and |
machinery |
etc |
£ |
COST |
At 1 January 2023 |
Additions |
Disposals | ( |
) |
At 31 December 2023 |
DEPRECIATION |
At 1 January 2023 |
Charge for year |
Eliminated on disposal | ( |
) |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
6. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.12.23 | 31.12.22 |
£ | £ |
Trade debtors |
Other debtors |
MENDIP MEDIA GROUP LTD. (REGISTERED NUMBER: 02784605) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2023 |
7. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.12.23 | 31.12.22 |
£ | £ |
Trade creditors |
Amounts owed to group undertakings |
Taxation and social security |
Other creditors & accruals |
8. | LEASING AGREEMENTS |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
31.12.23 | 31.12.22 |
£ | £ |
Within one year |
Between one and five years |
In more than five years |
9. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 31.12.23 | 31.12.22 |
value: | £ | £ |
Ordinary | £1 | 2 | 2 |
10. | RESERVES |
Capital |
Retained | contribution |
earnings | reserve | Totals |
£ | £ | £ |
At 1 January 2023 | (2,618,800 | ) | 10,996 | (2,607,804 | ) |
Deficit for the year | (1,277,672 | ) | (1,277,672 | ) |
Reanalysis upon exercise / |
expiry | 9,432 | (9,432 | ) | - |
At 31 December 2023 | (3,887,040 | ) | 1,564 | (3,885,476 | ) |
The amount of £9,432 is reanalysed from capital contribution reserve to retained earnings for the exercise of the fully vested Restricted Stock Units during the year. |
11. | DISCLOSURE UNDER SECTION 444(5B) OF THE COMPANIES ACT 2006 |
The Report of the Auditors was unqualified. |
for and on behalf of |
MENDIP MEDIA GROUP LTD. (REGISTERED NUMBER: 02784605) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2023 |
11. | DISCLOSURE UNDER SECTION 444(5B) OF THE COMPANIES ACT 2006 - continued |
As stated above, the report of the auditors was unqualified. It did however contain the following modification:- |
"Material uncertainty related to going concern |
We draw attention to Note 2 in the financial statements. The conditions disclosed in Note 2, indicate a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern and, therefore whether it will realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the financial statements. Our opinion is not modified in respect of this matter. |
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report." |
We would like to draw your attention to the following statement contained within our audit report as included within the full financial statements:- |
"Use of our report |
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 a Report of the Auditors 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." |
12. | ULTIMATE PARENT COMPANY |
The ultimate parent company is Appen Limited, a public listed company incorporated in Australia. Its registered office is Level 6, 9 Help Street, Chatswood, NSW 2067, Australia. The consolidated accounts can be found on https://appen.com/annual-reports/. |
13. | ULTIMATE CONTROLLING PARTY |
There is no ultimate controlling party. |
14. | SHARE BASED PAYMENTS |
Mendip Media Group Ltd. operates an equity settled share based payment scheme for employees. The vesting period is split over 3 years. The rights to conversions lapse on cessation of employment before the vesting date. |
The following table summarises the Restricted Stock Units with employees in the period: |
Item | Number |
Outstanding at the beginning of the period | 3,128 |
Granted during the year | - |
Forfeited/cancelled during the period | - |
Exercised during the period | (1,311 | ) |
Expired during the period | - |
Outstanding at the end of the period | 1,817 |
Exercisable at the end of the period | - |
The share based payment expense is recognised on a reasonable allocation of the group expense. The charge recognised in the year was £nil (2022: £4,957). |
Further details over how the fair value of the goods or services received are measured are given in note 2 to the financial statements. |