MGI Tech UK Ltd
Annual Report and Financial Statements
For the year ended 31 December 2023
Company registration number 13982625 (England and Wales)
MGI Tech UK Ltd
Company Information
Director
Mr Yong Hou
Secretary
TMF Corporate Administration Services Limited
Company number
13982625
Registered office
C/O Tmf Group 13th Floor, One Angel Court
London
United Kingdom
EC2R 7HJ
Auditor
Moore Kingston Smith LLP
4 Victoria Square
St Albans
Hertfordshire
AL1 3TF
Business address
C/O Tmf Group 13th Floor, One Angel Court
London
United Kingdom
EC2R 7HJ
MGI Tech UK Ltd
Contents
Page
Director's report
1
Director's responsibilities statement
2
Independent auditor's report
3 - 6
Income statement
7
Statement of financial position
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 20
MGI Tech UK Ltd
Director's Report
For the year ended 31 December 2023
- 1 -
The director presents his annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of trading of sequencing facility, reagents and materials.
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
No preference dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr Yong Hou
Auditor
Moore Kingston Smith LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Statement of disclosure to auditor
Each director in office at the date of approval of this annual report confirms that:
so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and
the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
On behalf of the board
Mr Yong Hou
Director
27 November 2024
MGI Tech UK Ltd
Director's Responsibilities Statement
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom adopted International Accounting Standards. Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
make an assessment of the company's ability to continue as a going concern.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is 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.
MGI Tech UK Ltd
Independent Auditor's Report
To the Members of MGI Tech UK Ltd
- 3 -
Opinion
We have audited the financial statements of MGI Tech UK Ltd (the 'company') for the year ended 31 December 2023 which comprise the Income Statement, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted International Accounting Standards.
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom adopted International Accounting Standards; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Director's Report has been prepared in accordance with applicable legal requirements.
MGI Tech UK Ltd
Independent Auditor's Report (CONTINUED)
To the Members of MGI Tech UK Ltd
- 4 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the director's Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
the director was not entitled to take advantage of the small companies exemption from the requirement to prepare a strategic report.
Responsibilities of director
As explained more fully in the Director's Responsibilities Statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the director 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 the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
MGI Tech UK Ltd
Independent Auditor's Report (CONTINUED)
To the Members of MGI Tech UK Ltd
- 5 -
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
MGI Tech UK Ltd
Independent Auditor's Report (CONTINUED)
To the Members of MGI Tech UK Ltd
- 6 -
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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.
Darren Jordan (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP
28 November 2024
Chartered Accountants
Statutory Auditor
4 Victoria Square
St Albans
Hertfordshire
AL1 3TF
MGI Tech UK Ltd
Income Statement
For the year ended 31 December 2023
- 7 -
Year
Period
ended
ended
31 December
31 December
2023
2022
Notes
£
£
Revenue
3
23,025
-
Cost of sales
(22,566)
Gross profit
459
-
Administrative expenses
(387,953)
(15,790)
Operating loss
4
(387,494)
(15,790)
Finance costs
6
(4,603)
Loss before taxation
(392,097)
(15,790)
Income tax expense
-
-
Loss and total comprehensive income for the year
(392,097)
(15,790)
MGI Tech UK Ltd
Statement Of Financial Position
As at 31 December 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
Non-current assets
Property, plant and equipment
8
523,622
107,352
Current assets
Trade and other receivables
9
158,471
40,998
Cash and cash equivalents
80,177
210,900
238,648
251,898
Current liabilities
Trade and other payables
11
835,459
355,040
Lease liabilities
12
176,370
1,011,829
355,040
Net current liabilities
(773,181)
(103,142)
Non-current liabilities
Lease liabilities
12
138,328
Net (liabilities)/assets
(387,887)
4,210
Equity
Called up share capital
13
20,000
20,000
Retained earnings
(407,887)
(15,790)
Total equity
(387,887)
4,210
The financial statements were approved and signed by the director and authorised for issue on 27 November 2024
Mr Yong Hou
Director
Company Registration No. 13982625
MGI Tech UK Ltd
Statement of Changes in Equity
For the year ended 31 December 2023
- 9 -
Share capital
Retained earnings
Total
Notes
£
£
£
Balance at 17 March 2022
-
-
Period ended 31 December 2022:
Loss and total comprehensive income for the period
-
(15,790)
(15,790)
Issue of share capital
13
20,000
-
20,000
Balance at 31 December 2022
20,000
(15,790)
4,210
Year ended 31 December 2023:
Loss and total comprehensive income for the year
-
(392,097)
(392,097)
Balance at 31 December 2023
20,000
(407,887)
(387,887)
MGI Tech UK Ltd
Statement of Cash Flows
For the year ended 31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
17
39,883
(46,943)
Interest paid
(203)
Net cash inflow/(outflow) from operating activities
39,680
(46,943)
Investing activities
Purchase of property, plant and equipment
(122,159)
Net cash used in investing activities
(122,159)
-
Financing activities
Proceeds from issue of shares
20,000
Proceeds from borrowings
235,870
Payment of lease liabilities
(47,100)
Net cash (used in)/generated from financing activities
(47,100)
255,870
Net (decrease)/increase in cash and cash equivalents
(129,579)
208,927
Cash and cash equivalents at beginning of year
210,900
Effect of foreign exchange rates
(1,144)
1,973
Cash and cash equivalents at end of year
80,177
210,900
MGI Tech UK Ltd
Notes to the Financial Statements
For the year ended 31 December 2023
- 11 -
1
Accounting policies
Company information
MGI Tech UK Ltd is a private company limited by shares incorporated in England and Wales. The registered office is C/O Tmf Group 13th Floor, One Angel Court, London, United Kingdom, EC2R 7HJ. The company's principal activities and nature of its operations are disclosed in the director's report.
1.1
Accounting convention
The financial statements have been prepared in accordance with United Kingdom adopted International Accounting Standards and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.
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 director has at the time of approving the financial statements, a reasonable expectation that the truecompany has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
The group have confirmed that they intend to continue to provide financial support for a period of at least twelve months from the date of signature of the financial statements and this support will extend to enable the company to trade and to meet its liabilities as they fall due for at least that period.
1.3
Revenue
The Company is in the business of providing sequencing technology equipment, maintenance and support services to the equipment and all the reagents and consumables for use with, and to be consumed through the use of the equipment. MGI enter into collaboration and equipment placement agreement with its customer, and for the purpose of developing new technologies for the collaboration and enhancing the applicability of MGI’s equipment, MGI lends the equipment to its customer for its use and operation in accordance with the terms and conditions (normally free of charge). MGI will provide services and consumables to the customers which can be used on the equipment, the equipment shall at all times remain, the sole and exclusive property of MGI.
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts and sales related taxes. The fees are agreed in advance and are based on the type of service being provided.
Revenue is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Revenue is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:
the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amounts of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the Company; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
MGI Tech UK Ltd
Notes to the Financial Statements (CONTINUED)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
- 12 -
The company’s major sources of revenue are as follows:
Freight and insurance – this is the fee charged to customer for delivery of MGI equipment to the customer’s premise, MGI shall be solely responsible for arranging the delivery of the equipment to the customer, and for all reasonable costs of the delivery of the equipment shall be borne by the customer, the fee is a non-refundable, lump-sum payment.
Installation and starter training – the fees for installation of the equipment and the one-time starter training provided by MGI is a non-refundable, lump-sum payment. The customer shall complete the laboratory environment preparation and notify MGI in writing to install the Equipment and provide starter training within 60 days from the date of receipt of the Equipment. And the equipment shall be installed within 3 months from the date of shipment. These fees are agreed in advance as stated in the contracts.
Service Program – the customer can purchase maintenance and support services in relation to the equipment, there are two alternatives ‘Bronze Service’ and ‘Gold Service’. Service starting date shall respectively be the installation date of equipment as described in the installation report issued by MGI’s engineer. The MGI List Price will be adjusted by MGI according to the development in the market at the end of each year. This revenue may either be recognised "over time" or "at a point in time" depending on the specific terms used in the contracts. When revenue is recognised over time, the revenue will be recognised over the period of the agreement of the services on a straight-line basis.
Sale of reagents and consumables – the customer will purchase form MGI any and all the regents and consumables for use with the equipment, there is no commitment, the customer will order extras based on needs. A list of consumable prices for one year agreement is normally provided and agreed as part of the contracts.
For and in consideration of the logistics, installation and starter training provided by MGI, customer shall make a non-refundable, lump-sum payment within 30 days upon signing the agreement. The prices of starter training course only include travel expense and labour, and all reagents and kits required for training are not included and must be agreed separately. If the customer has a past due payment which exceeds 5 business days, MGI may at its own option stop the services, and will be under no obligation to continue services until the past due payment has been made; if the customer has a past due payment which exceeds 10 business days, MGI may at its own option unilaterally terminate this agreement, however, if MGI has provided services to the customer pursuant to the agreement, the customer shall pay MGI the corresponding service fee. Even though the services have been suspended or terminated due to customer’s failure to make timely payments.
The company do not have long term contracts during the year and as at the year end, the services and goods provided are as and when the sale order received from the customer.
1.4
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Assets in the course of construction are not depreciated.
Leasehold land and buildings
2 years straight line
Plant and equipment
5 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
1.5
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
MGI Tech UK Ltd
Notes to the Financial Statements (CONTINUED)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
- 13 -
1.6
Financial assets
Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
1.7
Financial liabilities
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.9
Leases
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
MGI Tech UK Ltd
Notes to the Financial Statements (CONTINUED)
For the year ended 31 December 2023
1
Accounting policies
(Continued)
- 14 -
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
2
Critical accounting estimates and judgements
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
There were no critical accounting estimates and judgements during the year.
MGI Tech UK Ltd
Notes to the Financial Statements (CONTINUED)
For the year ended 31 December 2023
- 15 -
3
Revenue
2023
2022
£
£
Revenue analysed by class of business
Freight and insurance
3,217
-
Installation and starter training
11,000
-
Sales of reagents and consumables
8,808
-
23,025
-
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
23,025
-
4
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange losses
1,144
708
Fees payable to the company's auditor for the audit of the company's financial statements
5,650
5,650
Depreciation of property, plant and equipment
63,287
-
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Total
6
Finance costs
2023
2022
£
£
Interest on bank overdrafts and loans
203
-
Other interest payable
4,400
Total interest expense
4,603
MGI Tech UK Ltd
Notes to the Financial Statements (CONTINUED)
For the year ended 31 December 2023
- 16 -
7
Income tax
The Company has tax losses which arose in the UK of £649,045 that are available to carry forward against future taxable profits of the company. A net deferred tax asset of £101,972 has not been recognised in respect of these losses as there is uncertainty over recoverability.
8
Property, plant and equipment
Leasehold land and buildings
Assets under construction
Plant and equipment
Total
£
£
£
£
Cost
At 17 March 2022
-
Additions
107,352
107,352
At 31 December 2022
107,352
107,352
Additions
357,398
229,511
586,909
Other
(107,352)
(107,352)
At 31 December 2023
357,398
229,511
586,909
Accumulated depreciation and impairment
At 17 March 2022 and 1 January 2023
Charge for the year
44,675
18,612
63,287
At 31 December 2023
44,675
18,612
63,287
Carrying amount
At 31 December 2023
312,723
-
210,899
523,622
At 31 December 2022
-
107,352
-
107,352
During the year an assets under construction of £107,352 has been transferred to Plant and Equipment.
9
Trade and other receivables
2023
2022
£
£
Trade receivables
27,630
Provision for bad and doubtful debts
(1,947)
25,683
VAT recoverable
64,700
26,698
Other receivables
56,520
-
Prepayments
11,568
14,300
158,471
40,998
MGI Tech UK Ltd
Notes to the Financial Statements (CONTINUED)
For the year ended 31 December 2023
- 17 -
10
Trade receivables - credit risk
Fair value of trade receivables
The director considers that the carrying amount of trade and other receivables is approximately equal to their fair value.
The company impairment provision policy classify its debtors by 3 categories:
1. Accounts receivable from related parties - the company does not make provision for bad debts for accounts receivable from related parties within the scope of consolidation that have no significant risk of recovery.
2. Related-party customers - provision between 0.01% - 100% impairment provision will be accounted for depends on the total days of the payment become overdue.
3. 3rd party customers - provision between 1% - 100% impairment provision will be accounted for depends on the total days of the payment become overdue.
No significant receivable balances are impaired at the reporting end date.
Movement in the allowances for impairment of trade receivables
2023
2022
£
£
Balance at 1 January 2023 and at 31 December 2023
1,947
-
11
Trade and other payables
2023
2022
£
£
Trade payables
866
Amount owed to parent undertaking
544,996
238,550
Amounts owed to fellow group undertakings
249,532
110,840
Accruals
9,501
5,650
Other payables
30,564
-
835,459
355,040
12
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
176,370
-
In two to five years
138,328
-
Total undiscounted liabilities
314,698
-
MGI Tech UK Ltd
Notes to the Financial Statements (CONTINUED)
For the year ended 31 December 2023
12
Lease liabilities
(Continued)
- 18 -
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
2023
2022
£
£
Current liabilities
176,370
Non-current liabilities
138,328
314,698
-
13
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
20,000
20,000
20,000
20,000
14
Capital risk management
The company is not subject to any externally imposed capital requirements.
15
Related party transactions
During the year MGI Tech UK Limited made purchases of £138,955 (2022: 110,840) from Latvia MGI Tech SIA, a fellow subsidiary company.
As at the year end, MGI Tech UK Limited had a creditor balance of £249,532 (2022: £110,840) with Latvia MGI Tech SIA and a creditor balance of £544,996 (2022: £238,550) with its parent MGI International Sales Co, Limited.
MGI Tech UK Ltd
Notes to the Financial Statements (CONTINUED)
For the year ended 31 December 2023
- 19 -
16
Analysis of changes in gross funds/(debt)
1 January 2023
Cash flows
New finance leases
Other non-cash changes
Market value movements
Exchange rate movements
31 December 2023
£
£
£
£
£
£
£
Cash at bank and in hand
210,900
(129,579)
-
-
-
(1,144)
80,177
Borrowings excluding overdrafts
-
(4,400)
-
-
4,400
-
-
Obligations under finance leases
-
47,100
(464,750)
102,952
-
-
(314,698)
210,900
(86,879)
(464,750)
102,952
4,400
(1,144)
(234,521)
MGI Tech UK Ltd
Notes to the Financial Statements (CONTINUED)
For the year ended 31 December 2023
- 20 -
17
Cash generated from operations
2023
2022
£
£
Loss for the year before income tax
(392,097)
(15,790)
Adjustments for:
Finance costs
4,603
-
Non-operating income treated as financing activity
-
(235,870)
Depreciation and impairment of property, plant and equipment
63,287
-
Foreign exchange gains on cash equivalents
1,144
(1,973)
Movements in working capital:
Increase in trade and other receivables
(117,473)
(40,998)
Increase in trade and other payables
480,419
355,040
Cash generated from operations
39,883
60,409
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