The directors present their annual report and financial statements for the year ended 31 December 2023.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, RDP Newmans LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
The directors of the company have elected not to include a copy of the income statement within the financial statements.
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
Acoustiguide Limited is a private company limited by shares incorporated in England and Wales. The registered office is 2-3 North Mews, London, WC1N 2JP. The company's principal activities and nature of its operations are disclosed in the directors' report.
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 company meets the definition of a qualifying entity under FRS 101 Reduced Disclosure Framework. These financial statements for the year ended 31 December 2023 are the first financial statements of Acoustiguide Limited prepared in accordance with FRS 101. The company transitioned from EU-adopted IFRS to FRS 101 for all periods presented and the date of transition to FRS 101 was 1 January 2022.
There are no significant changes to the reported financial position and financial performance as a result of the transition to FRS 101.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:
inclusion of an explicit and unreserved statement of compliance with IFRS;
presentation of a statement of cash flows and related notes;
disclosure of the objectives, policies and processes for managing capital;
disclosure of key management personnel compensation;
disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;
the effect of financial instruments on the statement of comprehensive income;
comparative period reconciliations for the number of shares outstanding and the carrying amounts of property, plant and equipment, intangible assets, investment property and biological assets;
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;
a reconciliation of the number and weighted average exercise prices of share options, how the fair value of share-based payments was determined and their effect on profit or loss and the financial position;
comparative narrative information;
for financial instruments, investment property and biological assets measured at fair value and within the scope of IFRS 13, the valuation techniques and inputs used to measure fair value, the effect of fair value measurements with significant unobservable inputs on the result for the period and the impact of credit risk on the fair value; and
related party disclosures for transactions with the parent or wholly owned members of the group.
Where required, equivalent disclosures are given in the group accounts of Espro Information Technologies Ltd. The group accounts of Espro Information Technologies Ltd are available to the public and can be obtained as set out in note 21.
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.
Acoustiguide Limited is a wholly owned subsidiary of Espro Information Technologies Limited and the results of Acoustiguide Limited are included in the consolidated financial statements of Espro Information Technologies Limited which are available from 17 Atir Yada St., Kfar-Saba, 44643, Israel.
These financial statements have been prepared on the going concern basis despite the historical losses suffered by the company. The validity of this assumption depends on the continuing support of the company's parent undertaking, Espro Information Technologies Ltd. ("Espro") and its investors. Espro will ensure the company will provide the necessary working capital for the company to meet its liabilities as they fall due.
The Covid-19 pandemic which developed in 2020 had a significant impact on the global tourism industry as many countries have imposed travel restrictions on their citizens. The company, including its parent undertaking, has been deeply impacted by the pandemic. Espro is currently facing losses and net liabilities. These factors raise significant doubts about the parent company's ability to continue as a going concern. The parent company has implemented cost reduction strategies and raise working capital investments to protect cash and normal business operations. The directors have a reasonable expectation that the company has adequate resources and therefore, believe that it is appropriate to apply the going concern basis.
If the company were unable to continue in existence for the foreseeable future, adjustments would be necessary to reduce the balance sheet values of assets to their recoverable amounts, to reclassify fixed assets as current assets and to provide for further liabilities which might arise.
Revenues from finance leases where the Company transfers substantially all the risks and rewards incidental to the legal ownership are accounted for as sales-type leases. The present value of the minimum lease payments computed at a market rate of interest is recorded as revenue. The difference between the revenues and the carrying amount of the goods is the selling profit. Unearned financing income is recognised over the term of the lease under the effective interest method.
Performance obligations and timing of revenue recognition
A portion of the company's revenue is derived from selling goods with revenue recognised at a point in time when control of the goods has transferred to the customer. This is generally when the goods are delivered to the customer. There is limited judgement needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, the company no longer has physical possession, usually will have a present right to payment (as a single payment on delivery) and retains none of the significant risks and rewards of the goods in question.
Some goods sold by the company include warranties which require the company to either replace or mend a defective product during the warranty period if the goods fail to comply with agreed-upon specifications. In accordance with IFRS 15, such warranties are not accounted for as separate performance obligations and hence no revenue is allocated to them. Instead, a provision is made for the costs of satisfying the warranties in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. On some product lines, a customer is able to take out extended warranties. These are accounted for as separate performance obligations, with the revenue earned recognised on a straight-line basis over the term of the warranty.
The company has a division which carries out design services (on the audio-guides) for clients, with revenue recognised typically on an over time basis. This is because the designs created have no alternative use for the company and the contracts would require payment to be received for the time and effort spent by the group on progressing the contracts in the event of the customer cancelling the contract prior to completion for any reason other than the group’s failure to perform its obligations under the contract. On these projects revenue is recognised on the basis of uses of the audio-guides provided and/or the number of hours staff have worked at the museum sites. This is considered a faithful depiction of the transfer of services as the contracts are initially priced on the basis of anticipated uses of the guides and therefore also represents the amount to which the company would be entitled based on its performance to date.
A majority of the company's revenue is derived from sales based royalties with revenue recognised on a monthly basis when the sales have occurred and the performance obligation to which the royalties relate has been satisfied.
Determining the transaction price
Most of the group’s revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices.
Allocating amounts to performance obligations
For most contracts, there is a fixed unit price for each product sold. Therefore, there is no judgement involved in allocating the contract price to each unit ordered in such contracts (it is the total contract price divided by the number of units ordered). Where a customer orders more than one product line, the company is able to determine the split of the total contract price between each product line by reference to each product’s standalone selling prices (all product lines are capable of being, and are, sold separately).
The extended warranties are sold as an add on when the customer purchases one of the products and/or services from the company. There is therefore also no judgement required for determining the amounts received for extended warranties in retail sales – it is the priced charged to the purchaser of the warranty. (From the company's perspective, the contract with the customer for the warranty is separate from the contract for the original sale of the goods).
Costs of fulfilling contracts
The costs of fulfilling contracts do not result in the recognition of a separate asset because:
• such costs are included in the carrying amount of inventory for contracts involving the sale of goods; and
• for service contracts, revenue is recognised over time by reference to the stage of completion meaning that control of the asset (the design service) is transferred to the customer on a continuous basis as work is carried out. Consequently, no asset for work in progress is recognised.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
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.
Interests in subsidiaries, 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.
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.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
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'.
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.
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
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.
The tax expense represents the sum of the tax currently payable and deferred tax.
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 the statement of comprehensive income on a straight-line basis over the lease term.
When the company acts as a lessor, leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees, over the major part of the economic life of the asset. All other leases are classified as operating leases. If an arrangement contains lease and non-lease components, the company applies IFRS 15 to allocate the consideration in the contract. When the company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately, classifying the sub-lease with reference to the right-of-use asset arising from the head lease instead of the underlying asset.
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.
In order to determine whether to classify a lease as a finance lease or right-of-use asset, the company evaluates whether the lease transfers substantially all the risks and benefits incidental to ownership of the leased asset. In this respect, the company evaluates such criteria as the existence of a "bargain" purchase option, the lease term in relation to the economic life of the asset and the present value of the minimum lease payments in relation to the fair value of the asset.
The company reviews the estimated lives of property, plant and equipment at the end of each reporting period.
The average number of persons (including directors) employed by the company during the year was:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
The company has not designated any financial assets that are not classified as held for trading as financial assets at fair value through profit or loss.
The directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
Details of the company's subsidiaries at 31 December 2023 are as follows:
The company has leased equipment (audio guiding products) to its customers under sale type, finance leases with an average term between three to five years at a weighted annual interest rate of London Inter-Bank Offered Rate (LIBOR) +5%. The interest rate inherent in the leases is fixed at the contract date for all the lease term.
The maximum exposure to credit risk for finance lease receivables is the carrying amount of the receivables because the company has no allowances for doubtful debts. The finance lease receivables in the current and prior year are neither past due nor impaired.
The fair value of the finance lease receivables approximates the book value.
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
The bank borrowings of the company of £250,000 are secured by way of a debenture and fixed and floating charges over the company's assets. The loan was taken out on 24 July 2020. Repayment commenced on 24 August 2021 and will continue until 24 July 2026. The loan carries interest rate at 3.99% per annum over the Bank of England Base Rate. As at 31 December 2023 the remaining balance payable is £129,167.
Fixed and floating charges have been secured over the assets of the company to support a loan taken by the parent company.
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:
Retained earnings consist of all other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
Other related parties transaction are in relation to Acoustiguide Australia Pty Ltd and Acoustiguide GmbH, Berlin, which are fellow sister companies of Acoustiguide Limited.
The sales to and purchases from related parties are made on an arm's length basis. Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 December 2023 the company has not recorded any impairment of receivables relating to the amounts due from related parties.