Company registration number 09633403 (England and Wales)
ARC X-MEDIA LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
PAGES FOR FILING WITH REGISTRAR
ARC X-MEDIA LIMITED
CONTENTS
Page
Balance sheet
1
Notes to the financial statements
2 - 9
ARC X-MEDIA LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 1 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
4
-
0
777
Tangible assets
5
23,683
30,152
23,683
30,929
Current assets
Stocks
121,794
173,675
Debtors
6
255,386
368,723
Cash at bank and in hand
224,320
737,401
601,500
1,279,799
Creditors: amounts falling due within one year
7
(239,696)
(515,806)
Net current assets
361,804
763,993
Total assets less current liabilities
385,487
794,922
Creditors: amounts falling due after more than one year
8
(14,806)
(30,481)
Net assets
370,681
764,441
Capital and reserves
Called up share capital
10
227,996
227,996
Share premium account
2,655,179
2,655,179
Other reserves
26,670
26,670
Profit and loss reserves
(2,539,164)
(2,145,404)
Total equity
370,681
764,441

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 15 April 2024 and are signed on its behalf by:
A J Curran
Director
Company registration number 09633403 (England and Wales)
ARC X-MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
1
Accounting policies
Company information

Arc X-Media Limited is a private company limited by shares incorporated in England and Wales. The registered office is 78a York Street, London, W1H 1DP.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

The directors have assessed the Balance Sheet and likely future cash flows at the date of approving these financial statements. The company posted a loss for the financial year but continues to achieve year on year improvements in its trade. true

 

In August 2023, HMRC opened an enquiry into the 2021 and 2022 company tax returns. The enquiry reviewed the research and development tax claims submitted in both years which generated tax refunds paid to the company of £154,526 and £153,957.

The directors have taken professional advice and have been provided further assurances over the validity of the tax credit claims. The directors have subsequently lodged an appeal with HMRC to request a review of their decision and, at the time of this report, the company has not received closure notices in respect of either claim.

 

Whilst the directors and the company's advisors remain confident in the original claims, there remains uncertainty over the outcome of the appeal. Given the unknown quantum of the potential liability it gives rise to a material uncertainty over the company’s ability to continue as a going concern without further shareholder support. The directors have assessed that the company can meet financial obligations for at least 12 months from the date of signing these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes.

1.4
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

ARC X-MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 3 -
1.5
Intangible fixed 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:

Development costs
20% per annum straight line basis
1.6
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Fixtures, fittings & equipment
25% per annum reducing balance basis
Computer equipment
33.3% per annum reducing balance basis

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.7
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

ARC X-MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 4 -
1.8
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.9
Cash and cash equivalents

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.

1.10
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors and bank loans, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

ARC X-MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 5 -
1.11
Equity instruments

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

1.12
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 profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.13
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.14
Retirement benefits

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

1.15
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

ARC X-MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 6 -

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

 

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

1.16
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

1.17
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Exceptional item
2023
2022
£
£
Income
Exceptional item - Other operating income
95,022
-

During the year, accruals totaling £108,672 (2022 - £nil) were released on the basis that they were no longer required. The release has been offset by exceptional professional costs of £13,650 (2022 - £nil) relating to advisory work on Research and Development claims.

3
Employees

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

2023
2022
Number
Number
Total
17
18
ARC X-MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
4
Intangible fixed assets
Development costs
£
Cost
At 1 January 2023 and 31 December 2023
366,996
Amortisation and impairment
At 1 January 2023
366,219
Amortisation charged for the year
777
At 31 December 2023
366,996
Carrying amount
At 31 December 2023
-
0
At 31 December 2022
777
5
Tangible fixed assets
Fixtures, fittings & equipment
Computer equipment
Total
£
£
£
Cost
At 1 January 2023
1,480
90,026
91,506
Additions
-
0
5,308
5,308
At 31 December 2023
1,480
95,334
96,814
Depreciation and impairment
At 1 January 2023
1,125
60,229
61,354
Depreciation charged in the year
88
11,689
11,777
At 31 December 2023
1,213
71,918
73,131
Carrying amount
At 31 December 2023
267
23,416
23,683
At 31 December 2022
355
29,797
30,152
6
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
228,763
187,122
Other debtors
26,623
181,601
255,386
368,723
ARC X-MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
7
Creditors: amounts falling due within one year
2023
2022
£
£
Bank loans
10,140
9,890
Trade creditors
143,250
110,827
Taxation and social security
33,283
48,458
Other creditors
53,023
346,631
239,696
515,806

Included within other creditors is a hire purchase balance of £5,534 (2022 - £15,629), which is secured on the assets to which it relates.

8
Creditors: amounts falling due after more than one year
2023
2022
£
£
Bank loans and overdrafts
14,806
24,947
Other creditors
-
0
5,534
14,806
30,481

Included within other creditors is a hire purchase balance of £nil (2022 - £5,534), which is secured on the assets to which it relates.

9
Share-based payment transactions
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 January 2023
24,300
26,550
16.61
15.36
Granted
2,750
1,500
34.40
34.40
Forfeited
-
0
(3,750)
-
0
14.88
Outstanding at 31 December 2023
27,050
24,300
18.42
16.61
Exercisable at 31 December 2023
-
0
-
0
-
0
-
0

The options outstanding at 31 December 2023 had an exercise price ranging from £5 to £34.40, and a remaining contractual life of 2 to 10 years.

The fair value of the equity instruments granted during the year were determined by the expected exercise price of the options discounted to reflect the benefits to the buyer.

ARC X-MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
10
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
A Ordinary shares of £1 each
54,400
54,400
54,400
54,400
B Ordinary shares of £1 each
145,976
145,976
145,976
145,976
C Ordinary shares of £1 each
27,620
27,620
27,620
27,620
227,996
227,996
227,996
227,996
11
Audit report information

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 auditor's report was unqualified.

Material uncertainty related to going concern

We draw attention to note 1.2 and 11 in the financial statements which refers to an ongoing enquiry opened by HMRC which has disputed the company’s claim for Research and Development tax credits for the accounting years ending December 2021 and 2022.

 

The directors have lodged an appeal against HMRC’s decision and both the directors and the company's advisors are confident of a successful resolution but there persists a material uncertainty whilst the dispute is ongoing, that may cast doubt on the company’s ability to continue as a going concern without further shareholder support. Our opinion is not qualified in respect of this matter.

Senior Statutory Auditor:
Nicholas John Bairstow
Statutory Auditor:
Moore
12
Financial commitments, guarantees and contingent liabilities

As set out in note 1.2 of the accounts, HMRC opened an enquiry into research and development tax claims submitted by the Company in its corporation tax returns for 2021 and 2022. HMRC are disputing the claims in both tax years’ and are seeking repayment of tax refunds totalling £308,483. The directors strongly disagree with HMRC’s position and have lodged an appeal disputing the findings The outcome of the appeal is not known at this date.

13
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:

2023
2022
£
£
18,054
54,247
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