Company registration number 02516753 (England and Wales)
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
PAGES FOR FILING WITH REGISTRAR
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
CONTENTS
Page
Statement of financial position
1
Statement of changes in equity
2
Notes to the financial statements
3 - 9
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023
- 1 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
4
788
3,043
Investments
5
9,000
9,000
9,788
12,043
Current assets
Debtors
6
328,629
396,088
Cash at bank and in hand
592,082
415,698
920,711
811,786
Creditors: amounts falling due within one year
7
(560,082)
(479,244)
Net current assets
360,629
332,542
Net assets
370,417
344,585
Capital and reserves
Called up share capital
2,801,000
2,801,000
Profit and loss reserves
(2,430,583)
(2,456,415)
Total equity
370,417
344,585
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The directors of the company have elected not to include a copy of the income statement within the financial statements.true
The financial statements were approved by the board of directors and authorised for issue on 23 December 2024 and are signed on its behalf by:
Mr A Kilman
Director
Company registration number 02516753 (England and Wales)
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
2,801,000
(2,485,965)
315,035
Year ended 31 December 2022:
Profit and total comprehensive income
-
29,550
29,550
Balance at 31 December 2022
2,801,000
(2,456,415)
344,585
Year ended 31 December 2023:
Profit and total comprehensive income
-
25,832
25,832
Balance at 31 December 2023
2,801,000
(2,430,583)
370,417
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
1
Accounting policies
Company information
Magic Software Enterprises (UK) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Hampden House, 76 Durham Road, London, SW20 0TL. The principal place of business is Lily Hill House, Lily Hill Road, Bracknell, Berkshire, RG12 2SJ.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention.The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Magic Software Enterprises (UK) Limited is a wholly owned subsidiary of Magic Software Enterprises Neth. B.V. and the results of Magic Software Enterprises (UK) Limited are included in the consolidated financial statements of the ultimate parent company, Magic Software Enterprises Ltd, which are available from 1 Yahadut Canada Street, Or-Yehuda, Israel 6037501.
1.2
Going concern
The company has a capital deficit as a result of past retained losses. The company has since managed to achieve profits in each of the last ten years and able to meet its day to day working capital through credit from its parent company.true
The parent company guaranteed to give their continued support to the company and would not insist on the repayment of the amounts owed to it, if it would put at risk the going concern position of the company.
On the basis of the above, the directors consider it appropriate to prepare the financial statement on a going concern basis.
1.3
Turnover
Turnover is the amount derived from ordinary activities and represents net invoiced value of goods and services excluding VAT.
Revenue recognition
The company generates revenues from licensing the rights to use its software products and professional services, including consulting, support, training and maintenance directly to end-users, and in directly through resellers, all of which are considered end-users.
Revenues from software license agreements are recognised upon delivery of the software when collections are probable; the license fee is otherwise fixed or determinable; no significant obligation with regard to implementation remains; and persuasive evidence of an arrangement exists.
Revenues from maintenance arrangements are deferred and recognised on a straight line basis over the life of the related agreement, which is typically one year.
Consulting and training revenues are deferred and recognised when provided to the customer. Customer advances and billed amounts due from customers in excess of revenue recognised are recorded as deferred revenues.
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 4 -
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
Over the lease period
Fixtures and fittings
15% straight line
Computers, software and office equipment
33% 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 credited or charged to profit or loss.
1.5
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 5 -
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 6 -
1.10
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.13
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Tangible fixed assets
Determine whether there are any indicators of impairment of the company's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 7 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Tangible fixed assets
Tangible fixed assets are depreciated over their useful lives taking account of residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on the number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycle and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of an asset and projected disposal values.
3
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Total
4
4
4
Tangible fixed assets
Leasehold improvements
Fixtures and fittings
Computers, software and office equipment
Total
£
£
£
£
Cost
At 1 January 2023 and 31 December 2023
32,855
16,118
15,888
64,861
Depreciation and impairment
At 1 January 2023
31,784
15,611
14,423
61,818
Depreciation charged in the year
1,071
253
931
2,255
At 31 December 2023
32,855
15,864
15,354
64,073
Carrying amount
At 31 December 2023
254
534
788
At 31 December 2022
1,071
507
1,465
3,043
5
Fixed asset investments
2023
2022
£
£
Shares in group undertakings and participating interests
9,000
9,000
Investment in a group undertaking represents the entire share capital of Hermes Logistics Technologies Ltd, a company incorporated in the United Kingdom, that develops and sells software products.
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
6
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
176,057
296,297
Amounts owed by group undertakings
132,829
79,020
Other debtors
993
2,021
309,879
377,338
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset
18,750
18,750
Total debtors
328,629
396,088
7
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
205
814
Amounts owed to group undertakings
64,443
50,792
Taxation and social security
53,981
57,066
Other creditors
441,453
370,572
560,082
479,244
8
Audit report information
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was unqualified.
Senior Statutory Auditor:
Mr Inderjith Sivlal
Statutory Auditor:
Hampden
Date of audit report:
23 December 2024
MAGIC SOFTWARE ENTERPRISES (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
9
Related party transactions
Transactions with related parties
In accordance with FRS102 paragraph 33.1A, the company is exempt from reporting related party transactions as it is a wholly owned subsidiary of Magic Software Enterprises Ltd (the ultimate parent company).
The largest group in which the company's results are consolidated is headed by Magic Software Enterprises Limited. Copies of their consolidated financial statements can be obtained from its registered office at: Terminal Centre, 1 Yahadut Canada Street, Or-Yehuda, Israel 6037501.
10
Parent company
The immediate parent company is Magic Software Enterprises Neth. B.V and the ultimate parent company is Magic Software Enterprises Ltd, a public company incorporated in Israel.
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