Registered number: 13987418
COHERE UK, LTD.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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COHERE UK, LTD.
CONTENTS
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Statement of changes in equity
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Notes to the financial statements
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REGISTERED NUMBER:13987418
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COHERE UK, LTD.
BALANCE SHEET
AS AT 31 DECEMBER 2023
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The company has opted not to file the profit and loss account in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 4 to 12 form part of these financial statements.
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REGISTERED NUMBER:13987418
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COHERE UK, LTD.
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2023
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COHERE UK, LTD.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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Shares issued during the period
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Share based payment charge
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Transfer on share options exercised
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Transfer on share options exercised
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Share based payment charge
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The notes on pages 4 to 12 form part of these financial statements.
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COHERE UK, LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Cohere UK Limited is a private company limited by shares incorporated in England and Wales. The
address of its registered office is 51 Great Marlborough Street, London, United Kingdom, W1F 7JT.
The comparative figures represent a period from the company's incorporation on the 18 March 2022 to 31 December 2022.
The financial statements are presented in Sterling (£), which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' and the requirements of the Companies Act 2006. 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 preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The company provides technical support services to Cohere Inc., its parent company, and as such is inextricably linked, both operationally and financially to its parent. The director of the company has received assurances from the parent company confirming its intention to support the company for a period of at least twelve months from the date of approval of these financial statements.
In considering the going concern assumption, the director has considered the group’s future cash flow forecasts, with an expectation that the parent company will continue to be successful in completing future fundraises with approximately £565million ($960million) already raised through previous fundraising efforts. The parent company is currently in the process of securing additional funding which is expected to be concluded in 2025 and the director is confident this fundraising will be successful. However, the absence of committed funding at the date of approval of these financial statements to cover the group’s projected future cash flows indicates the existence of a material uncertainty, which may cast doubt over the ability of the company to continue as a going concern, if insufficient funds are raised
Notwithstanding this, the fundraise is currently underway and thus the director is confident that the group will have adequate funding to continue in operational existence for the foreseeable future. Accordingly, the director has adopted the going concern basis in preparing these financial statements .
Revenue from contracts to provide sales, marketing and technology support services to the parent company is recognised in the period in which the services are provided. Revenue is recognised to the extent that it is probable that the company will receive the consideration due under the contract and the amounts of revenue can be measured reliably. Revenue is measured as the fair value of the consideration received or receivable, excluding value added tax.
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COHERE UK, LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit and loss account within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
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Operating leases: the company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Finance costs are charged to profit or loss 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.
Defined contribution pension plan
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.
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COHERE UK, LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period on a graded straight line basis. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the company keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.
The company has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial assets and financial liabilities are recognised when the company becomes party to the contractual provisions of the instrument.
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COHERE UK, LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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.
The company’s policies for its major classes of financial assets and financial liabilities are set out below.
Financial assets
Basic financial assets, including trade and other debtors, cash and bank balances and loans to fellow group companies are initially recognised at transaction price, 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 for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment.
Financial liabilities
Basic financial liabilities, including trade and other creditors and loans from fellow group companies 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 for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Impairment of financial assets
Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the company would receive for the asset if it were to be sold at the reporting date.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
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.
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COHERE UK, LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Derecognition of financial assets and financial liabilities
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an 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.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
Current tax is the amount of income tax payable in respect of taxable profit for the year or prior years.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company operates and generates income.
Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
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COHERE UK, LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In the application of the company’s accounting policies, which are described in note 2, the following
judgments and key estimates have been made by the director:
Share based payments
The company participates in an equity settled share based payment arrangement in which share options in its parent company are issued to employees of the company. The fair value determined at the grant date is expensed on a graded straight line basis over the vesting period. The fair value of the options is calculated using the Black-Scholes methodology. The market value of the shares at the grant date was estimated using the market approach company transaction method. The estimated level of vesting is reviewed annually by management.
The key assumptions used for the valuation of the company's fair value at grant date was a risk free rate ranging between 0.930% and 4.17%, volatility rates ranging between 65% and 80% and a lack of marketability ranging between of 40% to 45%, and the key assumptions used for the calculation of the fair value of the options at grant date was an average risk free rate of 3.92%, average volatility rate of 55.11% and a retention rate of 100%.
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The average monthly number of employees, including directors, during the year was 23 (2022 - 7).
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Charge for the year on owned assets
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COHERE UK, LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Due after more than one year
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Amounts owed by group undertakings
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Prepayments and accrued income
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Amounts owed by group undertakings are interest free, have no fixed repayment date and are repayable on demand.
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Creditors: Amounts falling due after more than one year
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COHERE UK, LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Allotted, called up and fully paid
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1 (2022 - 1) Ordinary Share Capital share of £1.00
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Other reserves
Other reserves comprise amounts recognised in the financial statements in respect of equity settled share based payments.
Profit and loss account
The profit and loss account comprises the cumulative profits for all periods to date which have been retained by the Company.
The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £405,282 (2022 - £44,503) . Contributions totalling £0 (2022 - £0) were payable to the fund at the balance sheet date and are included in creditors.
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COHERE UK, LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Related party transactions
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The company has taken advantage of the exemption contained in FRS 102 section 33 "Related Party Disclosures" from disclosing transactions with entities which are a wholly owned part of the group .
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The smallest and largest group for which consolidated financial statements are drawn up is headed by Cohere Inc., whose registered office is 171 John Street, Suite 200 Toronto, Ontario, Canada, M5T 1X3.
The auditor's report on the financial statements for the year ended 31 December 2023 was unqualified.
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In their report, the auditor emphasised the following matter without qualifying their report:
Material uncertainty related to going concern
We draw attention to Note 2.2 of the financial statements, which indicates that whilst the director is confident that the parent company, Cohere Inc., will successfully raise sufficient funds during the first quarter of 2024 in order for the group to continue its operations, the absence of committed funding at the date of approval of these financial statements indicates the existence of a material uncertainty, which may cast doubt over whether the company would be able to continue as a going concern if insufficient funds are raised. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors' 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.
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The audit report was signed on 12 March 2025 by Marc Levy FCA (senior statutory auditor) on behalf of Blick Rothenberg Audit LLP.
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