Company registration number 10156239 (England and Wales)
MEME UK HOLDINGS LTD AND SUBSIDIARY UNDERTAKINGS
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
MEME UK HOLDINGS LTD
COMPANY INFORMATION
Director
Mr J R N Brooke
(Appointed 15 October 2024)
Secretary
Vistra Company Secretaries Limited
Company number
10156239
Registered office
95 Gresham Street
6th Floor
London
EC2V 7NA
Auditor
Kirk Rice LLP
Zeeta House
200 Upper Richmond Road
Putney
London
United Kingdom
SW15 2SH
MEME UK HOLDINGS LTD
CONTENTS
Page
Strategic report
1 - 2
Director's report
3 - 4
Independent auditor's report
5 - 8
Profit and loss account
9
Group statement of comprehensive income
10
Group balance sheet
11
Company balance sheet
12
Group statement of changes in equity
13
Company statement of changes in equity
14
Group statement of cash flows
15
Company statement of cash flows
16
Notes to the financial statements
17 - 38
MEME UK HOLDINGS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The director presents the strategic report for the year ended 31 December 2023.
Principal activities
The principal activity of the company is to provide next-generation marketing technology across various platforms.
Review of the business
The group has made a loss for the year after tax of $10,182,022 (2022 - $22,387,816).
Principal risks and uncertainties
The management of the business and the execution of the company’s strategy are subject to several risks. The key business risks affecting the company relate to achieving the revenue growth planned for future periods and ensuring sufficient liquidity is available to support operations.
Financial Risk Management
The company's operations expose it to a variety of financial risks, including foreign exchange currency rate risk, price risk, credit risk, liquidity risk, and interest rate cash flow risk. Given the size of the company, responsibility for monitoring financial risk management remains with the board.
Interest Rate Risk
The board seeks to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and related finance costs. The company does not use derivative financial instruments to manage interest rate costs, and as such, no hedge accounting is applied.
Foreign Exchange Currency Rate Risk
The majority of the company's transactions, both in volume and value, are conducted primarily in Euro, British Pound Sterling, and US Dollars. The company seeks to minimise foreign exchange currency rate risk through regular monitoring of foreign currency flows and by endeavouring to match inflows and outflows for each major currency (a "natural hedge"). The company does not use derivative financial instruments to manage currency risks, and as such, no hedge accounting is applied.
Price Risk
The company is not exposed to any commodity price risk as a result of its operations. It also has no exposure to equity securities price risk, as it holds no listed investments.
Credit Risk
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, and credit exposures to customers, including outstanding receivables. The company has implemented policies requiring appropriate credit checks on potential customers before sales are made.
MEME UK HOLDINGS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Liquidity Risk
Liquidity continues to be a key risk and uncertainty facing the company. Since its inception, the company has not yet achieved operating profitability. Due to the significant costs incurred in:
(i) investing in updates to the technology underlying its service platform; and
(ii) rationalising the employee base in line with anticipated future cash flows, the company has been reliant on the support of its ultimate parent company.
During the past year, the company has undertaken several cost-cutting measures and strategic initiatives to improve profitability.
A significant initiative in the UK Company is to cut the operating costs of the office but moving to a smaller and much less expensive lease in April when the current lease expires.
The company continues to explore additional ways to reduce costs and works closely with the board to secure support for cost-saving initiatives that require capital investment.
Please also refer to the post-statement of financial position events section in the directors’ report, which highlights a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern.
Key performance indicators
For the 12 months ended 31 December 2023, the company generated $21,677,976 (2022 - $25,420,124) gross profit from revenues of $37,169,707 (2022 - $40,696,365). The successful implementation of cost reduction strategies led to a decrease in operating expenses, resulting in an operating profit of $288,389 (2022 – operating loss of $17,016,520).
Mr J R N Brooke
Director
21 February 2025
MEME UK HOLDINGS LTD
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The director presents his annual report together with the Group strategic report and financial statements of MEME UK Holdings Ltd ('the company') and its subsidiaries (together 'the group') for the year ended 31 December 2023.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The director does not recommend payment of a further 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 S F Warren
(Appointed 19 May 2023 and resigned 15 October 2024)
Mr N E Pingelton
(Resigned 15 October 2024)
Mr M Johnson
(Resigned 19 May 2023)
Mr M E Wilkinson
(Resigned 19 May 2023)
Mr J R N Brooke
(Appointed 15 October 2024)
Auditor
Kirk Rice were appointed as auditors to the group 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 group 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 director's responsibilities
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 Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ;
prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
MEME UK HOLDINGS LTD
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.
Matters covered in the strategic report
The Group has chosen in accordance with Section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out within the group's Strategic Report the Company's Strategic Report Information Required by Schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008. This includes information that would have been included in the business review and details of the principal risks and uncertainties.
Going concern
The directors have assessed the group's ability to continue as a going concern considering its financial position. For the year ended 31 December 2023, the group reported a loss before tax of $10.1 million and net liabilities of $102.9 million. The group has prepared forecasts for the forthcoming 12 months, these contain assumptions regarding revenues and anticipated costs. However, the timing of cashflows, revenues and costs is inherently difficult to forecast. Although, should future projections be achieved, the group will have sufficient cashflows. Thus, the directors continue to adopt the going concern basis of accounting.
UBS Asset Management (Americas) LLC, as the majority shareholder of MEME Global Holdings and a provider of debt financing to the group, has confirmed its continued financial support. UBS has explicitly stated its ability and willingness to provide additional financial assistance if required, backed by its substantial financial capacity and market presence.
Based on this support, the directors have a reasonable expectation that the group will have sufficient resources to continue operating for the foreseeable future. Therefore, the financial statements have been prepared on a going concern basis. However, the directors acknowledge that the group remains dependent on the continued financial backing of UBS and that this represents a material uncertainty that may cast significant doubt on the group's ability to continue as a going concern.
On behalf of the board
Mr J R N Brooke
Director
21 February 2025
MEME UK HOLDINGS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MEME UK HOLDINGS LTD
- 5 -
Qualified opinion on financial statements
We have audited the financial statements of MEME UK Holdings Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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 Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion, except for the possible effects of the matter described in the basis for qualified opinion section of our report, 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 for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified opinion
In the parent company's individual financial statements for the year ended 31 December 2022, a disclaimer of opinion was issued due to a limitation of scope relating to potentially material and pervasive transactions with related parties, namely with the wider Marlin Group. The parent company was unable to provide sufficient appropriate audit evidence regarding these transactions as a result of limitations on its access to information from the wider Marlin Group.
As a result of these matters, we were unable to determine whether any adjustments might have been found necessary in respect of the comparative information in the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, and notes to the financial statements, including a summary of significant accounting policies. Furthermore, the possible effects of any undetected misstatements could have a material impact on the intercompany revenue (2023: $2,363,120), intercompany expense (2023: $3,957,066), intercompany interest income (2023: $379,905) and intercompany interest expense (2023: $6,319,703) in the Statement of Comprehensive Income for the year ended 31 December 2023 and consequently we were unable to determine whether any adjustment to these balances were necessary. In addition, were any adjustment be required, the strategic report would also need to be amended.
Finally, as a result of the parent company not preparing consolidated financial statements for a number of years, the group has been unable to provide us with satisfactory information and explanations relating to a specific historical consolidation adjustment between the investments of the parent company and the equity reserves of the subsidiaries, which resulted in an adjustment to consolidated retained earnings of $45,396,137 as at 31 December 2022 and $33,499,921 as at 31 December 2023. We were unable to satisfy ourselves by alternative means due to their historical nature and the unavailability of supporting data. As a result of this matter, we were unable to determine whether any adjustment might have been found necessary to the consolidated retained earnings in the Statement of Financial Position.
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 group and parent 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 qualified opinion.
MEME UK HOLDINGS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MEME UK HOLDINGS LTD
- 6 -
Material uncertainty relating to going concern
We draw attention to Note 1.4 in the financial statements, which indicates that the group incurred a net loss before tax of £10,140,722 during the year ended 31 December 2023 and, as of that date, the group's current liabilities exceeded its total assets by £102,869,920. The group relies on the ongoing support of its indirect shareholder and, as stated in Note 1.4, this indicates that a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
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.
As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the comparative information and the intercompany income and expenditure during the year to 31 December 2023. We have concluded that where the other information refers to the comparative information or intercompany income and expenditure, it may be materially misstated for the same reason.
Opinions on other matters prescribed by the Companies Act 2006
Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
Except for the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
Arising solely from the limitation on the scope of our work relating to the comparative information and intercompany income and expenditure, referred to above:
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:
returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made.
MEME UK HOLDINGS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MEME UK HOLDINGS LTD
- 7 -
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 parent 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 parent company or to cease operations, or has no realistic alternative but to do so.
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
During the planning of our audit procedures, attention was drawn to the key areas which might involve non-compliance with laws and regulations or fraud. All members of the audit team considered the risks and how these could possibly manifest in practice. We also enquired of management whether they were aware of any instances of non-compliance with laws and regulations or had knowledge of any actual, suspected, or alleged fraud.
In particular, we had to consider the adequacy of the controls in place including management’s use of spreadsheets and reconciliations. We also considered, amongst other matters, management override of controls, recognition of income, and the maintenance of statutory records.
As detailed throughout this summary, the audit work carried out was designed in a way to identify any occurrences of fraud during the year. We are satisfied that the risk of management override of controls has been mitigated and that no manipulation has occurred in sales through incorrect or false revenue recognition or inappropriate journal entries.
At the completion stage of the audit, final review and oversight included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud. Following this, we are satisfied that there were no instances of fraud or irregularity.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Other matters which we are required to address
The Company took exemption from consolidation when preparing the financial statements for the year ended 31 December 2022. Thus, comparative information for the Group in the consolidated financial statements for the year ended 31 December 2023 has been derived from the consolidation of the Company's results with its subsidiaries' individual trial balances, which were not audited.
The comparative information presented for the Company is derived from its prior period financial statements, which were subject to audit by a predecessor auditor. The predecessor auditor's report was dated 30 April 2024 and expressed a disclaimer of opinion as a result of the issues described in the basis for qualified opinion section of our report.
MEME UK HOLDINGS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MEME UK HOLDINGS LTD
- 8 -
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.
Kalbinder Sanghera (Senior Statutory Auditor)
For and on behalf of Kirk Rice LLP
21 February 2025
Statutory Auditor
Zeeta House
200 Upper Richmond Road
Putney
London
United Kingdom
SW15 2SH
MEME UK HOLDINGS LTD
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
$
$
Turnover
3
37,169,707
40,696,365
Cost of sales
(15,491,731)
(15,276,241)
Gross profit
21,677,976
25,420,124
Administrative expenses
(21,426,513)
(42,447,685)
Other operating income
36,926
11,041
Operating profit/(loss)
4
288,389
(17,016,520)
Interest receivable and similar income
7
379,904
123,409
Interest payable and similar expenses
8
(10,809,015)
(5,202,069)
Loss before taxation
(10,140,722)
(22,095,180)
Tax on loss
9
(41,300)
(292,636)
Loss for the financial year
20
(10,182,022)
(22,387,816)
Loss for the financial year is all attributable to the owners of the parent company.
MEME UK HOLDINGS LTD
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
$
$
Loss for the year
(10,182,022)
(22,387,816)
Other comprehensive income
Actuarial (loss)/gain on defined benefit pension schemes
(141,770)
748,434
Currency translation (loss)/gain taken to retained earnings
(3,808,249)
8,373,201
Other comprehensive income for the year
(3,950,019)
9,121,635
Total comprehensive income for the year
(14,132,041)
(13,266,181)
Total comprehensive income for the year is all attributable to the owners of the parent company.
MEME UK HOLDINGS LTD
GROUP BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
$
$
$
$
Fixed assets
Intangible assets
10
42
41
Tangible assets
11
1,680,772
2,289,483
1,680,814
2,289,524
Current assets
Debtors
14
57,066,248
28,938,573
Cash at bank and in hand
2,313,912
3,353,874
59,380,160
32,292,447
Creditors: amounts falling due within one year
15
(161,633,549)
(121,618,869)
Net current liabilities
(102,253,389)
(89,326,422)
Total assets less current liabilities
(100,572,575)
(87,036,898)
Creditors: amounts falling due after more than one year
16
(435,126)
(560,659)
Net assets excluding pension liability
(101,007,701)
(87,597,557)
Defined benefit pension liability
18
(1,862,219)
(1,649,357)
Net liabilities
(102,869,920)
(89,246,914)
Capital and reserves
Called up share capital
19
1
1
Capital redemption reserve
20
95,053,226
94,544,191
Profit and loss reserves
20
(197,923,147)
(183,791,106)
Total equity
(102,869,920)
(89,246,914)
The financial statements were approved by the board of directors and authorised for issue on 21 February 2025 and are signed on its behalf by:
21 February 2025
Mr J R N Brooke
Director
Company registration number 10156239 (England and Wales)
MEME UK HOLDINGS LTD
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 12 -
2023
2022
Notes
$
$
$
$
Fixed assets
Investments
12
451,419
163,586
Current assets
Debtors
14
15,977,677
9,808,388
Creditors: amounts falling due within one year
15
(52,832,063)
(45,867,930)
Net current liabilities
(36,854,386)
(36,059,542)
Net liabilities
(36,402,967)
(35,895,956)
Capital and reserves
Called up share capital
19
1
1
Capital redemption reserve
20
95,053,226
94,544,191
Profit and loss reserves
20
(131,456,194)
(130,440,148)
Total equity
(36,402,967)
(35,895,956)
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was $991,747 (2022 - $7,453,070 loss).
The financial statements were approved by the board of directors and authorised for issue on 21 February 2025 and are signed on its behalf by:
21 February 2025
Mr J R N Brooke
Director
Company registration number 10156239 (England and Wales)
MEME UK HOLDINGS LTD
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
$
$
$
$
Balance at 1 January 2022
1
94,477,288
(170,524,925)
(76,047,636)
Year ended 31 December 2022:
Loss for the year
-
-
(22,387,816)
(22,387,816)
Other comprehensive income:
Actuarial gains on defined benefit plans
-
-
748,434
748,434
Currency translation differences
-
-
8,373,201
8,373,201
Total comprehensive income
-
-
(13,266,181)
(13,266,181)
Other movements
-
66,903
-
66,903
Balance at 31 December 2022
1
94,544,191
(183,791,106)
(89,246,914)
Year ended 31 December 2023:
Loss for the year
-
-
(10,182,022)
(10,182,022)
Other comprehensive income:
Actuarial gains on defined benefit plans
-
-
(141,770)
(141,770)
Currency translation differences
-
-
(3,808,249)
(3,808,249)
Total comprehensive income
-
-
(14,132,041)
(14,132,041)
Other movements
-
509,035
-
509,035
Balance at 31 December 2023
1
95,053,226
(197,923,147)
(102,869,920)
MEME UK HOLDINGS LTD
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
$
$
$
$
Balance at 1 January 2022
1
94,477,288
(126,540,345)
(32,063,056)
Year ended 31 December 2022:
Loss for the year
-
-
(7,453,069)
(7,453,069)
Other comprehensive income:
Currency translation differences
-
-
3,553,266
3,553,266
Total comprehensive income
-
-
(3,899,803)
(3,899,803)
Increase in capital contributions
-
66,903
-
66,903
Balance at 31 December 2022
1
94,544,191
(130,440,148)
(35,895,956)
Year ended 31 December 2023:
Profit for the year
-
-
991,747
991,747
Other comprehensive income:
Currency translation differences
-
-
(2,007,793)
(2,007,793)
Total comprehensive income
-
-
(1,016,046)
(1,016,046)
Increase in capital contributions
-
509,035
-
509,035
Balance at 31 December 2023
1
95,053,226
(131,456,194)
(36,402,967)
MEME UK HOLDINGS LTD
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
2023
2022
Notes
$
$
$
$
Cash flows from operating activities
Cash generated from/(absorbed by) operations
24
12,655,774
(700,191)
Interest paid
(10,809,015)
(5,202,069)
Income taxes refunded/(paid)
542,806
(232,951)
Net cash inflow/(outflow) from operating activities
2,389,565
(6,135,211)
Investing activities
Purchase of tangible fixed assets
(397,121)
(835,045)
Proceeds from disposal of tangible fixed assets
-
70
Interest received
379,904
123,409
Net cash used in investing activities
(17,217)
(711,566)
Financing activities
Proceeds from issue of shares
509,035
66,903
Repayment of bank loans
(235,358)
(283,141)
Net cash generated from/(used in) financing activities
273,677
(216,238)
Net increase/(decrease) in cash and cash equivalents
2,646,025
(7,063,015)
Cash and cash equivalents at beginning of year
3,353,874
1,605,620
Effect of foreign exchange rates
(3,685,987)
8,811,269
Cash and cash equivalents at end of year
2,313,912
3,353,874
MEME UK HOLDINGS LTD
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
2023
2022
Notes
$
$
$
$
Cash flows from operating activities
Cash generated from/(absorbed by) operations
25
3,685,145
(3,251,787)
Interest paid
(3,909,927)
(2,032,722)
Net cash outflow from operating activities
(224,782)
(5,284,509)
Investing activities
Interest received
1,723,540
1,664,340
Net cash generated from investing activities
1,723,540
1,664,340
Financing activities
Proceeds from issue of shares
509,035
66,903
Net cash generated from financing activities
509,035
66,903
Net increase/(decrease) in cash and cash equivalents
2,007,793
(3,553,266)
Cash and cash equivalents at beginning of year
Effect of foreign exchange rates
(2,007,793)
3,553,266
Cash and cash equivalents at end of year
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
1
Accounting policies
Company information
MEME UK Holdings Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 95 Gresham Street 6th Floor, London, United Kingdom, EC2V 7NA.
The group consists of MEME UK Holdings Ltd and all of its subsidiaries.
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.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of income and retained earnings in these financial statements.
The functional currency of the company is GBP. The presentational currency of these financial statements is USD. 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
Business combinations
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.
Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.
1.3
Basis of consolidation
The consolidated group financial statements consist of the financial statements of the parent company MEME UK Holdings Ltd together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
1.4
Going concern
The directors have assessed the group's ability to continue as a going concern considering its financial position. For the year ended 31 December 2023, the group reported a loss before tax of $10.1 million and net liabilities of $102.9 million. The group has prepared forecasts for the forthcoming 12 months, these contain assumptions regarding revenues and anticipated costs. However, the timing of cashflows, revenues and costs is inherently difficult to forecast. Although, should future projections be achieved, the group will have sufficient cashflows. Thus, the directors continue to adopt the going concern basis of accounting.
UBS Asset Management (Americas) LLC, as the majority shareholder of MEME Global Holdings and a provider of debt financing to the group, has confirmed its continued financial support. UBS has explicitly stated its ability and willingness to provide additional financial assistance if required, backed by its substantial financial capacity and market presence.
Based on this support, the directors have a reasonable expectation that the group will have sufficient resources to continue operating for the foreseeable future. Therefore, the financial statements have been prepared on a going concern basis. However, the directors acknowledge that the group remains dependent on the continued financial backing of UBS and that this represents a material uncertainty that may cast significant doubt on the group's ability to continue as a going concern.
1.5
Turnover
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
Subscription fees
The company derives subscription fees from following sources: Software as a service (SaaS) fees, implementation and configuration fees, support fees, and professional services. Contracts may represent multiple deliverable arrangement. These arrangement are bifurcated according to service elements. Amounts received in advance of service are recorded as deferred revenue.
The company's pricing is predicated on a 'per subscription, per annum' basis plus usage, which is directly correlated to the agreed annual email commitment (web service usages). Contracts follow a software subscription model where the customer pays a fixed monthly fee for use of the email subscription and support services plus usage fees based on the amount of emails sent monthly or the amount of emails sent monthly over the committed amount. The average contact duration can be monthly or annual.
For hosted software service solutions, the company recognises revenue of monthly SaaS fees, providing there are no indications of software sales in the agreement. Where there is a stand-alone value for implementation and/or consulting labour, the revenue is recognised upon client's acceptance or when the service is performed. where no stand-alone values exists the revenue is recognised on a straight-line basis over the term of the contract which is deemed to be the best indication of the customer life.
Advertising services
The company generates advertising services revenue by delivering advertisements to internet users through various channels, including display, paid search, mobile, social and email, which results in lead generation. These arrangement are typically made directly with customers or with advertising agencies on behalf of their advertiser clients and are generally evidence by a fully executed sales order. Generally, sales orders describe the campaign objectives, state the number and type of leads to be delivered, the agreed upon rate for each delivered lead, and a fixed period of time for delivery. Customers are typically bulled on a monthly basis for each campaign for leads delivered during the prior month.
The determination of whether revenue from advertising services arrangements should be reports on a gross or net basis is based on an assessment of whether the company is acting as the principal or an agent in the transaction, In determining whether the company acts as a principal or an agent, the company follows the accounting guidance for principal-agent considerations, While none of the factors identified in this guidance is individually considered presumptive or determinative, the company has concluded that is acts as a principal with respect to these arrangements because the company is the primary obligor and responsible for (i) fulfilling the advertisement delivery, (ii) establishing the selling prices for delivery of the advertisements, (ii) establishing the selling prices for delivery of the advertisements, (iii) selecting the media to fulfil the sales order, and (iv) performing campaign set-up, management, billing and collection activities including retaining credit risk and (b) the company has the risk of fluctuating costs from its media vendors relative to fixed pricing negotiated with its customers and has discretion in selecting media vendors when fulfilling a customer's campaign. Based on this conclusion, the company reports revenue earned and costs incurred with respect to its advertising services on a gross basis.
Professional services
Professional fees include other consulting services or installation related consulting services that are outside the scope of their contract. The work is request and approved by both the client and the company. These are one-time services to be recorded as revenue upon completion of the service. If payment is made prior to the performance of the service, the amount received is recorded as deferred revenue and recognised, in full, upon completion of the service.
1.6
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
1.7
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.8
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Developed technology
10 years straight line
1.9
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 land and buildings
5 to 10 years
Plant and equipment
3 to 5 years
Fixtures and fittings
5 to 7 years
Computers
3 to 5 years
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 profit and loss account.
1.10
Fixed asset investments
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -
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 group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.11
Impairment of fixed assets
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
1.12
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.
1.13
Financial instruments
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 22 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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 group 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.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 23 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
1.14
Equity instruments
Equity instruments issued by the group 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 group.
1.15
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 24 -
1.16
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.
1.17
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The cost of providing benefits under defined benefit plans is determined separately for each plan using the projected unit credit method, and is based on actuarial advice.
The change in the net defined benefit liability arising from employee service during the year is recognised as an employee cost. The cost of plan introductions, benefit changes, settlements and curtailments are recognised as an expense in measuring profit or loss in the period in which they arise.
The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.
Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.
The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.
1.18
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
1.19
Foreign exchange
This policy establishes procedures for translating the functional currency of subsidiaries into the Group’s reporting currency for consolidation purposes. Subsidiaries must translate their financial statements by applying the closing rate for assets and liabilities, the average rate for income and expenses, and historical rates for equity items. Exchange differences arising from this translation are recognized in Other Comprehensive Income (OCI).
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 25 -
1.20
Finance costs are charged to the statement of the comprehensive income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
1.21
Where invoices have been raised in the accounting period but the associated turnover will not be recognised until the following accounting period, the group recognises a deferred revenue liability. At the year-end date, any unpaid invoices that are recognised as deferred revenue are removed from the financial statements by netting off the trade debtor and the deferred revenue liability. Any VAT element for those invoices within trade debtors and the corresponding VAT liability are left unchanged. The recognition of deferred revenue in this manner is considered to reflect a more true and fair view of the actual position of the group's assets and liabilities.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
2
Judgements and key sources of estimation uncertainty
In the application of the group’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 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.
Investments
Where there are indicators of impairment of investments, the company compares the carrying value of the asset with its recoverable amount, represented by the higher of its value in use and its fair value less costs to sell. Value in use is based on a discounted cash flow model, and is, therefore, sensitive to the discount rate used as well as the expected future cash flows and extrapolated growth rate. Net realisable value is estimated as fair value less costs of disposal, based on available data from sales transactions for similar assets.
Fair value of loans
Where there are new loans, the company recognises the present value of the future payments discounted at a market rate of interest for a similar debt instrument as determined at initial recognition adjusted for transaction costs.
Impairment of trade debtors
Management make an estimate of the recoverable value of trade debtors. When assessing impairment of trade and other debtor, management consider factors including the current credit rating of the debtor, the aging profile of the debt, and historical experience.
Impairment of group debtor balances
Group debtor balances are reviewed regularly by the directors for any evidence of impairment. The review will consider numerous factors including the underlying net assets, projected earnings, and likely future cash inflows of the respective entities. Where it is considered that the recoverable amount is lower than the carrying value, any impairment is recognised in the statement of comprehensive income.
Impairment of intangible assets
Management reviews intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. When assessing impairment of intangible assets, management compare the carrying value of the assets with the estimated undiscounted cash flows expected.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
3
Turnover and other revenue
2023
2022
$
$
Turnover analysed by class of business
Subscriptions
26,388,858
26,684,377
Services
4,444,487
5,196,558
SMS Revenue
3,802,026
4,445,384
Media
252,547
295,282
Discounts
(81,331)
(95,094)
Non-consolidated group charges
2,363,120
4,169,858
37,169,707
40,696,365
2023
2022
$
$
Turnover analysed by geographical market
United Kingdom
9,470,379
8,288,690
Rest of the world
27,699,328
32,407,675
37,169,707
40,696,365
2023
2022
$
$
Other revenue
Interest income
379,904
123,409
4
Operating profit/(loss)
2023
2022
$
$
Operating profit/(loss) for the year is stated after charging/(crediting):
Exchange (gains)/losses
(6,538,013)
9,895,856
Research and development costs
(207,075)
(383,385)
Depreciation of owned tangible fixed assets
881,027
822,381
Loss on disposal of tangible fixed assets
2,540
4,252
Share-based payments
-
35,798
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
$
$
For audit services
Audit of the financial statements of the group and company
63,675
-
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
6
Employees
The average monthly number of persons (including directors) employed by the group and company during the year was:
Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Media
72
66
-
-
Sales
55
64
-
-
Technical
91
114
-
-
Admin
29
40
-
-
Total
247
284
Their aggregate remuneration comprised:
Group
Company
2023
2022
2023
2022
$
$
$
$
Wages and salaries
17,876,860
18,993,995
Social security costs
2,123,412
2,191,197
-
-
Pension costs
1,031,719
2,232,015
21,031,991
23,417,207
No remuneration was paid to the directors by the Company or the Group during the year (prior year: £nil). The directors’ remuneration is borne by another entity within the wider group and is not recharged to the Group.
7
Interest receivable and similar income
2023
2022
$
$
Interest income
Interest receivable from group companies
379,904
123,409
2023
2022
Investment income includes the following:
$
$
Interest on financial assets not measured at fair value through profit or loss
379,904
123,409
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 29 -
8
Interest payable and similar expenses
2023
2022
$
$
Interest on financial liabilities measured at amortised cost:
Interest payable to group undertakings
6,319,762
4,785,756
Other finance costs:
Other interest
4,489,253
416,313
Total finance costs
10,809,015
5,202,069
Included within other interest is $62,271 (2022: $29,376) net interest on pension scheme liabilities.
9
Taxation
2023
2022
$
$
Current tax
Foreign current tax on profits for the current period
41,300
292,636
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
$
$
Loss before taxation
(10,140,722)
(22,095,180)
Expected tax credit based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
(2,535,181)
(4,198,084)
Tax effect of expenses that are not deductible in determining taxable profit
3,422,112
991,758
Unutilised tax losses carried forward
114,365
3,078,104
Permanent capital allowances in excess of depreciation
(1,158)
(1,020)
Consolidation adjustments
(1,676,744)
(1,040,378)
Overseas company profits not taxable in UK
676,606
1,169,620
Foreign tax paid
41,300
292,636
Taxation charge
41,300
292,636
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
10
Intangible fixed assets
Group
Goodwill
Developed technology
Total
$
$
$
Cost
At 1 January 2023
9,410,181
4,444,685
13,854,866
Exchange adjustments
318,671
150,517
469,188
At 31 December 2023
9,728,852
4,595,202
14,324,054
Amortisation and impairment
At 1 January 2023
9,410,181
4,444,644
13,854,825
Exchange adjustments
318,671
150,516
469,187
At 31 December 2023
9,728,852
4,595,160
14,324,012
Carrying amount
At 31 December 2023
42
42
At 31 December 2022
41
41
The company had no intangible fixed assets at 31 December 2023 or 31 December 2022.
11
Tangible fixed assets
Group
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Computers
Total
$
$
$
$
$
Cost
At 1 January 2023
22,900
408,767
340,052
9,286,057
10,057,776
Additions
3,629
393,454
397,083
Disposals
(2,384)
(71,125)
(19,856)
(10,134)
(103,499)
Exchange adjustments
1,082
58,049
16,868
131,624
207,623
At 31 December 2023
21,598
399,320
337,064
9,801,001
10,558,983
Depreciation and impairment
At 1 January 2023
20,314
390,847
295,342
7,061,790
7,768,293
Depreciation charged in the year
2,351
9,881
7,168
861,627
881,027
Eliminated in respect of disposals
(2,384)
(71,125)
(17,353)
(10,134)
(100,996)
Exchange adjustments
406
64,304
15,574
249,603
329,887
At 31 December 2023
20,687
393,907
300,731
8,162,886
8,878,211
Carrying amount
At 31 December 2023
911
5,413
36,333
1,638,115
1,680,772
At 31 December 2022
2,586
17,920
44,710
2,224,267
2,289,483
The company had no tangible fixed assets at 31 December 2023 or 31 December 2022.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Tangible fixed assets
(Continued)
- 31 -
12
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
$
$
$
$
Investments in subsidiaries
13
451,419
163,586
Movements in fixed asset investments
Company
Shares in subsidiaries
$
Cost or valuation
At 1 January 2023
97,170,419
Valuation changes
5,498,696
Disposals
(447,359)
At 31 December 2023
102,221,756
Impairment
At 1 January 2023
97,006,833
Impairment losses
(278,652)
Valuation changes
5,489,515
Disposals
(447,359)
At 31 December 2023
101,770,337
Carrying amount
At 31 December 2023
451,419
At 31 December 2022
163,586
13
Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
13
Subsidiaries
(Continued)
- 32 -
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Mapp Digital UK Limited
95 Gresham Street 6th Floor, London, United Kingdom, EC2V 7NA
Ordinary
100.00
-
Mapp Digital France SAS
33 Rue La Fayette, 75009, Paris, France
Ordinary
100.00
-
Mapp Digital Germany GmbH
Sandstraße 3, 80335 München, Germany
Ordinary
100.00
-
Mapp Digital Italy SRL
Via Dante, 7, 20123 Milano MI, Italy
Ordinary
100.00
-
Mapp Digital Netherlands BV
Lichttoren 32, Eindhoven, 5611 BJ, NL
Ordinary
100.00
-
Mapp Digital Poland Sp Z.O.O
Ul. Kamienskiego 47, 30-644 Krakow, Poland
Ordinary
100.00
-
Mapp Digital Isreal Holdings Limited
3 Habazel, Tel Aviv-Jaffa, 6971005, IL
Ordinary
100.00
-
MEME US Holdings, LLC
4660 La Jolla Village Dr.Suite 100, San Diego, CA 92122, USA
Ordinary
100.00
-
Webtrekk Group GmbH
Schönhauser Allee 148, 10435 Berlin, Germany
Ordinary
100.00
-
Webtrekk GmbH
Schönhauser Allee 148, 10435 Berlin, Germany
-
100.00
Webtrekk GmbH (Italy)
Via Pietro Orseolo,12, 20144, Milano MI, Italy
-
100.00
14
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
$
$
$
$
Trade debtors
7,386,314
6,593,244
Amounts owed by group undertakings
47,057,670
19,411,347
15,850,282
9,744,491
Other debtors
222,164
501,452
127,395
63,897
Prepayments and accrued income
1,438,784
1,400,960
56,104,932
27,907,003
15,977,677
9,808,388
Amounts falling due after more than one year:
Prepayments and accrued income
961,316
1,031,570
Total debtors
57,066,248
28,938,573
15,977,677
9,808,388
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 33 -
15
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
$
$
$
$
Bank loans
17
114,775
239,118
Trade creditors
1,770,241
1,570,843
Amounts owed to group undertakings
119,300,155
86,010,264
26,398,115
25,597,324
Corporation tax payable
850,518
266,412
Other taxation and social security
1,266,096
1,217,091
-
-
Other creditors
33,292,468
26,727,839
26,433,948
20,270,606
Accruals and deferred income
5,039,296
5,587,302
161,633,549
121,618,869
52,832,063
45,867,930
Other creditors includes amounts owed to Marlin-MAPP, Inc., an indirect shareholder, by MEME UK Holdings Ltd and Mapp Digital UK Ltd of $26,433,948 (2022: $20,270,606) and $6,911,586 (2022: $6,427,059) respectively.
16
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
$
$
$
$
Bank loans and overdrafts
17
111,015
Other creditors
25,657
140,466
Accruals and deferred income
409,469
309,178
435,126
560,659
-
-
17
Loans and overdrafts
Group
Company
2023
2022
2023
2022
$
$
$
$
Bank loans
114,775
350,133
Payable within one year
114,775
239,118
Payable after one year
111,015
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
$
$
Charge to profit or loss in respect of defined contribution schemes
1,031,719
2,232,015
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
18
Retirement benefit schemes
(Continued)
- 34 -
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Defined benefit schemes
The group operates a closed defined benefit scheme in Germany within the subsidiary Mapp Digital Germany GmbH. The pension scheme is unfunded, meaning that any benefits are paid out of the company's assets as necessary.
Aon Consulting, Inc. are the independent actuary that carried out the latest actuarial valuation as at 31 December 2023 using the projected unit credit method. The actuarial report was dated 7 February 2024 and the major assumptions used by the actuary are detailed below.
As at 31 December 2023, the updated valuation of the pension scheme shows it to be in deficit, as expected of an unfunded scheme.
Present values of defined benefit oblifations, fair value of assets and defined benefit liability
2023
2022
2021
$
$
$
Fair value of scheme assets
-
-
-
Present value of scheme liabilities
1,862,219
1,649,357
2,522,439
Deficit in scheme
1,862,219
1,649,357
2,522,439
Unrecognised surplus
-
-
-
Defined benefit liability recognised
1,862,219
1,649,357
2,522,439
Reconciliation of opening and closing balances of the present value of the scheme liabilities
2023
2022
$
$
Scheme liabilities at start of period
1,649,357
2,522,439
Service cost
-
2,779
Interest cost
62,271
29,376
Actuarial losses
138,278
(762,026)
Exchange rate loss
(58,887)
(143,211)
Benefits paid from plan
(46,574)
-
Scheme liabilities at end of period
1,862,219
1,649,357
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
18
Retirement benefit schemes
(Continued)
- 35 -
Reconciliation of opening and closing balances of the fair value of the scheme assets
2023
2022
$
$
Fair value of scheme assets at start of period
-
-
Fair value of scheme assets at end of period
-
-
As the scheme is unfunded, there are no scheme assets to be disclosed and no return on scheme assets to be recognised.
Total expense recognised in profit and loss account
2023
2022
$
$
Service cost
-
(2,779)
Net interest cost
(62,271)
(29,376)
Amortisation of gain
31,026
8,908
Total expense recognised in profit and loss account
(31,245)
(23,247)
Defined benefit cost recognised in Other Comprehensive Income
2023
2022
$
$
(Gain)/loss arising during the year
(138,278)
762,026
Gain recognised in expense during the year
(31,026)
(8,908)
Exchange rate gain/(loss)
27,534
(4,684)
Total recognised in other comprehensive income
(141,770)
748,434
Assumptions
2023
2022
2021
% per annum
% per annum
% per annum
Inflation
2.15
2.25
5.00
Discount rate
3.35
3.75
1.25
Salary increase rate
3.00
3.00
3.00
Pension increase rate for pensioners
2.15
2.25
1.75
The mortality assumptions adopted at 31 December 2023 are based on Heubeck 2018 G.
The best estimate of contributions, excluding expenses, to be paid by the company to the scheme for the period commencing 1 January 2024 is $48,921.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 36 -
19
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
$
$
Issued and fully paid
of £1 each
1
1
1
1
20
Reserves
The company's capital and reserves are as follows:
Called up share capital
Called up share capital represents the nominal value of the shares issued.
Capital contribution reserve
Capital contribution represents the consideration given to the entity in exchange for an equity interest.
Profit and loss account
The profit and loss account represents cumulative profits or losses, foreign exchange movements, and other adjustments.
21
Operating lease commitments
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Group
Company
2023
2022
2023
2022
$
$
$
$
Within one year
1,486,458
1,485,597
-
-
Between two and five years
708,516
1,995,389
-
-
2,194,974
3,480,986
-
-
22
Related party transactions
As at 31 December 2023, $26,433,948 (2022 - $20,270,606) was owed to related party Marlin-Mapp, Inc.
During the year, interest of $1,964,230 (2022 - $2,036,964) was charged on the related party balance payable to Marlin-Mapp, Inc.
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 37 -
23
Controlling party
The immediate parent company is MEME Global Holdings Ltd, a company incorporated in the Cayman Islands.
The company's ultimate parent company is TMA Solutions L.P., which is registered in the Cayman Islands.
As at 31 December 2023, TMA Solutions was wholly-owned by Marlin Equity IV L.P and Marlin Heritage, L.P., ("Marlin"), the company’s private equity sponsor. Marlin was the ultimate controlling party and the wider group refers to the whole Marlin group.
Subsequent to the balance sheet date, TMA Solutions was acquired by UBS Asset Management (Americas) LLC and this entity is now the ultimate controlling party.
As at 31 December 2023 the largest group in which the results are consolidated is that headed by TMA Solutions L.P.
24
Cash generated from/(absorbed by) group operations
2023
2022
$
$
Loss for the year after tax
(10,182,022)
(22,387,816)
Adjustments for:
Taxation charged
41,300
292,636
Finance costs
10,809,015
5,202,069
Investment income
(379,904)
(123,409)
Loss on disposal of tangible fixed assets
2,540
4,252
Depreciation and impairment of tangible fixed assets
881,027
822,381
Pension scheme non-cash movement
71,093
721,231
Equity settled share based payment expense
-
35,798
Movements in working capital:
(Increase)/decrease in debtors
(28,127,675)
187,997,774
Increase/(decrease) in creditors
39,540,400
(173,265,107)
Cash generated from/(absorbed by) operations
12,655,774
(700,191)
MEME UK HOLDINGS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 38 -
25
Cash generated from/(absorbed by) operations - company
2023
2022
$
$
Profit/(loss) for the year after tax
991,747
(7,453,069)
Adjustments for:
Finance costs
3,909,927
2,032,722
Investment income
(1,723,540)
(1,664,340)
Impairment of investments
(287,833)
4,654,273
Movements in working capital:
Increase in debtors
(6,169,289)
(1,157,830)
Increase in creditors
6,964,133
336,457
Cash generated from/(absorbed by) operations
3,685,145
(3,251,787)
26
Analysis of changes in net funds - group
1 January 2023
Cash flows
Exchange rate movements
31 December 2023
$
$
$
$
Cash at bank and in hand
3,353,874
2,404,503
(3,444,465)
2,313,912
Borrowings excluding overdrafts
(350,133)
235,358
-
(114,775)
3,003,741
2,639,861
(3,444,465)
2,199,137
27
Analysis of changes in net funds - company
1 January 2023
Cash flows
Exchange rate movements
31 December 2023
$
$
$
$
Cash at bank and in hand
-
2,007,793
(2,007,793)
-
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