Azerion UK Limited
Annual Report and Financial Statements
For the year ended 31 December 2023
Company registration number 06080497 (England and Wales)
Azerion UK Limited
Company Information
Directors
M Newcomb
U Akpinar
J A M Merks
S R V Moesman
Company number
06080497
Registered office
Floor 3
The Crane Building
22 Lavington Street
London
SE1 0NZ
Auditor
Moore Kingston Smith LLP
Charlotte Building
17 Gresse Street
London
W1T 1QL
Azerion UK Limited
Contents
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 8
Income statement
9
Statement of financial position
10
Statement of changes in equity
11
Notes to the financial statements
12 - 30
Azerion UK 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.

 

Azerion UK is a brand advertising and technology business, which creates and commercialises high-impact, non-intrusive brand advertising formats. Azerion UK specializes in cross-device, rich-media digital advertising, partners with over 250 publishers worldwide, and delivers campaigns to more than 1,000 premium websites globally.

 

Business Review

In 2023 business has continued to grow as part of its integration into the Azerion Group, including the integration of new assets acquired from the acquisition of Hybrid Theory Global Limited and Hawk Platform Limited. This has benefited the company from having access to an expanded client base and new group product initiatives.

 

Principal risks and uncertainties

The most immediate risk since 2023 has been the increased cost of living resulting in several enterprises reducing their global advertising budgets. This has impacted on brand budgets, which is turn is resulting in agencies putting more pressure to reduce CPM pricing.

 

Through acquisitions made by the parent company, Azerion UK continues to mitigate these risks through being able to offer new services outside of its core business activities. New assets acquired by the group in 2023 has enabled Azerion UK to expand its product offering to brands and agencies, and the company expands into new product offerings like CTV, audio, and audience data segments to diversify the revenue base and mitigate against downward CPM trends on its traditional business offering.

Key performance indicators

A number of Key Performance indicators are measured and reviewed every month, to provide clear measurement and management tools. These include:

On behalf of the board

M Newcomb
Director
25 September 2024
Azerion UK Limited
Directors' Report
For the year ended 31 December 2023
Page 2

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 software publishing and advertising.

Results and dividends

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

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

No preference 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:

M Hine
(Resigned 18 July 2023)
M Newcomb
U Akpinar
J A M Merks
S R V Moesman
Auditor

The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

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.

Energy and carbon report

The company is not large for statutory purposes and hence is not required to report on its emissions, energy consumption or energy efficiency activities.

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
M Newcomb
Director
25 September 2024
Azerion UK Limited
Directors' Responsibilities Statement
For the year ended 31 December 2023
Page 3

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Azerion UK Limited
Independent Auditor's Report
To the Members of Azerion UK Limited
Page 4
Opinion

We have audited the financial statements of Azerion UK Limited (the 'company') for the year ended 31 December 2023 which comprise the Income Statement, the Statement of Financial Position, the Statement of Changes in Equity 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 101 'Reduced Disclosure Framework' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Azerion UK Limited
Independent Auditor's Report (Continued)
To the Members of Azerion UK Limited
Page 5

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

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

 

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

 

Responsibilities of directors

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Azerion UK Limited
Independent Auditor's Report (Continued)
To the Members of Azerion UK Limited
Page 6
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:

 

 

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.

Azerion UK Limited
Independent Auditor's Report (Continued)
To the Members of Azerion UK Limited
Page 7

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:

 

 

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.

Azerion UK Limited
Independent Auditor's Report (Continued)
To the Members of Azerion UK Limited
Page 8

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 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.

Jamie Seaford (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP
25 September 2024
Chartered Accountants
Statutory Auditor
Charlotte Building
17 Gresse Street
London
W1T 1QL
Azerion UK Limited
Income Statement
For the year ended 31 December 2023
Page 9
2023
2022
Notes
£
£
Revenue
4
16,362,984
11,497,580
Cost of sales
(7,663,847)
(5,412,275)
Gross profit
8,699,137
6,085,305
Administrative expenses
(10,588,602)
(6,849,110)
Other operating income
1,342,901
1,350,485
Operating (loss)/profit
5
(546,564)
586,680
Finance costs
9
(468,507)
(165,348)
(Loss)/profit before taxation
(1,015,071)
421,332
Tax on (loss)/profit
10
101,147
(51,000)
(Loss)/profit and total comprehensive income for the financial year
(913,924)
370,332
Azerion UK Limited
Statement Of Financial Position
As at 31 December 2023
Page 10
2023
2022
Notes
£
£
£
£
Non-current assets
Intangible assets
12
-
710,708
Property, plant and equipment
13
2,101,747
2,208,726
Investments
14
247,186
197,176
2,348,933
3,116,610
Current assets
Deferred tax asset
21
334,199
388,000
Trade and other receivables
16
33,153,332
4,563,188
Cash and cash equivalents
492,047
392,898
33,979,578
5,344,086
Current liabilities
17
(35,729,460)
(6,455,815)
Net current liabilities
(1,749,882)
(1,111,729)
Total assets less current liabilities
599,051
2,004,881
Non-current liabilities
17
(1,888,323)
(2,221,956)
Provisions for liabilities
Deferred tax liabilities
21
(14,727)
(173,000)
Net liabilities
(1,303,999)
(390,075)
Equity
Called up share capital
23
92,114
92,114
Share premium account
24
3,297,344
3,297,344
Retained earnings
(4,693,457)
(3,779,533)
Total equity
(1,303,999)
(390,075)
The financial statements were approved by the board of directors and authorised for issue on 25 September 2024 and are signed on its behalf by:
M Newcomb
Director
Company Registration No. 06080497
Azerion UK Limited
Statement of Changes in Equity
For the year ended 31 December 2023
Page 11
Share capital
Share premium account
Retained earnings
Total
£
£
£
£
Balance at 1 January 2022
92,114
3,297,344
(4,149,865)
(760,407)
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
370,332
370,332
Balance at 31 December 2022
92,114
3,297,344
(3,779,533)
(390,075)
Year ended 31 December 2023:
Loss and total comprehensive income for the year
-
-
(913,924)
(913,924)
Balance at 31 December 2023
92,114
3,297,344
(4,693,457)
(1,303,999)
Azerion UK Limited
Notes to the Financial Statements
For the year ended 31 December 2023
Page 12
1
Accounting policies
Company information

Azerion UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Floor 3, The Crane Building, 22 Lavington Street, London, United Kingdom, SE1 0NZ. The company's principal activities and nature of its operations are disclosed in the directors' report.

1.1
Accounting convention

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

 

These financial statements for the year ended 31 December 2023 are the first financial statements of the company prepared in accordance with FRS 101. The company transitioned to FRS 101 for all periods presented and the date of transition to FRS 101 was 1 January 2022.

 

Details of the restatement for material adjustments on adoption of FRS 101 are disclosed in note 27.

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.

As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:

Where required, equivalent disclosures are given in the group accounts of Azerion Holding B.V.. The group accounts of Azerion Holding B.V. are available to the public and can be obtained as set out in note 27.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 13

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

 

Azerion UK Limited is a wholly owned subsidiary of Azerion Holding B.V. and the results of Azerion UK Limited are included in the consolidated financial statements of Azerion Holding B.V. which are available to the public and can be obtained as set out in note 27.

1.2
Going concern

These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. true

 

The company made a loss after tax of £913,924 (2022: profit after tax of £370,332) during the year and had net liabilities of £1,303,999 (2022: £390,075) as at 31 December 2023. However, the company has sufficient working capital to enable it to continue to trade and meet its liabilities as they fall due for at least the next twelve months from the date of approval of the financial statements.

 

The directors have prepared detailed forecasts for the company's future cash requirements and are satisfied that the company will be able to continue to meet its liabilities as they fall due for a period of at least twelve months from the date of approval of the financial statements. The company’s parent has also confirmed their ongoing support in relation to existing finance for the business for a period of at least 12 months from the date of approval of these financial statements. Accordingly the company continues to adopt the going concern basis in the preparation of the financial statements.

1.3
Revenue

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.

 

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.

Media revenue is recognised when charges are made to clients, principally when advertisements appear in the media. Fees are recognised over the period of relevant assignments or agreements.

 

When the outcome of the transaction can be estimated reliably, revenue from advertising space and management of media work is recognised by reference to the stage of completion at the balance sheet date. Stage of completion is measured by reference to when services are rendered. Where the outcome cannot be measured reliably, revenue is recognised to the extent of expenses recognised that are recoverable.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 14
1.4
Intangible assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

 

Amortisation 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:

 

1.5
Property, plant and equipment

Property, plant and equipment 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:

Leasehold land and buildings
Over the lease term
Computer equipment
25% Straight line
Leasehold improvements
25% 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 recognised in the income statement.

1.6
Non-current investments

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

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

1.7
Impairment of tangible and intangible assets

At each reporting 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.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 15

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.

 

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.

1.8
Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.9
Financial assets

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

Financial assets held at amortised cost

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Financial assets at fair value through other comprehensive income

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

1.10
Financial liabilities

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 16
Other financial liabilities

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

1.11
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.12
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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 is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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 income statement, 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.

1.13
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 inventories or non-current 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.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
Page 17
1.14
Retirement benefits

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

1.15
Leases

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 18
2
Adoption of new and revised standards and changes in accounting policies

The following new and revised Standards and Interpretations have been issued and are effective for the current financial period of the company.

 

 

The following UK-adopted IFRSs have been issued but have not been applied in these financial statements. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated:

 

 

A number of IFRS and IFRIC interpretations are also currently in issue which are not relevant for the company's activities and which have not therefore been adopted in preparing these financial statements.

3
Critical accounting estimates and judgements

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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

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

Critical judgements
Deferred taxation

Deferred tax assets are recognised for unused tax loses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that cab be recognised, based upon the likely timing and level of future profits together with future tax planning strategies. See note 18 for the carrying amount and further details.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
3
Critical accounting estimates and judgements
(Continued)
Page 19
Key sources of estimation uncertainty
Capitalised development costs and the subsequent rate of amortisation

The directors have considered the feasibility of the projects, the likelihood that the asset will generate probable future economic benefit, and the period over which these benefits will be generated. Whilst this is dependent on a number of factors, the directors considered whether the future cash flows would meet or exceed the carrying value of intangible assets held as at the Balance Sheet date, and whether any provision for impairment was required, and that the amortisation period was a fair reflection of the rate of consumption of the economic benefits. See note 11 for the carrying amount of the intangible fixed assets and note 10 for detail of impairment losses in the year.

Provision for irrecoverable trade debtors

In setting the provision against potentially unrecoverable trade debt, the directors have considered a number of factors including the terms of sale, the geographical locations in which their clients operate, historic evidence of recoverability and debtor days, and the positive relationships maintained with the client base.

4
Revenue
2023
2022
£
£
Revenue analysed by class of business
16,362,984
11,497,580
2023
2022
£
£
Revenue analysed by geographical market
UK
9,473,922
10,052,144
Europe
6,889,062
582,000
Rest of world
-
863,436
16,362,984
11,497,580
2023
2022
£
£
Other significant income
Grant received
-
8,325
5
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(39,368)
5,675
Depreciation of property, plant and equipment
912,996
144,419
Amortisation of intangible assets (included within administrative expenses)
524,305
505,863
Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 20
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements
50,905
38,355
For other services
Tax services
6,855
6,355
Other services
8,915
4,155
Total non-audit fees
15,770
10,510
7
Employees

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

2023
2022
Number
Number
Sales and operations
68
29
Administrative
12
10
Directors
3
3
Total
83
42

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
4,049,631
2,064,206
Social security costs
791,664
313,455
Pension costs
245,228
54,270
5,086,523
2,431,931
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
533,281
327,711
Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
8
Directors' remuneration
(Continued)
Page 21
Remuneration disclosed above include the following amounts paid to the highest paid director:
Remuneration for qualifying services
307,360
246,289
Company pension contributions to defined contribution schemes
24,758
1,321
9
Finance costs
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on other loans
395,823
143,337
Interest on lease liabilities
72,684
22,011
10
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of temporary differences
(101,147)
51,000

The charge for the year can be reconciled to the (loss)/profit per the income statement as follows:

2023
2022
£
£
(Loss)/profit before taxation
(1,015,071)
421,332
Expected tax (credit)/charge based on a corporation tax rate of 23.50% (2022: 19.00%)
(238,542)
80,053
Effect of expenses not deductible in determining taxable profit
152,839
37,949
Income not taxable
-
0
(20,234)
Change in unrecognised deferred tax assets
(12,668)
12,668
Other permanent differences
5,345
2,103
Deferred tax adjustments in respect of prior years
(4,519)
(84,301)
Fixed asset differences
1,733
(6,670)
Remeasurement of deferred tax for change in tax rates
(5,335)
29,432
Taxation (credit)/charge for the year
(101,147)
51,000
Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 22
11
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

2023
2022
£
£
In respect of:
Intangible assets
186,403
-
0
Recognised in:
Administrative expenses
186,403
-

The impairment loss is in respect of capitalised development expenditure no longer in use in the company. The development expenditure intangible asset has been impaired in full in the year.

12
Intangible fixed assets
Development expenditure
£
Cost
At 31 December 2022
5,243,048
At 31 December 2023
5,243,048
Amortisation and impairment
At 31 December 2022
4,532,340
Charge for the year
524,305
Impairment loss
186,403
At 31 December 2023
5,243,048
Carrying amount
At 31 December 2023
-
At 31 December 2022
710,708
13
Property, plant and equipment
Leasehold land and buildings
Computer equipment
Leasehold improvements
Total
£
£
£
£
Cost
At 1 January 2023
1,747,037
28,672
577,204
2,352,913
Additions
424,348
-
0
374,303
798,651
Transfers in
-
0
41,547
-
0
41,547
At 31 December 2023
2,171,385
70,219
951,507
3,193,111
Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
13
Property, plant and equipment
Leasehold land and buildings
Computer equipment
Leasehold improvements
Total
£
£
£
£
(Continued)
Page 23
Accumulated depreciation and impairment
At 1 January 2023
114,560
5,189
24,438
144,187
Charge for the year
768,028
11,802
133,166
912,996
Transfers in
-
0
34,181
-
0
34,181
At 31 December 2023
882,588
51,172
157,604
1,091,364
Carrying amount
At 31 December 2023
1,288,797
19,047
793,903
2,101,747
At 31 December 2022
1,632,477
23,483
552,766
2,208,726

Property, plant and equipment includes right-of-use assets, as follows:

Right-of-use assets
2023
2022
£
£
Net values at the year end
Leasehold land and buildings
1,288,797
1,632,477
Total additions in the year
424,348
-
Depreciation charge for the year
Leasehold land and buildings
768,028
144,560
14
Investments
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Investments in subsidiaries
-
-
247,186
197,176
Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
14
Investments
(Continued)
Page 24
Movements in non-current investments
Shares in subsidiaries
£
Cost or valuation
At 1 January 2023
197,176
Additions
50,010
At 31 December 2023
247,186
Carrying amount
At 31 December 2023
247,186
At 31 December 2022
197,176
15
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Inskin Media Asia Limited
Suite 1504, 15/F Chinachem Tower, 34-37 Connaught Rd Central, Hong Kong
Ordinary
100.00
Inskin Media Gmbh
Neuer Kamp 32, 20357, Hamburg
Ordinary
100.00
Inskin Media Singapore Pte Ltd
36 Robinson Road, #13-01, City House, Singapore (068877)
Ordinary
100.00
Inskin Media Australia Pty Ltd
Suite 1 Level 4, 3 Carlingford Road, Epping
Ordinary
100.00
Manufactura Ukraine LLC
01004, 42-44 Shovkovychna Steet, Kyiv, Ukraine
Ordinary
100.00
-
Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 25
16
Trade and other receivables
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Trade receivables
4,263,109
1,903,719
-
-
Provision for bad and doubtful debts
(278,593)
(164,716)
-
-
3,984,516
1,739,003
-
-
Corporation tax recoverable
141,068
102,631
-
-
Amount owed by parent undertaking
6,512,720
1,779,361
-
0
-
0
Amounts owed by fellow group undertakings
20,369,048
105,704
-
0
-
0
Other receivables
1,249,391
373,959
-
-
Prepayments and accrued income
896,589
462,530
-
-
33,153,332
4,563,188
-
-
Deferred tax asset
-
-
334,199
388,000
33,153,332
4,563,188
334,199
388,000
17
Liabilities
Current
Non-current
2023
2022
2023
2022
Notes
£
£
£
£
Borrowings
18
-
0
-
0
900,000
900,000
Trade and other payables
19
34,460,915
5,820,502
-
0
-
0
Taxation and social security
934,912
314,377
-
-
Lease liabilities
20
333,633
320,936
988,323
1,321,956
35,729,460
6,455,815
1,888,323
2,221,956
18
Borrowings
Non-current
2023
2022
£
£
Borrowings held at amortised cost:
Redeemable preference shares
900,000
900,000

The company has 900,000 preference shares with a nominal value of £0.01 which included at total price paid by share of £1.00. In respect of each Preference Share a cumulative cash preferential dividend is due of 6% per annum from October 2017 to October 2018, 8% from October 2018 to October 2019, 10% for October 2019 to October 2020 and 12% thereafter. The shares are redeemable upon a realisation.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 26
19
Trade and other payables
2023
2022
£
£
Trade payables
1,525,217
907,141
Amount owed to parent undertaking
4,588,808
1,416,714
Amounts owed to fellow group undertakings
19,284,096
244,459
Accruals and deferred income
4,793,269
2,770,134
Other payables
4,269,525
482,054
34,460,915
5,820,502
20
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
378,468
378,468
In two to five years
1,040,786
1,419,254
Total undiscounted liabilities
1,419,254
1,797,722
Future finance charges and other adjustments
(97,298)
(154,830)
Lease liabilities in the financial statements
1,321,956
1,642,892

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

2023
2022
£
£
Current liabilities
333,633
320,936
Non-current liabilities
988,323
1,321,956
1,321,956
1,642,892
2023
2022
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
72,684
22,011
Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 27
21
Deferred taxation
2023
2022
£
£
Deferred tax liabilities
14,727
173,000
Deferred tax assets
(334,199)
(388,000)
(319,472)
(215,000)
Deferred tax assets are expected to be recovered after more than one year

 

Accelerated capital allowances
Tax losses
Provisions
Total
£
£
£
£
Liability at 1 January 2022
268,000
-
268,000
Asset at 1 January 2022
-
0
(509,000)
(25,000)
(534,000)
Deferred tax movements in prior year
Charge/(credit) to profit or loss
(95,000)
140,000
6,000
51,000
Liability at 1 January 2023
173,000
-
-
173,000
Asset at 1 January 2023
-
0
(369,000)
(19,000)
(388,000)
Deferred tax movements in current year
Charge/(credit) to profit or loss
(158,273)
45,029
8,772
(104,472)
Liability at 31 December 2023
14,727
-
-
14,727
Asset at 31 December 2023
-
0
(323,971)
(10,228)
(334,199)
22
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
245,228
54,270

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.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 28
23
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
A Ordinary of 1p each
1,805,400
1,805,400
18,054
18,054
B Ordinary of 1p each
1,783,800
1,783,800
17,838
17,838
C Ordinary of 1p each
822,200
822,200
8,222
8,222
D Ordinary of 1p each
4,800,000
4,800,000
48,000
48,000
9,211,400
9,211,400
92,114
92,114

Ordinary A, Ordinary B, Ordinary C and Ordinary D shares are all entitled to receive notice to attend and vote in general meetings, are entitled to participate in dividend distributions of the company and are entitled to participate in any distribution or realisation of assets of the company including on a winding up, following any preference shares in issue. Preference shares are non-voting and are due to receive distributions of variable cumulative coupons of 6%-12% after the 5th year anniversary of issue. The company shall redeem all of the preference shares then in issue immediately prior to, and conditionally upon, the occurrence of the earlier of an exit or IPO, winding up or administration.

 

Distribution rights for each class of share are complex and are set out in section 6 of the company’s articles of association which were adopted on 19 October 2012 and which can be obtained from Companies House online.

24
Share premium account
2023
2022
£
£
At the beginning and end of the year
3,297,344
3,297,344
25
Events after the reporting date

After the reporting date, Azerion UK Limited purchased the trade and assets of group companies Hybrid Theory Global Limited on 1 January 2024 and Hawk Platform Limited on 1 May 2024.

26
Related party transactions

The company has taken advantage of the exemption available in FRS101 Paragraph 8(j) A whereby it has not disclosed transactions with wholly owned group undertakings.

27
Controlling party

The immediate parent company is Azerion Tech Holding BV, a company registered in Netherlands.

 

The ultimate parent company is Principle Holdings BV, a company registered in Netherlands.

Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
Page 29
28
Transition adjustments
Reconciliation of equity
At 1 January 2022
At 31 December 2022
Previously reported
Effect of transition
As restated
Previously reported
Effect of transition
As restated
Notes
£
£
£
£
£
£
Non-current assets
Other intangibles
1,072,373
-
1,072,373
710,708
-
710,708
Property, plant and equipment
6,914
1,747,037
1,753,951
576,249
1,632,477
2,208,726
Investments
197,176
-
197,176
197,176
-
197,176
1,276,463
1,747,037
3,023,500
1,484,133
1,632,477
3,116,610
Current assets
Deferred tax
534,000
-
534,000
388,000
-
388,000
Trade and other receivables - other
6,043,759
-
6,043,759
4,563,188
-
4,563,188
Bank and cash
726,368
-
726,368
392,898
-
392,898
7,304,127
-
7,304,127
5,344,086
-
5,344,086
Creditors due within one year
Finance leases
-
(104,145)
(104,145)
-
(320,936)
(320,936)
Other payables
(8,172,997)
-
(8,172,997)
(6,134,879)
-
(6,134,879)
(8,172,997)
(104,145)
(8,277,142)
(6,134,879)
(320,936)
(6,455,815)
Net current liabilities
(868,870)
(104,145)
(973,015)
(790,793)
(320,936)
(1,111,729)
Total assets less current liabilities
407,593
1,642,892
2,050,485
693,340
1,311,541
2,004,881
Creditors due after one year
Borrowings
(900,000)
-
(900,000)
(900,000)
-
(900,000)
Finance leases
-
(1,642,892)
(1,642,892)
-
(1,321,956)
(1,321,956)
(900,000)
(1,642,892)
(2,542,892)
(900,000)
(1,321,956)
(2,221,956)
Provisions for liabilities
Deferred tax
(268,000)
-
(268,000)
(173,000)
-
(173,000)
Net assets
(760,407)
-
(760,407)
(379,660)
(10,415)
(390,075)
Azerion UK Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2023
28
Transition adjustments
At 1 January 2022
At 31 December 2022
Previously reported
Effect of transition
As restated
Previously reported
Effect of transition
As restated
Notes
£
£
£
£
£
£
(Continued)
Page 30
Equity
Share capital
92,114
-
92,114
92,114
-
92,114
Share premium
3,297,344
-
3,297,344
3,297,344
-
3,297,344
Profit and loss
(4,149,865)
-
(4,149,865)
(3,769,118)
(10,415)
(3,779,533)
Total equity
(760,407)
-
(760,407)
(379,660)
(10,415)
(390,075)
Notes to reconciliations
Leases

Under FRS 102, leases may be classified as either operating or finance leases. In the case of a finance lease, an asset and a liability are recognised at the present value of future minimum lease payments. For operating leases, no asset or liability is recognised and instead the payments on the lease are recognised as an expense on a straight line basis over the life of the lease. Any costs associated with restoring the lease to its original condition are recognised as a provision, discounted to the present value.

 

Under FRS 101, a lease that has a duration of over 12 months and is not low value is accounted for as a right-of-use asset, with a corresponding lease liability. The value of this asset and liability is the present value of future minimum lease payments, discounted at the company's average cost of borrowing. The asset is then depreciated over the course of its useful life and the discounting is unwound on the liability and recognised as finance costs. Any costs associated with restoring the lease to its original condition are included in the measurement of the liability and the asset.

 

The carrying values of the right-of-use assets and lease liabilities at 1 January 2022 were £1,747,037 and £1,747,037 respectively, resulting in no increase or decrease to net assets. The carrying values of the right-of-use assets and lease liabilities at 31 December 2022 were £1,632,477 and £1,642,892 respectively.

 

In the year ended 31 December 2022, additional depreciation and finance costs of £114,560 and £22,011 have been recognised, with a decrease in operating lease expenses of £126,156. This resulted in an overall decrease in the profit for the year ended 31 December 2022 of £10,415.

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