Avature Limited
Annual report and financial statements
Registered number 07892159
31 December 2023
Avature Limited
Annual report and financial statements
31 December 2023
Registered Number: 07892159
Contents
Company information
1
Strategic report                                                                                                                                                             
2-7
Directors' report
8-9
Statement of directors' responsibilities
10
Independent auditor's report
11-13
Statement of Profit and Loss and Other Comprehensive Income
14
Statement of Financial Position
15
Statement of Changes in Equity
16
Statement of Cash flows
17
Notes forming part of the financial statements
18-34
Avature Limited
Annual report and financial statements
31 December 2023
Registered Number: 07892159
COMPANY INFORMATION
Directors
Dimitri Boylan
Julian Boylan
Secretary
Ana Laura Darino (resigned
1st August 2022
01 August 2022
)
Registered number
07892159
Registered Office
25 Wilton Road,Victoria,
London, England, SW1V 1LW
Independent Auditors
Grant Thornton
Chartered Accountants and Statutory Auditors
13-18 City Quay
Dublin 2
DO2 ED70
Ireland
Principal Bank
Citibank
Canada SQ Service Ctr - Citigroup Ctr 25,
Canada Sq, London E14 5LB, UK
1
Avature Limited
Annual report and financial statements
31 December 2023
Registered Number: 07892159
STRATEGIC REPORT
Introduction
The Company, Avature Limited, was incorporated and domiciled in the UK on 28 December 2011 with a UK establishment office address at 25 Wilton Road, Victoria, London.
The Directors present their strategic report together with the audited financial statements of the Company for the financial year ended 31 December 2023 on the basis of its continued existence.
Review of the development of the business
2023 has been an exciting year, with growth on our business, product and people.
At Avature, we believe in tailoring solutions to meet the needs of our global customers. Over the past year, we stayed true to this principle, putting customization at the heart of our offerings and that, once again, has proven to fetch amazing results.
What also stayed true during 2023 was our commitment to driving business and digital transformation for all kinds of industries. Now more than ever, our customers need a system that is understandable and can evolve alongside them. They need an efficient design and the flexibility that's inherited in it to evolve. That is the key to digital transformation, and it is precisely what Avature brings to the table: we are here to drive strategic change with them.
With this in mind, our products continued to expand on schedule according to our product roadmap.
We released a slew of new features in 2023 (Avature's conversational chatbot, the Portal Apps Builder, the industry-first Linked CRM Connect integration, among others), and two new solutions, HR Case Management and Social Learning.
We continued to grow our team, we are over 1,500 Avaturians worldwide. Expanding our culture globally comes with its complexities when you welcome new people at such a rhythm and in so many different parts of the world. Yet, we are thrilled with the results we've achieved. This year has seen not only numerical growth but also an expansion of professional opportunities for our employees, with the emergence of new clusters and roles in almost all of our teams.
We have added new and better office locations and provided our employees with spaces to meet, work and collaborate:
in a world increasingly driven by digital interactions, our emphasis on human connections and meaningful bonds has once again set us apart.
We held in-person annual conferences in the US, EU, Australia and China, with great all-around feedback from attendees. Our customers continue to perceive great value in getting together with the Avature community and our team members in person.
Analysis of performance and position
The profit for the financial year amounted to £1,663,911 (2022: £881,680). The total comprehensive income for the year amounted to £1,663,911 (2022: £881,680). The total assets amounted to £16,127,155 (2022: £18,318,175) and total equity amounted to £3,093,230 (2022: £1,429,319).
As for the year ahead, we are looking to continue to grow our customer base and up-sell more solutions to existing customers.
Key performance indicators (KPIs)
Avature's KPIs related to the financial statements: we have increased of our liquidity ratio to 0.95 (2022: 0.89); we have a working capital of £0.7 million (2022: £1.8 million); our gross profit margin is 3% (2022: 11% ) while our net profit margin is 10% (2022: 6%).
Avature KPIs related to the SaaS industry shows a 18.1% growth on billing revenue (2023: £23.2 million – 2022: £19.7 million) and a gross margin of 88.1% (2022: 87.5%). In relation to customer retention, we had an attrition rate of 3.5% during 2023 (2022: 6%).
2
Avature Limited
Annual report and financial statements
31 December 2023
STRATEGIC REPORT (CONTINUED)
Strategic Management
Strategy
Avature aims to create an innovative and agile enterprise Human Capital Management (“HCM”) platform for customers to do business the way they want to do it, create the user experience they want, and add a competitive edge to their talent programs.
Avature believes cutting-edge talent acquisition and talent management require new thinking and new solutions, because breakthrough performance requires a break from the past. At Avature we see things differently. Rather than struggling with too many separate systems that do not really communicate with each other, we believe in a one-platform approach. One platform powered by innovative, flexible, and socially oriented software that supports business-driven solutions, not vendor-driven compromises.
Business model
Avature was founded in 2005 by Dimitri Boylan to help organizations across the globe deploy innovative solutions to their HR challenges. Our platform is a people-centric system designed to help manage a company's most important asset - its people. We are goal-oriented, team-spirited professionals looking for challenges. Our individual stories bring insights and perspectives that enrich our products and improve our services. We work together and support each other in an open environment with a common drive to bring interesting technical solutions to the market.
Recognising that leading CRM products were not suitable for modern recruiting, we designed branded email marketing features for passive candidate engagement, developed advanced segmentation based on candidate pipeline progress and talent pool attributes, as well as pioneered personalised multi-channel communication.
Along the way, we realised that we could get hiring managers to participate in recruiting if we gave them a modern web portal with real-time information on recruiting projects. As it turned out, this not only added transparency but helped hiring managers to gain new respect for the efforts that went into building good talent pipelines and recruiting passive candidates.
Finally, realising that every company has a different way to go to market and attract and retain great talent, we delivered a flexible data model and configurable workflow engine to support the creation of an ever-expanding range of fully bespoke recruiting and talent management solutions, including career sites, referral management, campus and events recruiting, onboarding, internal mobility, performance management and succession planning. In 2023, Avature launched two new solutions: HR Case Management and Social Learning.
We provide recruiting and talent management software to companies of all sizes as a SaaS. We apply one-time charges for the implementation of the software and a recurring fee for maintenance and upgrades with new features.
Business environment
Recruiting software is used across all industry types without much variation. However, for Recruiting CRM software, the buyers are usually high-growth companies, such as software companies, professional services companies, etc. For our Applicant Tracking System (“ATS”), we focus on large companies (10,000 employees or more) that are multinational – essentially, the Global 2000 is our market. The same can be said for our other solutions, which attract big enterprise customers, though there are some exceptions.
Our flagship products are the recruiting CRM and our ATS. In the CRM space, most of our competitors are start-ups, while the majority of our ATS competitors are rigid legacy vendors. We are seeing an increase in our talent management suite, specifically our Avature Onboard and Avature Internal Mobility solutions.
Avature differentiates in the following ways:
Fit for Purpose
To survive and thrive in today's highly competitive and rapidly changing market, organisations need a competitive advantage. To hire and retain the talent they need to achieve breakout performance, they require leading-edge technology that empowers them to break away from the pack and activate innovative talent strategies. Rather than acting as a barrier, we believe that their recruiting and talent management technology should be a powerful enabler.
3
Avature Limited
Annual report and financial statements
31 December 2023
STRATEGIC REPORT (CONTINUED)
Fit for Purpose (continued)
As such, we have designed the Avature platform to be more configurable and scalable than the competition so our customers can move to the technology as offense model.
Avature solutions are not one-size-fits-all. We respect our customers as experts in their own businesses, and we actively encourage them to follow their own vision and define the solution that achieves their objectives. Our platform allows our customers to create real, lasting transformation.
Agility
We believe that agility is more than a buzzword. In recruiting and talent management, agility means the ability to change the way things are done when market conditions change. Agility is only possible when a system is flexible enough for its users to optimize it over time. We have made it possible for customers to configure the system through the user interface, so they can design, modify and optimize digitally based business practices to aggressively compete for and win talent over their competition. In today's environment, it is not enough to acquire a system that is marginally competitive today but cannot scale, lacks innovation and will be ineffective in one- or two-years' time. We offer customers a steady stream of new functionality to keep pace with evolving technology and trends.
Continuous Improvement
We believe that our customers are co-designers of our software. We produce a steady stream of customer-requested features and enhancements with a focus on recruiting and talent management. We offer multiple channels for customers to present their feedback directly to us (Customer Advisory Counsel, User Conferences, Online Forums, Meet-ups, Account Management) and adhere to a customer-driven roadmap.
World-Class Support
Avature provides full-lifecycle customer support, from the day customers first meet us to the future evolution of their strategy in the years to come. Our Consulting team has extensive domain expertise in sourcing, talent engagement and recruiting service delivery derived from the world's most demanding and innovative recruitment organisations. Our customers are supported by dedicated and experienced Account Managers. We take pride in the fact that our customer-facing teams are just one step away from our technical operations, engineering and product design teams. This allows us to respond to customer issues with real solutions and in real-time, rather than having to deal with an intermediary or system integrator who has limited understanding of the underlying platform or leverage to drive modifications to it.
Experience
We differentiate with our industry experience, commitment and proven staying power. The recruiting and talent management software market is full of heavily venture capital-funded start-ups that are seeking a quick exit. They have no commitment to developing long-term relationships and many have experienced significant changes to management teams in recent months. Their leaders no longer have industry experience. Avature's larger competitors are typically serving up a software product that they purchased several years ago and for which they have no real roadmap or appetite for innovation and advance.
Environmental, employee, social, community, human rights and anti-corruption and anti-bribery matters.
Employees
We understand the responsibility we have as a talent technology provider, and we reaffirm our commitment to the initiatives and best practices we have implemented toward positive social and environmental impact.
For employees, we are constantly empowering our own internal teams, promoting long-term career paths and continued education. We champion providing sustainable employment, job security and a thriving space to propose innovative ideas and business initiatives.
We believe a diverse employee body will bring about creativity and foster innovation. Our vision is that only by accepting our differences, bringing people together and supporting each other we will realise the full potential of each employee and create breakthrough solutions.
4
Avature Limited
Annual report and financial statements
31 December 2023
STRATEGIC REPORT (CONTINUED)
Employees (continued)
Avaturians are trained to focus on the output of the individual and commit to helping each other succeed. Avature has a zero-tolerance stance on discrimination, harassment, and bullying of any kind. Applications for employment by disabled persons are always fully considered, bearing in mind the respective aptitudes and abilities of the applicant concerned. It is the policy of the Group that the training, career development and promotion of a disabled person should, as far as possible, be identical to that of a person who does not suffer from a disability.
We require each employee to behave in a professional manner, but we do not require people to change who they are when they come to work for us. As enshrined in our Code of Conduct and Equal Opportunity policy, Avature absolutely condemns forced labour, child labour, modern slavery, and human trafficking of any kind.
Customers
Our decision to respond directly to our customers' needs, listen to them, and partner with them is at the heart of Avature's operating model. We develop all our solutions in-house, and we are in complete control of the quality and evolution of our platform, allowing us to directly engage with our customers and co-create the next-generation enterprise platform. Our commitment to high-quality engineering, transparency, and service, together with this partnership and the people we bring to this commitment, are our competitive advantage and part of our customers' advantage.
We offer a core platform meant to serve up only the solutions, tools and functionality that an organization needs for their processes, to avoid distraction from their objectives. When, and if they wish to evolve or expand, the platform can adapt to additional or modified processes, new strategies, enhanced functionality, new tools or extended solutions.
Furthermore, we give users the training to use our solutions specifically for their processes and we view this training and support as ongoing.
Suppliers
We understand that corporate social responsibility extends to our entire supply chain. This encompasses not only the products and services provided, but also the human rights, ethics, and social practices of Avature and our suppliers. One goal of our corporate social responsibility procurement program is to build partnerships with like-minded organisations by actively seeking out business partners who are the most environmentally and workforce friendly.
This includes the following areas:
• Responsible environmental impact: Avature and its suppliers shall conduct ongoing efforts to reduce environmental pollution while increasing sustainability.
•  Forced labour: Avature and its suppliers and supply chain shall employ all employees under their own free will with no individual being subjected to bonded or forced labour.
•  Child labour: Avature and its suppliers and supply chain shall not employ any people under the minimum legal working age of the country in which they work.
•  Modern slavery and human trafficking: Avature does not tolerate human trafficking or slavery in any form and in any part of our global organization or our supply chain.
Avature has a diverse supplier policy. For non-strategic supply, managers are expected to include small-business vendors and minority-owned vendors in any bid group unless a reason is given for not including them. We recognise that size does not relate to performance and the only reason company size can be used as a criteria for selection is when size is needed for the execution of the service.
Avature's abiding rule on diversity is that our vendors' diversity should align with the general diversity of the country where they operate their business. A strong deviation from this model can be considered a negative attribute in any evaluation. A vendor employment policy that supports diversity can be considered a positive attribute.
Principal risks and uncertainties
The Group is required to give a description of the principal risks and uncertainties that it faces. These principal risks are set out hereunder:
- Financial risk management, including exposure to liquidity risk and foreign currency risk
5
- Significant changes in the marketplace in which the business operates
Avature Limited
Annual report and financial statements
31 December 2023
STRATEGIC REPORT (CONTINUED)
Principal risks and uncertainties (continued)
The Group has insurance, business policies and organizational structures to limit these risks and the Board of Directors regularly reviews, re-assess, and proactively limits these risks.
Statement by the Directors in performance of their statutory duties in accordance with Section 172(1) Companies Act 2006
The Directors of the Group must act in accordance with a set of general duties including (among others) those under s172 of the Companies Act to promote the success of the companies.
The Directors consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1) (a-f) of the Act) in the decisions taken during the financial year ended December 31, 2023.
-
The Directors oversee a structured approach to the development of the Group's strategy, looking at commercial considerations and the development of current and possible future markets. They also take a long-term perspective on matters such as possible strategic workforce requirements and the impact of new technology. Long-term business planning and key strategic decisions are undertaken in line with the strategy agreed by the Directors.
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The Group's employees are fundamental to the delivery of Group's goals. The Group aims to be a responsible employer in their approach to the pay and benefits their employees receive. The health, safety and well-being of their employees is one of their primary considerations in the way it does business (see previous section). In this regard, the Group annually conducts an in-depth review of entire workforce remuneration and the alignment of incentives with the Group's culture. The review covers the structuring of pay and incentives across the Group.
Delivering on the commitments the companies make to their customers is critical to their long-term success. Senior Executives meet regularly with customers and, as necessary, subsequently brief the Directors on the status of these important relationships and how the Group is delivering on its commitments. During the year, the Directors were also provided with details of the output from the group's customer satisfaction surveys.
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The Group considered the impact of its operations on the community and environment and in particular how the companies influence the regions where facilities are located (for more information see previous section).
Responsible behaviour is fundamental to how the companies do business. The Group's Code of Conduct sets out the standards and behaviours expected of all the companies' employees to meet the high standards of business conduct – legally and ethically – that their customers and other stakeholders expect. The Directors' intention is to behave responsibly and ensure that management operate the business in a responsible manner, operating within the high standards of business conduct and good governance. The intention is to nurture the companies' reputation through the compliance of the Code of Conduct which is reflected in the companies' actions. Also, during the year the Directors reviewed how employees were encouraged to seek guidance, raise concerns or report issues, if necessary, to the Group's Ethics Committee.
The Directors' intention is to behave responsibly toward Group's shareholders and treat them fairly and equally, so they too may benefit from the successful delivery of the Group's long-term objectives.
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Avature Limited
Annual report and financial statements
31 December 2023
STRATEGIC REPORT (CONTINUED)
Our Stance on Diversity
Avature understands that innovation goes hand in hand with solutions designed to offer accessibility for individuals with disabilities and which can be leveraged to remove bias and partiality in hiring practices. This has informed, and will continue to inform, our functionality and roadmap on an ongoing basis.
We are committed to ensuring that our own internal hiring and mobility philosophy reflects what we help our customers do: hire the person before anything else. By way of example, by the end of the year, at a Group level 499 (2022: 597) Avaturians are women, and 109 (2022: 110) of them correspond to 36% (2022: 40%) of senior leadership positions at Avature Group, surpassing the number at other leading tech organisations.
Equality and diversity are at the core of our organisation. Our talent acquisition strategy is absolutely neutral in regard to any form of self-identification including gender, sexual orientation, race, etc.
This report was approved by the board and signed on its behalf.
. . . . . . . . . . . . . . . . . . . . . . .
Dimitri Boylan
Director
Date: 11 November 2024
7
Avature Limited
Annual report and financial statements
31 December 2023
Directors' report
The directors submit their annual report together with the audited financial statements for the financial year to 31 December 2023, on the basis of its continued existence.
Principal activity and review of the development of the business
The principal activity of the company in the period under review was the sale and marketing of Software Services.
Results and dividends
The profit for the year, after taxation, amounted to £1,663,911 (2022: £881,680).
The directors have not recommended a dividend (2022: £5,325,000).
Energy and Carbon reporting information
The Company is not required to make a detailed disclosure of energy and carbon information as the Company consumes considerably less than 40MWh in the United Kingdom and including offshore areas annually. In assessing whether or not the 40MWh threshold was met, we considered all the energy from gas, electricity and transport fuel usage as defined in section 7 of government's policy on Streamlined Energy and Carbon Reporting (SECR).
Research and development activities
The Company constantly develops and enhances software internally due to the new technologies and necessities of their clients.
Directors
The directors who held office during the year were as follows:
Dimitri Boylan
Julian Boylan
Secretary
Ana Laura Darino (resigned 1st August 2022).
Subsequent events
There have not been significant events since the period end, which require adjustment to or disclosure in these financial statements.
Disclosure of information to auditor
The directors confirm that:
so far as each director is aware, there is no relevant audit information of which the Company´s auditor is unaware, and
the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the Company´s auditor is aware of the information.
Matters contained in the Strategic Report
The disclosure requirements under the Companies (Miscellaneous Reporting) Requirements 2018, with respect to the directors' engagement with stakeholders, is covered in the Strategic Report. Further information on Financial risk management, future developments, employees and employment of disabled persons is also included in the Strategic Report.
8
Avature Limited
Annual report and financial statements
31 December 2023
Directors' report (continued)
Auditor
The auditor, Grant Thornton Chartered Accountants & Statutory Auditors, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
On behalf of the board:
Dimitri Boylan
Director
Date:
11 November 2024
2024-11-11
9
Avature Limited
Annual report and financial statements
31 December 2023
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the directors' report and financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under the law, the directors have elected to prepare the financial statements in accordance with UK-adopted international accounting standards (“UK-adopted IAS”) 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 assets, liabilities and financial position of the Company as at the financial year end date and of the profit or loss of the Company for that financial year.
In preparing the financial statements, the directors are required to:
select suitable accounting policies for the Company financial statements and then apply them consistently;
make judgements and estimates that are reasonable and prudent, relevant and reliable;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for ensuring that the Company keeps or causes to be kept adequate accounting records which correctly explain and record the transactions of the Company, enable at any time the assets, liabilities, financial position and the profit or loss of the Company to be determined with reasonable accuracy, enable them to ensure that the financial statements and directors' report comply with the Companies Act 2006. The directors 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.
On behalf of the board:
Dimitri Boylan
Director
Date: 11 November 2024
10
Avature Limited
Annual report and financial statements
31 December 2023
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF AVATURE LIMITED
Opinion
We have audited the financial statements of Avature Limited (the “Company”) which comprise the Statement of Profit or Loss and Other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows for the financial year ended 31 December 2023, and the related notes to the financial statements, including the summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is UK law and UK-adopted international accounting standards (“UK-adopted IAS”).
In our opinion, Avature Limited's financial statements:
  • *
give a true and fair view in accordance with UK-adopted IAS of the assets, liabilities and financial position of the Company as at 31 December 2023, of the Company's financial performance and Company's cash flows for the financial year then ended; and
  • *
have been properly prepared in accordance with the requirements of the Companies Act 2006.
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 ‘Responsibilities of the auditor 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 United Kingdom, including the FRC's Ethical Standard and the ethical pronouncements established by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances for the entity. 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 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 the date 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
Other information comprises information included in the Annual Report, other than the financial statements and our auditor's report thereon, including the Directors' Report. The directors are responsible for the other information. 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.
In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies in the financial statements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF AVATURE LIMITED
Opinions on matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Directors' Report have been prepared in accordance with the applicable requirements.
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 any material misstatements in the Directors' Report. We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of management and those charged with governance for the financial statements
As explained more fully in the directors' responsibilities statement, management is responsible for the preparation of the financial statements which give a true and fair view in accordance with UK-adopted IAS, and for such internal control as they determine necessary to enable the preparation of financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Responsibilities of the auditor for the audit of the financial statements
The objectives of an auditor 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 their 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.
A further description of an auditor's responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatement in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF AVATURE LIMITED
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud (continued)
Based on our understanding of the Company and its industry, we identified that the principal risks of non-compliance with laws and regulations related to compliance with, Data Privacy law and Employment law and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and UK tax legislation. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial performance and management bias through judgements and assumptions in significant accounting estimates, in particular in relation to significant one-off or unusual transactions. We apply professional scepticism through the audit to consider potential deliberate omission or concealment of significant transactions, or incomplete/inaccurate disclosures in the financial statements.
In response to these principal risks, our audit procedures included but were not limited to:
  • *
Enquiries of management and the Board on the policies and procedures in place regarding compliance with laws and regulations, including consideration of known or suspected instances of non-compliance and whether they have knowledge of any actual, suspected or alleged fraud;
  • *
inspection of the Company's legal correspondence and review of minutes of Board meetings during the year to corroborate enquiries made;
  • *
gaining an understanding of the internal controls established to mitigate risk related to fraud;
  • *
discussion amongst the engagement team in relation to the identified laws and regulations and regarding the risk of fraud, and remaining alert to any indications of non-compliance or opportunities for fraudulent manipulation of financial statements throughout the audit;
  • *
identifying and testing journal entries to address the risk of inappropriate journals and management override of controls;
  • *
designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;
  • *
challenging assumptions and judgements made by management in their significant accounting estimates, including – allowance for credit losses, useful lives of depreciable assets, impairment of financial assets and impairment on tangible assets; and
  • *
review of the financial statement disclosures to underlying supporting documentation and enquiries of management.
The primary responsibility for the prevention and detection of irregularities including fraud rests with those charged with governance and management. As with any audit, there remains a risk of non-detection or irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or override of internal controls.
The purpose of our audit work and to whom we owe our responsibilities
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.
Jason Crawford (Senior Statutory Auditor)
For and on behalf of
GRANT THORNTON
Chartered Accountants & Statutory Auditors
Dublin
13
Republic of Ireland
Date:
11 November 2024
2024-11-11
Avature Limited
Annual report and financial statements
31 December 2023
Statement of Profit and Loss and Other Comprehensive Income
for year ended 31 December 2023
Note
2023
2022
£
£
Revenue
2
17,042,994
15,028,141
Cost of sales
(16,526,720)
(13,328,935)
Gross profit
516,274
1,699,206
Selling expenses
5
(1,839,809)
(1,226,857)
Administrative expenses
5
   (965,462)
   (929,868)
Other operating loss, net
3
(1,093,811)
   (979,961)
Operating loss
(3,382,808)
(1,437,480)
Financial gain
4
5,280,780
2,573,926
Profit before tax
1,897,972
1,136,446
Taxation
7
  (234,061)
   (254,766)
Profit for the year
1,663,911
    881,680
Total Comprehensive income for the year
1,663,911
    881,680
The notes on pages 18 to 34 form part of these financial statements.
The above results were derived entirely from continuing operations.
14
Avature Limited
Annual report and financial statements
31 December 2023
Statement of Financial Position
at
31 December 2023
2023-12-31
Note
2023
2022
£
£
ASSETS
Non-current assets
Property, plant and equipment
8
106,529
147,831
Trade and other receivables
10
3,732,025
3,107,227
3,838,554
3,255,058
Current assets
Trade and other receivables
10
5,905,764
3,983,149
Cash and cash equivalents
11
6,382,837
11,079,968
12,288,601
15,063,117
TOTAL ASSETS
16,127,155
18,318,175
EQUITY AND LIABILITIES
Equity
Share capital
13
  100
  100
Retained earnings
3,093,130
1,429,219
Total equity
3,093,230
1,429,319
Non-current liabilities
   Deferred tax liabilities
9
    (51,472)
    (29,154)
      (51,472)
      (29,154)
Current liabilities
Trade and other payables
12
(12,982,453)
(16,859,702)
(12,982,453)
(16,859,702)
Total liabilities
(13,033,925)
(16,888,856)
TOTAL EQUITY AND LIABILITIES
16,127,155
18,318,175
The notes on pages 18 to 34 form part of these financial statements.
The financial statements were approved and authorised for issue by the board on 11 November 2024 and were signed on its behalf by:
Dimitri Boylan
Director
Date:
11 November 2024
2024-11-11
Company registered number: 07892159 (England & Wales)
15
Avature Limited
Annual report and financial statements
31 December 2023
Statement of Changes in Equity
Share
Retained
Total
capital
earnings
equity
£
£
£
Balance at 1 January 2022
      100
5,872,539
      5,872,639
Total comprehensive income for the year
        -
       881,680
     881,680
Dividends to be distributed to shareholders
          -
   (5,325,000)
(5,325,000)
Balance at 31 December 2022
       100
    1,429,219
   1,429,319
Total comprehensive income for the year
        -
       1,663,911
     1,663,911
Dividends to be distributed to shareholders
          -
                 -
                -
Balance at 31 December 2023
       100
    3,093,130
    3,093,230
The notes on pages 18 to 34 form part of these financial statements.
16
Avature Limited
Annual report and financial statements
31 December 2023
Statement of Cash flows
For year ended 31 December 2023
Note
2023
2022
£
£
Cash flows used in operating activities
Profit for the year
1,663,911
881,680
Adjustments for:
Depreciation
8
194,291
261,248
Financial gain
4
(5,280,780)
(2,573,926)
Taxation
7
234,061
254,766
Decrease in trade and other receivables
10
3,358,165
1,583,172
Increase in trade and other payables
12
  1,236,008
  5,725,443
Net cash from operating activities
1,405,656
  6,132,383
Cash flows used in investing activities
Acquisition of PPE
8
   (152,989)
     (13,606)
Net cash used in investing activities
   (152,989)
     (13,606)
Cash flows used in financing activities
    Increase in financial assets
   (624,798)
(1,661,606)
    Dividends paid
(5,325,000)
                   -
Net cash used in financing activities
   (5,949,798)
(1,661,606)
Net (decrease) increase in cash and cash equivalents
(4,697,131)
4,457,171
Cash and cash equivalents at 1 January
11,079,968
   6,622,797
Cash and cash equivalents at 31 December
11
   6,382,837
  11,079,968
The notes on pages 18 to 34 form part of these financial statements.
17
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements
1
Accounting policies
Avature Limited (the “Company”) is a company incorporated and domiciled in the UK.
The company financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), in addition to the IFRSs as issued by the International Accounting Standards Board (IASB) and endorsed for use by the EU at 31 December 2023 and the requirements of Companies Act 2006.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.
1.1
Measurement convention
The financial statements are prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for assets at that time.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When measuring the fair value of an asset or a liability, the company uses market observable data to the extent possible. If the fair value of an asset or a liability is not directly observable, it is estimated by the company using  valuation  techniques  that  maximise  the  use  of  relevant  observable  inputs  and minimise the use of unobservable inputs (e.g. by use of the market comparable approach that reflects recent transaction prices for similar items, discounted cash flow analysis, or option pricing models refined to reflect the issuer's specific circumstances). Inputs used are consistent with the characteristics of the asset / liability that market participants would take into account.
Fair  values  are  categorised  into  different  levels  in  a  fair  value  hierarchy  based  on  the  degree  to  which  the  inputs  to  the measurement are observable and the significance of the inputs to the fair value measurement in its entirety:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Company management to exercise judgement in applying the Company's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 1.12.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
1.2
Going concern
The financial statements have been prepared on a going concern basis, which assumes that the Company will be able to meet the mandatory payments of liabilities for a period of at least 12 months from the date of approval of the financial statements. The directors are satisfied that the Company has adequate resources to continue operating for the foreseeable future.
1.3
Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates.
The Company's functional and presentational currency is GBP (£).
18
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
1            Accounting policies (continued)
1.4
Foreign currency
Transactions in foreign currencies are translated to the Company's functional currency at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.
1.5
Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
i)
Financial assets
Financial assets are classified, at initial recognition as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under IFRS 15.
Subsequent to initial recognition, Company's financial assets are measured at amortised cost. The Company measures financial assets at amortised cost if both of the following criteria are met:
  • *
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; 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.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Company's financial assets at amortised cost includes trade and other receivables.
ii)
Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company's financial liabilities include trade and other payables.
Subsequent to initial recognition financial, Company's liabilities are measured at fair value through profit or loss.
  • *
Derecognition:
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss and other comprehensive income.
19
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
1            Accounting policies (continued)
1.5
Financial Instruments (continued)
iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
iv) Hedge accounting
Company does not have financial instruments of hedge accounting.
v) Impairment of financial assets
The Company considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. In applying this forward-looking approach, a distinction is made between financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk and financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low. Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.
1.6
Property, plant and equipment
On initial recognition, items of property, plant and equipment are recognised at cost, which includes the purchase price as well as any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by Management.
After  initial  recognition,  items  of  property,  plant  and  equipment  are  carried  at  cost  less  any  accumulated  depreciation  and impairment losses.Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
Office equipment 3 years
IT equipment 3 years
Servers 3 years
Useful lives, residual values and depreciation methods are reviewed, and adjusted if appropriate, at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Statement of Profit and Loss and Other Comprehensive Income.
1.7
Leases
For any new contracts the Company considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'. To apply this definition, the Company assesses whether the contract meets three key evaluations which are whether:
•  the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Company.
•  the Company has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract.
•  the Company has the right to direct the use of the identified asset throughout the period of use.
•  the Company assess whether it has the right to direct ‘how and for what purpose' the asset is used throughout the period of use.
The Company did not have Finance Leases before or after 1 January 2023, nor 2022.
20
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
1            Accounting policies (continued)
1.7
Leases (continued)
The Company did not act as a Lessor before or after 1 January 2023, nor 2022.
The Company has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis.
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.
The expense relating to payments not included in the measurement of the lease liability is as follows:
2023
2022
£
£
Short-term leases
15,117
13,576
15,117
13,576
1.8
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, on demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.
For the purpose of the statement of cash flows only, cash and cash equivalents include bank overdrafts repayable on demand. Since the characteristics of such banking arrangements are that the bank balance often fluctuates from being positive to overdrawn, they are considered an integral part of the Company's cash management.
1.9
Provisions
Where, at the reporting date, the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that the Company will settle the obligation, a provision is made in the statement of financial position. Provisions are made using best estimates of the amount required to settle the obligation and are discounted to present values using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. Changes in estimates are reflected in profit or loss in the period they arise. Restructuring provisions are only recognised once the formal plan has been communicated to affected parties.
1.10
Revenue
The Company derives revenues primarily from subscription services and professional services. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determine revenue recognition through the following steps:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations in the contract
Recognition of revenue when, or as, we satisfy a performance obligation
The company sells both software application services and professional services.
Application services primarily consists of fees that provide customers access to one or more of our cloud applications. Revenue are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date the Company's service is made available to customers.
21
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
1            Accounting policies (continued)
1.10
Revenue (continued)
Professional services primarily consists of fees for integration and customization. Revenue are fixed fee arrangements recognized as the services are rendered.
Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis.
The Company recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the statement of financial position. Similarly, if the Company satisfies a performance obligation before it receives the consideration, the Company recognises a contract asset in its statement of financial position.
There was no significant judgement applied or significant estimate determined in applying this accounting policy.
1.11
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.
1.12
Estimates and judgements
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies.
In determining the carrying amounts of certain assets and liabilities, the Company make assumptions of the effects of uncertain future events on those assets and liabilities at the reporting date. The Company's estimates and assumptions are based on historical experience and expectation of future events and are reviewed annually. This excludes uncertainty over future events and judgements in respect of measuring financial instruments. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year are discussed below:
(a) Allowance for credit losses
The Company makes an estimate of the recoverable value of trade and other debtors.  The Company uses estimates based on historical experience, as well as reasonable and supportable forecasts, in determining the level of debts that the Company believes will not be collected.  These estimates include such factors as the current credit rating of the debtor, the ageing profile of debtors and historical experience. Any significant reduction in the level of customers that default on payments or other significant improvements that resulted in a reduction in the level of impairment allowance would have a positive impact on the operating results. The level of impairment allowance required is reviewed on an on-going basis.
22
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
1            Accounting policies (continued)
1.12
Estimates and judgements (continued)
The estimates and underlying assumptions are reviewed on an ongoing basis, revisions to accounting estimates are recognised in the year in which the estimate is revised if revision affects only that year or in the year of the revision and future years if the revision affects both current and future periods.
(b) Useful lives of depreciable assets
The Company reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment.
The estimates and underlying assumptions are reviewed on an ongoing basis, revisions to accounting estimates are recognised in the year in which the estimate is revised if revision affects only that year or in the year of the revision and future years if the revision affects both current and future periods.
(c) Impairment on financial assets
In assessing impairment of financial assets, management estimates the recoverable amount of each asset based on expected future cash flows. Estimation uncertainty relates to assumptions about future operating results.
(d) Impairment on tangible assets
The company assesses impairment on tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the company considers important which could trigger an impairment review include the following:
Significant underperformance relative to expected historical or projected future operating results;
Significant changes in the manner of use of the acquired assets or the strategy for overall business;
Significant negative industry or economic trends.
In determining the estimated cash flows expected to be generated from continued use of the assets, the company is required to make estimates and assumptions that can materially affect the financial statements. These assets are reviewed for impairment whenever events of changes in circumstances indicate the carrying amount may not be recoverable.
1.13
Application on new IFRS requirements
For the preparation of these consolidated financial statements, the following amended Standards are mandatory for the first time for the financial year beginning 1 January 2023.
New Standards
International Tax Reform—Pillar Two Model Rules (Amendments to the IFRS for SMEs Standard). The application of these amendments did not have any impact on these Group and Company's financial statements.
International Tax Reform—Pillar Two Model Rules (Amendments to IAS 12). The application of these amendments did not have any impact on these Group and Company's financial statements.
Initial Application of IFRS 17 and IFRS 9 — Comparative Information (Amendment to IFRS 17). The application of these amendments did not have any impact on these Group and Company's financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12). The application of these amendments did not have any impact on these Group and Company's financial statements.
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2). The application of these amendments did not have any impact on these Group and Company's financial statements.
Definition of Accounting Estimates (Amendments to IAS 8). The application of these amendments did not have any impact on these Group and Company's financial statements.
23
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
1
Accounting policies (continued)
1.13
Application on new IFRS requirements (continued)
Classification of Liabilities as Current or Non-current—Deferral of Effective Date (Amendment to IAS 1). The application of these amendments did not have any impact on these Group and Company's financial statements.
Other than the above standards, none of the standards, amendments and interpretations effective during the current financial year had a significant impact on the Group and Company's financial statements.
New IFRS requirements in issue but not yet effective
The Group has not applied the following new Interpretations and Standards that have been issued by the IASB but are not yet effective for the financial year beginning 1 January 2023. The Directors anticipate that the new Interpretations and Standards will be adopted in the Group and Company's financial statements when they become effective, but do not expect these Standards to have a material effect on the Group and Company's financial statements.
  • *
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
  • *
Non-current Liabilities with Covenants (Amendments to IAS 1)
  • *
Lack of Exchangeability (Amendments to IAS 21)
  • *
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
2
Revenue
2.1 Dissaggregated revenue information
2023
2022
£
£
Application services
12,202,644
9,950,385
Professional services
  4,840,350
  5,077,756
Total revenue from contracts with customers
17,042,994
15,028,141
2.2 Contract balances
2023
2022
£
£
Gross trade receivables
5,164,647
3,217,690
Contract assets
193,846
190,903
Contract liabilities
5,282,099
3,587,169
Amount included in contract liabilities at the beginning of the year
3,587,169
2,897,296
2.3 Performance obligations
Information about the Company´s performance obligation are summarized below:
Application Services (SaaS Subscription, Customer Support and On-demand training)
Subscription services are combined with customer support and free on-demand training as a single unit of accounting. The performance obligation is satisfied ratably over the contract term beginning on the commencement date of each contract. Payment is generally due to 30 to 45 days after billing.
Professional services
Professional services performance obligation is satisfied as services are delivered to the customer. The Company typically bills for these services either in arrears on a time and materials basis or upfront based on a fixed price. Implementation services are generally rendered over a specific period and involve the delivery of several dissimilar acts. Payment is generally due to 30 to 45 days after billing.
24
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
3
Other operating loss, net
2023
2022
£
£
Intercompany commission
(1,157,077)
(979,961)
Other income
        63,266
               -
Total other operating loss
  (1,093,811)
  (979,961)
4
Financial gain
2023
2022
£
£
Net foreign exchange gain *
   5,203,835
   2,523,774
Intercompany interest
     76,945
     50,152
Total financial income
5,280,780
2,573,926
* In 2023 exchange gain includes £2,351,449 related to the settlement of bonds traded to settle Argentinian Peso denominated liabilities by the Company (2022: £1,984,713) and £2,852,386 related to net foreign exchange gain of the year (2022: £539,061).
During 2023 and 2022, the Company has not classified financial assets or liabilities at fair value through profit or loss.
5
Expenses and auditor's remuneration €
Auditor's remuneration:
2023
2022
£
£
Auditor's remuneration – Audit fee
34,451
32,167
Auditor's remuneration – Advisory & tax fees
        2,501
      34,537
      36,952
      66,704
Included in profit are the following:
Payroll
1,352,473
1,083,448
Marketing and Advertising
479,067
143,409
Professional fees
216,558
223,624
Depreciation
194,291
261,248
Allowance for expected credit loss
26,134
-
Office rent
15,117
13,576
Premises costs
350
7,456
Other
   521,281
   423,964
2,805,271
2,156,725
6
Staff numbers and costs
The average number of persons employed by the Company (including directors) during the year, analysed by category, was as follows:
Number of employees
2023
2022
Employees (Sales)
8
5
Directors
            2
           2
          10
           7
The directors did not receive or accrue any remuneration from the Company in the current year (2022 : £Nil). Directors received their remuneration at a Group level.
25
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
6
Staff numbers and costs (continued)
The aggregate payroll costs of these persons were as follows:
2023
2022
£
£
Wages and salaries
1,127,279
924,159
Payroll taxes
     225,194
     159,289
  1,352,473
  1,083,448
7
Taxation
Recognised in the income statement
2023
2022
£
£
Current tax expense
(213,239)
(264,448)
Transfer pricing additional corporation tax liabilities
(4,638)
(13,893)
Interest refund from HMRC
        6,134
              -
Total current tax
(211,743)
(278,341)
Deferred tax expense (note 9)
(22,318)
50,547
Difference in Deferred tax liabilities 2021 (note 9)
               
-
0
      (26,972)
Total deferred tax expense
    (22,318)
        23,575
Total tax expense
(234,061)
(254,766)
The following is a reconciliation between income tax as charged to the Statement of Profit and Loss and Other Comprehensive Income and the amount that would have resulted from applying the relevant tax rate to taxable income before tax:
Reconciliation of effective tax rate
2023
2022
£
£
Profit before tax
1,897,972
1,136,446
Total tax expense
  (234,061)
  (254,766)
Profit for the year
1,663,911
    881,680
Tax using the UK corporation tax rate of 23,5% (2022:19%)
(446,023)
(215,925)
Non deductible expenses
(25,144)
(2,106)
Non deductible Capital Allowance
(30,705)
4,130
Transfer pricing additional corporation tax liabilities
(4,638)
(13,893)
Interest refund from HMRC
6,134
-
Group relief claimed
266,315
-
Difference in Deferred tax liabilities 2021
                
-
0
    (26,972)
Total tax expense
  (234,061)
  (254,766)
The company has zero (2022: £nil) of tax losses carried forward.
26
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
7
Taxation (continued)
Factors that affect tax charges:
The standard rate of UK Corporation Tax remained at 19% until 31 March 2023 when the rate was increased from 19% to 25%. The 2023 rate of 23.5% represents the blended UK tax rate over the 12 month period to 31 December 2023. In summary, the rate of corporation tax from 1 April 2023 increased to 25% for companies generating taxable profits of more than £250,000.
Deferred tax at the balance sheet date has been measured using the enacted tax rates of 25% (2022: 19%).
8
Property, plant and equipment
Office equipment
IT equipment
Servers
Total
£
£
£
£
Cost
Balance at 1 January 2022
1,405,363
40,932
77,083
  1,523,378
Additions
       8,739
   4,867
          -
      13,606
Balance at 31 December 2022
1,414,102
45,799
77,083
1,536,984
Additions
    143,291
   9,167
     531
    152,989
Balance at 31 December 2023
1,557,393
54,966
77,614
1,689,973
Depreciation
Balance at 1 January 2022
  1,065,096
37,115
25,694
1,127,905
Additions
   231,334
   4,220
25,694
   261,248
Balance at 31 December 2022
1,296,430
41,335
51,388
1,389,153
Depreciation charge for the year
   162,522
   5,897
25,872
   194,291
Balance at 31 December 2023
1,458,952
47,232
77,260
1,583,444
Net book value
At 31 December 2022
117,672
   4,464
25,695
   147,831
At 31 December 2023
   98,441
   7,734
     354
   106,529
9
Deferred tax liabilities
Recognised deferred tax liabilities
Deferred tax liabilities are attributable to the following:
Liabilities
2023
2022
£
£
Accelerated capital allowances
51,472
29,154
Net deferred tax
51,472
29,154
Movements in deferred tax during the year
1 January
Recognised
31 December
2023
in income
2023
£
£
£
Accelerated capital allowances
29,154
22,318
51,472
Total
29,154
22,318
51,472
27
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
9
Deferred tax liabilities (continued)
Movements in deferred tax during the prior year
1 January
Recognised
31 December
2022
in income
2022
£
£
£
Accelerated capital allowances
52,729
(23,575)
29,154
Total
52,729
(23,575)
29,154
10
Trade and other receivables
2023
2022
Current
£
£
Trade receivables
5,164,647
3,217,690
Allowance for expected credit loss
   (26,134)
                -
Trade receivables – net
5,138,513
3,217,690
Other financial assets with related parties (note 14)
138,375
62,643
Other receivables due from related parties (note 14)
90,153
28,867
Prepayments
250,832
353,991
Other receivables
90,108
125,206
Rent deposit
3,937
3,849
Contract assets
   193,846
   190,903
Total current trade and other receivables
5,905,764
3,983,149
Non current
£
£
Other financial assets with related parties (note 14)
3,732,025
3,107,227
Total non current trade and other receivables
3,732,025
3,107,227
There is no material difference between the fair value of receivables and their carrying amount.
Provisions, write-off of uncollectible  receivables  and  utilisation  of  the  allowance  for  expected credit losses  are  presented  in  the statement of profit or loss within administration expenses. The table below analyses changes in the allowance for impairment losses in the year.
2023
2022
ALLOWANCE FOR EXPECTED CREDIT LOSSES
£
£
-
Balance at 1 January
-
Increase in allowance for expected credit losses
-
26,134
Balance at 31 December
-
26,134
Allowance for expected credit losses for trade and other receivables have  been determined based on 12 months  expected credit losses,  as these have not shown  increased credit risk since initial recognition and are low credit risk financial instruments at the reporting date. As there was no indication of increased credit risk sinc e initial recognition of any trade and other receivables balances, none of the trade and other receivables credit losses were determined based on the lifetime expected credit losses.
The Company defines a  default event  as  when the customer fails to repay its debt after  90  days, 30 days after debt repayment was due.
The Company assesses an asset to be credit impaired when one or more events that have a detrimental impact of the estimated future cash flows of that financial asset has occurred.
No collateral pertaining to trade and other receivables is held by the Company at the reporting date.
Amounts owed by related party undertakings are unsecured, interest free and repayable on demand.
28
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
11
Cash and cash equivalents
2023
2022
£
£
Bank balances
3,557,815
11,079,968
Short term bank deposits
2,825,022
                 -
Cash and cash equivalents per cash flow statement
6,382,837
11,079,968
There is no material difference between the fair value and the carrying amount of cash and cash equivalents. The effective interest rate on short-term bank deposits is 5.02%.
12
Trade and other payables
  Current
2023
2022
£
£
Trade payables due to related parties (note 14)
6,075,230
6,482,210
Amounts due to parent company
-
0
5,325,000
Other trade payables
32,658
180,480
Non-trade payables due to third parties
385,061
583,468
Non-trade payables due to parent company
898,635
447,248
Payroll
308,770
254,127
Contract liabilities
   5,282,099
   3,587,169
12,982,453
16,859,702
The carrying amount of trade and other payables, accrued liabilities and contract liabilities is considered to be in line with their fair value at the reporting date. Amounts due to related parties are unsecured, interest-free and payable on demand.
Amounts owed to related parties are unsecured, interest-free and repayable on demand.
2022
2023
Non current
£
£
51,472
29,154
Deferred tax liabilites (Note 9)
51,472
29,154
13
Capital
2023
2022
£
£
Authorised, allotted, called up and fully paid
100 Ordinary shares of £1 each – fully paid
100
100
100
100
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. No dividends have been declared in the year (2022: £5,325,000).
14
Related parties
Identity of related parties with which the Company has transacted
Related party transactions
Other financial assets
Software expenses incurred by
2023
2022
2023
2022
Parent companies
£
£
£
£
Avature Group Limited
3,749,442
3,051,079
     -
       -
Avature Holdings Limited
     120,958
     118,791
                 -
                 -
                 -
                 -
  3,169,870
  3,870,400
29
Notes forming part of the financial statements (continued)
Avature Limited
Annual report and financial statements
31 December 2023
14
Related parties (continued)
During 2023 Avature Spain S.L., Avature S.R.L. and Avature Limitd Hong Kong incurred Software expenses on behalf of the Company.
Software expenses incurred by
2023
2022
Other related parties
£
£
Avature Spain SL
(5,486,575)
(3,816,701)
Avature SRL
(9,517,590)
(8,224,544)
Avature Hong Kong
      (467,557)
      (402,780)
(15,471,722)
(12,444,025)
Intercompany commission
    2023
2022
Other related parties
£
£
Avature Limited (US)
   1,157,077
   979,961
  1,157,077
   979,961
Receivables outstanding
Payables outstanding
2023
2022
2023
2022
Parent companies
£
£
£
£
Avature Group Limited
8,575
1,778
898,635
5,772,248
         1,334
              -
                        -
                -
Avature Holdings Limited
         9,909
       1,778
   898,635
  5,772,248
Receivables outstanding
Payables outstanding
2023
2022
2023
2022
Other related parties
£
£
£
£
Avature Spain SL
292
-
(514,990)
(766,013)
Avature GMBH
79,952
27,089
-
(9,286)
Avature SRL
-
-
(2,472,297)
(1,156,483)
Avature Limited (US)
-
-
(2,668,435)
(4,218,177)
Avature Hong Kong (HK)
                 -
                 -
    (419,508)
    (332,251)
       80,244
       27,089
(6,075,230)
(6,482,210)
Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are unsecured, interest free and are usually settled in cash.
There was no remuneration to key management personnel in the current or prior financial year.
Other than the disclosed above, there were no other transactions with related parties.
30
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
15
Information of financial risks
In performing its operating, investing and financing activities, the Company is exposed to the following financial risks:
Liquidity risk: the risk that the Company may not have, or may not be able to raise, cash funds when needed and therefore encounter difficulty in meeting obligations associated with financial liabilities.
Market risk: the risk that the value of a financial instrument will fluctuate in terms of fair value or future cash flows as a result of a fluctuation in market prices. Basically, the Company is exposed to two market risk components:
-
Interest rate risk
-
Currency risk
Operational risk: the risk of direct or indirect loss arising from a wide variety of causes associated with the Company´s processes personnel, technology and infrastructure.
Credit risk: the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The financial instruments that are exposed to such risk include cash and cash equivalents, and other receivables, notes receivable.
The objective of the Company is to manage operational risk in order to balance the avoidance of financial losses and damage to the Company´s reputation with overall cost effectiveness. The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management.
In order to effectively manage those risks, Avature Limited has approved specific strategies for the management of financial risk, which are in line with corporate objectives. These strategies set up guidelines for the short and long term objectives and actions to be taken in order to manage the financial risks that the Company faces.
The major guidelines are the following:
Minimise interest rate, currency and price risks for all material transactions.
All financial risk management activities are carried out and monitored at central level.
All financial  risk  management  activities  are  carried  out  on a  prudent  and consistent  basis  and  following  the  best market practices.
The Company can invest in shares or similar instruments only in the case of temporary excess of liquidity and such transactions have to be authorised by the Board of Directors.
Compliance with regulatory and other legal requirements.
Compliance with these standards is supported by a programme of ongoing review by senior management, internal audit and independent control functions within the Company.
The following table summarises the carrying amount of financial assets and financial liabilities recorded by category.
2023
2022
   £
   £
FINANCIAL ASSETS
Cash and cash equivalents
6,382,837
11,079,968
Other financial assets with related parties
3,870,400
3,169,870
5,767,389
3,920,506
Trade and other receivables
16,020,626
18,170,344
BALANCES AT 31 DECEMBER
2023
2022
   £
   £
FINANCIAL LIABILITIES
7,700,354
13,272,533
Trade and other payables
7,700,354
13,272,533
BALANCES AT 31 DECEMBER
31
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
15
Information of financial risks (continued)
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables. These are measured at amortized cost.
During the year, Avature Limited UK issued new non-current loans to Avature Group Limited and Avature Holdings with an annual interest rate of 2%.
Due to their short-term nature, the carrying value of cash and cash equivalents, other financial assets, trade and other receivables, trade and other payables approximates their fair value.
Credit risk
There is no significant concentration of credit risk.
The maximum credit risk to which the Company is exposed is summarised in the following table.
2023
2022
   £
   £
Cash and cash equivalents
6,382,837 3,870,400
11,079,968 3,169,870
Other financial assets with related parties
5,767,389
3,920,506
Trade and other receivables
16,020,626
18,170,344
BALANCES AT 31 DECEMBER
As disclosed in Note 11, cash and cash equivalents balances represent bank balances.
Note 10 provides an analysis of the allowance for expected credit losses against trade receivables.
Liquidity risk
The Company manages liquidity risk on the basis of expected maturity dates.
The following tables analyse financial liabilities by remaining contractual maturity.
TRADE AND OTHER PAYABLES
TOTAL
   £
   £
Less than 1 year
13,272,533
  13,272,533
BALANCE AT 31 DECEMBER 2022
13,272,533
13,272,533
Less than 1 year
7,700,354
  7,700,354
BALANCE AT 31 DECEMBER 2023
7,700,354
7,700,354
At present, the Company expects to pay all liabilities at their contractual maturity. In order to meet such cash commitments, the Company expects the operating activity to generate sufficient cash inflows.
At the reporting date, the Company had no financial guarantee contracts on issue (2022: £nil).
Interest rate risk
The Company´s exposure to interest rate risk mainly concerning its financial liabilities. At present, the Company does not hold loans and payables that are long-term in nature. The Company is not significantly exposed to interest rate risk and therefore no sensitivity analysis is presented. The following table analyses the breakdown of liabilities by type of interest rate.
32
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
15
Information of financial risks (continued)
Interest rate risk (continued)
2023
2022
   £
   £
FINANCIAL LIABILITIES
7,700,354
13,272,533
Non-interest bearing
7,700,354
13,272,533
BALANCES AT 31 DECEMBER
Foreign currency risk
The financial statements are presented in GBP, which is also the Company's functional currency. The Company is exposed to certain currency risks in that the value of certain financial instruments will fluctuate due to changes in foreign exchange rates. Management has mitigated the risk by holding sufficient cash in presentation currency.
At the year ended 31 December 2023, the Company had not entered into any contracts outstanding and designated as hedges.
Financial assets by currency
Financial assets as at 31 December are analysed by currency as follows:
TRADE AND OTHER RECEIVABLES
OTHER FINANCIAL ASSETS WITH
CASH AND CASH EQUIVALENTS
TOTAL
RELATED PARTIES
£
£
£
£
CURRENCY
British pound
2,074,762
3,169,870
7,359,993
12,604,625
US Dollars
1,065,043
-
3,209,150
4,274,193
Euro
778,913
-
510,825
1,289,738
Swiss Franc
       1,788
               -
                 -
         1,788
BALANCE AT 31 DECEMBER 2022
3,920,506
3,169,870
11,079,968
18,170,344
4,767,701
British pound
2,293,063
3,870,400
10,931,164
US Dollars
2,163,528
-
1,164,210
3,327,738
Euro
980,468
-
450,926
1,431,394
Swiss Franc
   330,330
               -
               -
     330,330
BALANCE AT 31 DECEMBER 2023
5,767,389
3,870,400
6,382,837
16,020,626
Financial liabilities by currency
The following table analyses the breakdown of liabilities by currency.
TRADE AND OTHER PAYABLES
TOTAL
£
   £
CURRENCY
British pound
6,972,799
6,972,799
Euro
4,226,110
4,226,110
US Dollars
917,141
917,141
Argentine pesos
    1,156,483
  1,156,483
BALANCE AT 31 DECEMBER 2022
13,272,533
13,272,533
British pound
2,013,567
2,013,567
Euro
2,668,435
2,668,435
US Dollars
546,055
546,055
Argentine pesos
    2,472,297
  2,472,297
BALANCE AT 31 DECEMBER 2023
7,700,354
7,700,354
33
Avature Limited
Annual report and financial statements
31 December 2023
Notes forming part of the financial statements (continued)
15
Information of financial risks (continued)
Foreign currency risk (continued)
The Company had net assets denominated in foreign currencies of £597,325 as at 31 December 2023 (2022: £734,015). The Company assumes a +/- 5% change of the principal currencies exchange rate for the year ended at 31 December 2023 (2022: 5%). Percentages have been determined based on the average market volatility in exchange rates in the previous twelve months. The sensitivity analysis is based on the Company's foreign currency financial instruments held at each reporting date. The Company's profit or loss for the year and the equity for the year would have been £29,866 higher/£ 29,866 lower (2022: £36,701 higher/£ 36,701 lower).
16
Subsequent events
There have been no significant events since the financial year end, which require adjustment to or disclosure in these financial statements
17
Capital management policy and procedures
The Company's capital management objectives are:
To safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns to
investors and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of
capital.
• To provide an adequate return to shareholders based on the level of risk undertaken.
• To have financial resources available to allow the Company to invest in areas that may deliver future benefits
• To maintain financial resources sufficient to mitigate against risks and unforeseen events.
Capital risk is not significant for the Company and measurement of capital management is not a tool used in the internal management reporting procedures of the Company.
18
Controlling party
The immediate parent company is Avature Group Limited, a private company limited by shares incorporated in the UK. The registered office address is 1 Charterhouse Mews, London. These financial statements are consolidated into those of Avature Group Limited for the current year.
The ultimate parent company is Avature Holdings Limited, a private exempt limited liability company incorporated in Malta, with a UK establishment office address at 1 Charterhouse Mews, London. These financial statements are consolidated into those of Avature Holdings Limited for the current year.
The ultimate controlling party of the Group is Mr. Dimitri Boylan, a director.
34
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