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Financial Statements
Soundmouse Limited
For the financial year ended 31 December 2023
Registered number: 03962610
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Company Information
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Kirkham Zavieh (resigned 19 January 2024)
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Contents
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Directors' responsibilities statement
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Independent auditors' report
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Statement of comprehensive income
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Statement of financial position
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Statement of changes in equity
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Notes to the financial statements
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Directors' report
For the financial year ended 31 December 2023
The directors present their report and the financial statements for the financial year ended 31 December 2023.
Principal activities and business review
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The principal activities of the Company is the providing of music reporting services to the broadcasting industry.
The loss for the financial year, after taxation, amounted to £1,481,612 (2022: £715,542).
The directors have not recommended a dividend in the current year (2022: £Nil).
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
The directors who served during the financial year were:
Dominic Jones (appointed 16 January 2023)
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Richard Constant (appointed 16 January 2023, resigned 19 January 2024)
Charles Hodgkinson (resigned 19 January 2024)
Christopher Mohoney (appointed 16 January 2023, resigned 19 January 2024)
Kirkham Zavieh (resigned 20 January 2024)
Francois Hennessy (resigned 16 January 2023)
Colm O’Carroll (appointed 20 January 2023)
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Statement on relevant audit information
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Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
∙so far as the directors are aware, there is no relevant audit information of which the Company's auditors are unaware, and
∙the directors have taken all the steps that ought to have been taken as directors in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
Post balance sheet events
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There have been no significant events affecting the Company since the year end.
The Directors have assessed the continued going concern of the Company through their review of annual plans and forecasts, and have come to the conclusion that there is a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future. The Company has received a letter of support from its ultimate parent company, Hexacorp Ltd and the directors are comfortable with Hexacorp Ltd’s ability to provide support.
Page 1
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Directors' report (continued)
For the financial year ended 31 December 2023
The auditor, BDO, were appointed during the financial year and expect to continue in office in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf:
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Colm O’Carroll
Director
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Page 2
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Directors' responsibilities statement
For the financial year ended 31 December 2023
The directors are responsible for preparing the Directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments 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 financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
This report was approved by the board and signed on its behalf:
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Colm O’Carroll
Director
Date: 28 March 2025
Page 3
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Independent auditors' report to the members of Soundmouse Limited
Opinion on the financial statements
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In our opinion the financial statements:
∙give a true and fair view of the state of the Company’s affairs as at 31 December 2023 and of its loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Soundmouse Limited (“the Company”) for the year ended 31 December 2023 which comprise 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. 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).
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
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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.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
The Directors are responsible for the other information. The other information comprises the information included in the Directors report, other than the financial statements and our auditor’s report thereon. 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.
Page 4
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Independent auditors' report to the members of Soundmouse Limited (continued)
Other information (continued)
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements, and
∙the Directors' report has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment we have obtained in the course of the audit, we have not identified material misstatements in the Directors' report .
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit; or
∙the directors were not entitled to take advantage of the small companies' exemptions from the requirement to prepare a strategic report or in preparing the Directors' report.
Responsibilities of Directors
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As explained more fully in the Directors' responsibilities statement , the Directors are 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 Directors determine 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 Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Page 5
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Independent auditors' report to the members of Soundmouse Limited (continued)
Auditor’s responsibilities for the audit of the financial statements
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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 statement.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
∙Our understanding of the Company and the industry in which it operates;
∙Discussion with management and those charged with governance; and
∙Obtaining and understanding of the Company’s policies and procedures regarding compliance with laws and regulations.
We considered the significant laws and regulations to be the applicable accounting framework (United Kingdom Generally Accepted Accounting Practice) and the Companies Act 2006 and relevant tax compliance legislation.
The Company is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be the health and safety legislation.
Our procedures in respect of the above included:
∙Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations;
∙Review of financial statement disclosures and agreeing to supporting documentation; and
∙Review of legal expenditure accounts to understand the nature of expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
∙Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
∙Obtaining an understanding of the Company’s policies and procedures relating to:
°Detecting and responding to the risks of fraud; and
°Internal controls established to mitigate risks related to fraud.
∙Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
∙Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
∙Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and
∙Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
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Independent auditors' report to the members of Soundmouse Limited (continued)
Auditor’s responsibilities for the audit of the financial statements (continued)
Extent to which the audit was capable of detecting irregularities, including fraud (continued)
Based on our risk assessment, we considered the areas most susceptible to fraud to be revenue recognition and management override of controls.
Our procedures in respect of the above included:
∙Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;
∙Assessing significant estimates made by management for bias; and
∙Ensuring the revenue recognition policy is in accordance with the Group’s reporting framework substantively testing a sample of revenue recognised in the year.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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.
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.
Peter Smithson (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
Date: 28 March 2025
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Page 7
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Statement of comprehensive income
For the financial year ended 31 December 2023
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Exceptional administrative expenses
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Interest receivable and similar income
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Interest payable and similar expenses
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All amounts relate to continuing operations.
There was no other comprehensive income for 2023 (2022: £Nil).
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The notes on pages 11 to 27 form part of these financial statements.
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Page 8
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Soundmouse Limited
Registered number: 03962610
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Statement of financial position
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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Net current (liabilities)/assets
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Creditors: amounts falling due after more than one year
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Called up share capital presented as equity
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Shareholders' (deficit)/funds
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The Company's financial statements have been prepared in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006 and in accordance with the provisions of FRS102 Section 1A - Small Entities.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 28 March 2025.
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Colm O’Carroll
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The notes on pages 11 to 27 form part of these financial statements.
Page 9
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Statement of changes in equity
For the financial year ended 31 December 2023
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Shares issued during the financial year
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Share options charge during the financial year
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Statement of changes in equity
For the financial year ended 31 December 2022
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Loss for the financial year
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The notes on pages 11 to 27 form part of these financial statements.
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Page 10
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Notes to the financial statements
For the financial year ended 31 December 2023
Soundmouse Limited (the “Company”) is a private company limited by shares under a registration number 03962610 and is incorporated in the United Kingdom. Its registered address is located at 88 Kingsway, London, England, WC2B 6AA.
The principal activities of the Company is the providing of music reporting services to the broadcasting industry.
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 Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The financial statements are presented in GBP (£).
The following principal accounting policies have been applied:
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Financial reporting standard 102 - reduced disclosure exemptions
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The Company, as a qualifying entity, has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7;
∙the requirements of Section 11 Basic Financial Instruments paragraph 11.41; and
∙the requirements of Section 12 Other Financial Instrument Issues paragraph 12.26.
This information is included in the consolidated financial statements of Hexacorp LTD as at 31 December 2023 and these financial statements may be obtained from The Enclave, 22619 Pacific Coast Hwy Suite B260. Malibu, CA 90265, United States.
The Directors have assessed the continued going concern of the Company through their review of annual plans and forecasts, and have come to the conclusion that there is a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future. The Company has received a letter of support from its ultimate parent company, Hexacorp Ltd and the directors are comfortable with Hexacorp Ltd’s ability to provide support.
Page 11
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
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:
Rendering of services
External sales
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
Internal sales
Intercompany turnover represents the invoiced amount in respect of services provided to the ultimate parent company in accordance with service agreements. It is recognised during the period that the service is provided.
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Finance leases: the company as lessee
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Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the group. All other leases are classified as operating leases.
Assets held under finance leases are recognised initially at the fair value of the leased asset (or, if lower, the present value of minimum lease payments) at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation using the effective interest method so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are deducted in measuring profit or loss. Assets held under finance leases are included in tangible fixed assets and depreciated and assessed for impairment losses in the same way as owned assets.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to the Statement of comprehensive income on a straight-line basis over the lease term.
Interest income is recognised in profit or loss using the effective interest method.
Page 12
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
Finance costs are charged to the Statement of 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.
Hexacorp LTD, the Group's ultimate parent company, (together with its subsidiary) issues equity-settled share based payments to employees under the terms of the long-term incentive plans. The Group estimates the fair value of its Stock Options ("Options") on the grant date, using the Black-Scholes pricing model. The fair value determined at the date of grant of equity-settled share based payments is expensed on an accelerated vesting method over the vesting period, based on an estimate of the number of shares that will ultimately vest. The fair value of share based payments awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period in which the employees become unconditionally entitled to the award. 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. 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 Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
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 Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.
Tax is recognised in profit or loss 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.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Page 13
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting 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 reporting date.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
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.
Page 14
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Company shares, whose market value can be reliably determined, are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in the Statement of comprehensive income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
The Company assesses impairment on intangible and tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognised and charged to profit or loss if the discounted expected future cash flows are less than the carrying amount. Fair value is estimated by discounting the expected future cash flows using a discount factor that reflects the risk-free rate of interest for a term consistent with the period of expected cash flows.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks, other third parties and loans to related parties.
Financial assets that are 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 Statement of Income and Retained Earnings.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a 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.
Page 15
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.
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Judgments in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires management to make judgements that affect the reported amounts of assets and liabilities at the date of financial statements and the reported amount of income and expenses during the reporting period. Management evaluates its judgements on an ongoing basis.
In preparing these financial statements, the directors have had to make the following judgements:
∙Share based payments: the company measures the cost of equity-settled transactions with employees by reference to the fair value of equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted and requires assumptions to be made in particular the value of the shares at the date of options granted. Management have had to apply judgement when selecting assumptions.
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An analysis of turnover by class of business is as follows:
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Page 16
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Notes to the financial statements
For the financial year ended 31 December 2023
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The operating loss is stated after charging:
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Equipment leasing (operational)
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Difference on foreign exchange
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Depreciation on tangible fixed assets
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Pension costs - defined contributions schemes
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Staff costs, including director's remuneration, were as follows:
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Pension costs - defined contribution schemes
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The average monthly number of employees, including the directors, during the financial year was as follows:
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Directors national insurance
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Directors pension costs - defined contribution schemes
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Page 17
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Notes to the financial statements
For the financial year ended 31 December 2023
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During the financial year, dividend income was received from subsidiary, Soundmouse Korea Limited (2022: £Nil).
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Interest payable and similar expenses
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Bank loan interest payable
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Finance leases interest payable
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During the year and prior year the interest charges included above were paid.
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Current tax on loss for the year
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Page 18
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Notes to the financial statements
For the financial year ended 31 December 2023
10.Taxation (continued)
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Factors affecting tax charge for the financial year
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The tax assessed for the financial year is higher than (2022 - lower than) the standard rate of corporation tax increased from 19% to25% with effect from 1 April 2023 in the UK (2022 -19%). The differences are explained below:
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Loss on ordinary activities before tax
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Loss on ordinary activities multiplied by standard rate of corporation tax increased from 19% to 25% with effect from 1 April 2023 in the UK (2022 - 19%)
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Expenses not deductible for tax purposes
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Other permanent differences
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Additional deduction for R&D expenditure
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Surrender of tax losses for R&D tax credit refund
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Exempt ABGH distributions
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Group relief surrendered/(claimed)
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Remeasurement of deferred tax for changes in tax rates
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Movement in deferred tax not recognised
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Total tax charge for the financial year
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Factors that may affect future tax charges
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There is a potential deferred tax asset of £501,995 (2022: £294,495) arising from trading losses of £2,007,798 (2022: £1,177,980, of which £177,614 (2022: £0) has been recognised with the remaining balance remaining unrecognised due to uncertainty of utilisation. These losses are off-settable against potential future taxable trading profits. The total deferred tax asset of £Nil (2022: £Nil) for deferred tax is made up as follows:
- Fixed asset timing differences £162,598 (2022: £Nil);
- Less; short term timing differences £816 (2022: £Nil); and
- Less: losses and other deductions £161,782 (2022: £Nil).
The deferred tax asset not recognised relates to losses of £1,360,669 (2022: £1,177,980) and amounts to £340,212 (2022: £Nil).
Page 19
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Notes to the financial statements
For the financial year ended 31 December 2023
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Exceptional administrative expenses
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Cost of group restructure
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In the prior year exceptional administrative expenses were recognised of £243,281 in relation to costs incurred in relation to the restructure of the group. No such costs were incurred in 2023.
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Charge for the financial year
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Page 20
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Notes to the financial statements
For the financial year ended 31 December 2023
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Charge for the financial year on owned assets
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Investments in subsidiary companies
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Page 21
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Notes to the financial statements
For the financial year ended 31 December 2023
The following were subsidiary undertakings of the Company:
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26 Litchfield Street, London
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Soundmouse International Limited
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26 Litchfield Street, London
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Soundmouse Digital Services Limited
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26 Litchfield Street, London
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Alphatheta Music Bulgaria EOOD
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Due after more than one year
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Amounts owed by group undertakings
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Amounts due within one year
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Prepayments and accrued income
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Corporation tax repayable
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Amounts owed by group undertakings are unsecured, interest free and with no fixed date of repayment.
Amounts owed by group undertakings are classed as greater than one year due to an agreement between theparties at the year-end that these will not be repayable until a period after 12 months.
The other debtors balance relates to R&D tax credit which was receivable at year end.
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Page 22
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Notes to the financial statements
For the financial year ended 31 December 2023
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Taxation and social security
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Obligations under finance lease and hire purchase contracts
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured, interest free and with no fixed date of repayment.
In 2020 the company received a Barclays loan under Coronavirus Business Interruption Loan Scheme (CBILS). The loan was repaid in January 2023, earlier than expected. This is a floating rate basis loan, under which the interest rate will never be less than the margin of 2.99% per annum. The term of the loan is 6 years.
The finance leases are secured by the assets being leased.
Included within other creditors are shareholder loans of £Nil (2022: £750,000).
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Taxation and social security
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National insurance payable
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Page 23
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Notes to the financial statements
For the financial year ended 31 December 2023
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Creditors: Amounts falling due after more than one year
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Net obligations under finance leases and hire purchase contracts
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Analysis of the maturity of loans is given below:
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Security:
The bank loans are secured by a fixed and floating charge over the assets of the Company.
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Authorised, allotted and called up
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902 (2022 - 882) Ordinary shares of £1.00 each
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During 2023, 20 shares were issued in relation to a £375,000 convertible loan. £374,980 has been posted to the share premium account being the excess of consideration for the shares above the nominal amount of shares issued.
Called up share capital presented as equity
Represents the nominal value of shares that have been issued.
Page 24
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Notes to the financial statements
For the financial year ended 31 December 2023
Share premium account
Includes the premium received on the issue of share capital.
Share based compensation
Includes the cost of share based payment options which have vested as at 31 December 2023.
Profit and loss account
Include all current and prior period retained profits and losses.
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The Company established an equity settled share option scheme for certain employees. The options are exercisable at a pre-determined strike price and have a vesting period of 5 years with a one year cliff. The exercise price of the option is set at the time of the grant against the market value of the underlying shares. All share options lapse after 10 years when unexercised and are equity settled when exercised.
The Company recognized a total expense of £23,622 (2022: £Nil) related to equity-settled share-based payment transactions during the year.
Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the year are detailed below:
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Weighted average exercise price (pence)
2023
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Weighted average exercise price
(pence)
2022
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Outstanding at the beginning of the year
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Forfeited during the year
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Outstanding at the end of the year
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Page 25
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Notes to the financial statements
For the financial year ended 31 December 2023
22.Stock Based Compensation (continued)
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The fair value of equity-settled share options granted in the prior year was estimated as at the date of grant using the Black-Scholes model, which incorporates various assumptions as outlined below:
1.Expected term: The expected term of stock options is estimated based on historical exercise patterns and expected future behavior of employees, or using the simplified method when historical data is insufficient.
2.Expected volatility: The expected volatility is determined based on the volatility of comparable publicly traded entities.
3.Expected dividend rate: The Company does not currently pay dividends and does not anticipate paying dividends in the foreseeable future. Accordingly, the expected dividend yield is assumed to be 0%.
4.Risk-free interest rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for a term that approximates the expected term of the award.
5.Discount for post-vesting restrictions: This is not applicable.
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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 £19,227 (2022: £31,587). Contributions totalling £9,732 (2022: £9,119) were payable to the fund at the balance sheet date and are included in creditors.
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Commitments under operating leases
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At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Page 26
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Notes to the financial statements
For the financial year ended 31 December 2023
24.Commitments under operating leases (continued)
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Commitments under finance leases
At 31 December 2023 the Company had future minimum lease payments due under non-cancellable finance leases for each of the following periods:
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Related party transactions
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The Company's ultimate parent company is Hexacorp LTD. During the year, there were recharges incurred of £1,326,880 (2022: £Nil) relating to working capital funding. At the financial year end the balance due to Hexacorp LTD was £1,326,880 (2022: £Nil).
The Company has availed of the exemption under FRS 102, Section 33 'Related Party Disclosures" available to subsidiary undertakings in relation to the disclosure of intergroup related party transactions with its fellow subsidiaries.
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Post balance sheet events
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There have been no significant events affecting the Company since the financial year end.
The immediate parent company is Soundmouse Holdings Limited. The ultimate parent company and controlling company is Hexacorp LTD, a company registered in Delaware, United States of America. The consolidated financial statements for Hexacorp Limited have been filed with Companies House and are available at the following address; The Enclave, 22619 Pacific Coast Hwy Suite B260, Malibu, CA 90265, United States.
Page 27
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