1. Accounting policies
Basis of measurement and preparation
These financial statements have been prepared in accordance with the provisions of Section 1A (Small Entities) of Financial Reporting Standard 102
Turnover policy
Recognition and measurement
Revenue represents the amount of consideration to which the Company expects to be entitled in exchange for
transferring the promised goods or services to the customer, excluding amounts collected on behalf of third parties
(for example, value-added taxes); the transaction price. The Company includes in the transaction price an amount of
variable consideration as a result of rebates/discounts only to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the
variable consideration is subsequently resolved. Estimations for rebates and discounts are based on the Company's
experience with similar contracts and forecasted sales to the customer.
The Company recognises revenue when the parties have approved the contract (in writing, orally or in accordance
with other customary business practices ) and are committed to perform their respective obligations, the Company
can identify each party's rights and the payment terms for the goods or services to be transferred, the contract has
commercial substance (i.e. the risk, timing or amount of the Company's future cash flows is expected to change as a
result of the contract), it is probable that the Company will collect the consideration to which it will be entitled in
exchange for the goods or services that will be transferred to the customer and when specific criteria have been met
for each of the Company's contracts with customers.
The Company bases its estimates on historical results, taking into consideration the type of customer, the type of
transaction and the specifics of each arrangement. In evaluating whether collectability of an amount of consideration
is probable, the Company considers only the customer's ability and intention to pay that amount of consideration
when it is due.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any
resulting increases or decreases in estimates are reflected in the statement of profit or loss and other comprehensive
income in the period in which the circumstances that give rise to the revision become known by Management.
Identification of performance obligations
The Company assesses whether contracts that involve the provision of a range of goods and/or services contain one
or more performance obligations (that is, distinct promises to provide a service) and allocates the transaction price to
each performance obligation identified on the basis of its stand-alone selling price. A good or service that is promised
to a customer is distinct if the customer can benefit from the good or service, either on its own or together with
other resources that are readily available to the customer (that is the good or service is capable of being distinct) and
the Company's promise to transfer the good or service to the customer is separately identifiable from other promises
in the contract (that is, the good or service is distinct within the context of the contract).
Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a
customer and excludes amounts collected on behalf of third parties. The Company recognises revenue when it
transfers control of a product or service to a customer.
Rendering of services
Rendering of services - over time:
Revenue from rendering of services is recognised over time while the Company satisfies its performance
obligation by transferring control over the promised service to the customer in the accounting period in
which the services are rendered.
For fixed price contracts, revenue is recognised based on the actual service provided to the end of the
reporting period as a proportion of the total services to be provided because the customer receives and uses
the benefits simultaneously.
The input method is used to measure progress toward completion of the performance obligation as it
provides a faithful depiction of the transfer of the control of the services to the customer.
Rendering of services - at a point in time:
The Company concluded that it transfers control over its services at a point in time, upon receipt by the
customer of the service, because this is when the customer benefits from the relevant service
Other accounting policies
The material accounting policies adopted in the preparation of these financial statements are set out below. These
policies have been consistently applied to all years presented in these financial statements unless otherwise stated.
Management seeks not to reduce the understandability of these financial statements by obscuring material
information with immaterial information. Hence, only material accounting policy information is disclosed, where
relevant, in the related disclosure notes.
Interest income
Interest income is recognised on a time-proportion basis using the effective interest method.
Finance costs
Interest expense and other borrowing costs are charged to profit or loss as incurred.
Foreign currency translation
(1) Functional and presentation currency
Items included in the Company's financial statements are measured using the currency of the primary
economic environment in which the entity operates ('the functional currency'). The financial statements are
presented in British Pounds (GB£), which is the Company's functional and presentation currency.
(2) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Financial assets - Classification
The Company classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value (either through OCI or through profit or loss), andthose to be measured at amortised cost.
The classification and subsequent measurement of debt financial assets depends on: (i) the Company's business
model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset. On initial
recognition, the Company may irrevocably designate a debt financial asset that otherwise meets the requirements to
be measured at amortized cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.
For investments in equity instruments that are not held for trading, the classification will depend on whether the
Company has made an irrevocable election at the time of initial recognition to account for the equity investment at
fair value through other comprehensive income (FVOCI). This election is made on an investment-by-investment
basis.
All other financial assets are classified as measured at FVTPL.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in
equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair value through other
comprehensive income (FVOCI).
Financial assets - Recognition and derecognition
All purchases and sales of financial assets that require delivery within the time frame established by regulation or
market convention (''regular way'' purchases and sales) are recorded at trade date, which is the date when the
Company commits to deliver a financial instrument. All other purchases and sales are recognised when the entity
becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or
have been transferred and the Company has transferred substantially all the risks and rewards of ownership.
Financial assets - Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at
initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if
there is a difference between fair value and transaction price which can be evidenced by other observable current
market transactions in the same instrument or by a valuation technique whose inputs include only data from
observable markets.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash
flows are solely payment of principal and interest.
Financial assets - impairment - credit loss allowance for ECL
The Company assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at
amortised cost and FVOCI and exposure arising from loan commitments and financial guarantee contracts. The
Company measures ECL and recognises credit loss allowance at each reporting date. The measurement of ECL
reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible
outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without
undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of
future conditions.
The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of
the loss is recognised in the statement of profit or loss and other comprehensive income within ''net impairment
losses on financial and contract assets. Subsequent recoveries of amounts for which loss allowance was previously
recognised are credited against the same line item.
Debt instruments carried at amortised cost are presented in the statement of financial position net of the allowance
for ECL. For loan commitments and financial guarantee contracts, a separate provision for ECL is recognised as a
liability in the statement of financial position.
For debt instruments at FVOCI, an allowance for ECL is recognised in profit or loss and it affects fair value gains or
losses recognised in OCI rather than the carrying amount of those instruments.
The impairment methodology applied by the Company for calculating expected credit losses depends on the type of
financial asset assessed for impairment. Specifically:
For trade receivables and contract assets, including trade receivables and contract assets with a significant financing
component, and lease receivables the Company applies the simplified approach permitted by IFRS 9, which requires
lifetime expected credit losses to be recognised from initial recognition of the financial assets.
For all other financial instruments that are subject to impairment under IFRS 9, the Company applies general
approach - three stage model for impairment. The Company applies a three stage model for impairment, based on
changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial
recognition is classified in Stage 1.
Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results
from default events possible within the next 12 months or until contractual maturity, if shorter (''12 Months ECL''). If
the Company identifies a significant increase in credit risk (''SICR'') since initial recognition, the asset is transferred to
Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but
considering expected prepayments, if any (''Lifetime ECL''). Refer to note 6, Credit risk section, for a description of
how the Company determines when a SICR has occurred. If the Company determines that a financial asset is creditimpaired,
the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Company's definition of
credit impaired assets and definition of default is explained in note 6, Credit risk section.
Financial assets - impairment - credit loss allowance for ECL (continued)
Additionally the Company has decided to use the low credit risk assessment exemption for investment grade financial
assets. Refer to note 6, Credit risk section for a description of how the Company determines low credit risk financial
assets.
Financial assets - Reclassification
Financial instruments are reclassified only when the business model for managing those assets changes. The
reclassification has a prospective effect and takes place from the start of the first reporting period following the
change.
Financial assets - write-off
Financial assets are written-off, in whole or in part, when the Company exhausted all practical recovery efforts and
has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event.
The Company may write-off financial assets that are still subject to enforcement activity when the Company seeks to
recover amounts that are contractually due, however, there is no reasonable expectation of recovery.
Financial assets - modification
The Company sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The
Company assesses whether the modification of contractual cash flows is substantial considering, among other, the
following factors: any new contractual terms that substantially affect the risk profile of the asset (e.g. profit share or
equity-based return), significant change in interest rate, change in the currency denomination, new collateral or
credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a
loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and the
Company derecognises the original financial asset and recognises a new asset at its fair value. The date of
renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes,
including determining whether a SICR has occurred. The Company also assesses whether the new loan or debt
instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised
and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the
difference is attributed to a capital transaction with owners.
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the
originally agreed payments, the Company compares the original and revised expected cash flows to assets whether
the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks
and rewards do not change, the modified asset is not substantially different from the original asset and the
modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting
the modified contractual cash flows by the original effective interest rate, and recognises a modification gain or loss
in profit or loss.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise cash at bank. Cash and cash
equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those
cash flows represent SPPI, and (ii) they are not designated at FVTPL.
Classification as trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they
are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised
initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss
allowance.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain
significant financing components, in which case they are recognised at fair value. The Company holds the trade
receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at
amortised cost using the effective interest method.
Trade receivables are also subject to the impairment requirements of IFRS 9. The Company applies the IFRS 9
simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables. See note 6, Credit risk section.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with the Company, and a failure to make contractual payments for a period of greater than 180 days past due.
Financial liabilities - measurement categories
Financial liabilities are initially recognised at fair value and classified as subsequently measured at amortised cost,
except for (i) financial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for
trading (e.g. short positions in securities), contingent consideration recognised by an acquirer in a business
combination and other financial liabilities designated as such at initial recognition and (ii) financial guarantee
contracts and loan commitments.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Trade payables
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the
effective interest rate method.
Financial liabilities - Modifications
An exchange between the Company and its original lenders of debt instruments with substantially different terms, as
well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability. The terms are
substantially different if the discounted present value of the cash flows under the new terms, including any fees paid
net of any fees received and discounted using the original effective interest rate, is at least 10% different from the
discounted present value of the remaining cash flows of the original financial liability. (In addition, other qualitative
factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new
conversion features attached to the instrument and change in loan covenants are also considered.)
If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees
incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not
accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are
amortised over the remaining term of the modified liability.
Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a
cumulative catch up method, with any gain or loss recognised in profit or loss, unless the economic substance of the
difference in carrying values is attributed to a capital transaction with owners and is recognised directly to equity.
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds,
including interest on borrowings, amortisation of discounts or premium relating to borrowings, amortisation of
ancillary costs incurred in connection with the arrangement of borrowings, finance lease charges and exchange
differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to
interest costs.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset,
being an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are
capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the
Company and the costs can be measured reliably.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position
if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention
to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case
with master netting agreements, and the related assets and liabilities are presented gross in the statement of
financial position.
Prepayments
Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the
goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment
relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments to acquire
assets are transferred to the carrying amount of the asset once the Company has obtained control of the asset and it
is probable that future economic benefits associated with the asset will flow to the Company. Other prepayments are
written off to profit or loss when the goods or services relating to the prepayments are received. If there is an
indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the
prepayment is written down accordingly and a corresponding impairment loss is recognised in profit or loss.
Share capital
Ordinary shares are classified as equity.
Comparatives
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.