Company registration number 01905935 (England and Wales)
KVH MEDIA GROUP COMMUNICATION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
KVH MEDIA GROUP COMMUNICATION LIMITED
COMPANY INFORMATION
Director
Mr A F Pike
(Appointed 1 May 2021)
Secretary
Ms F Feingold
Company number
01905935
Registered office
Suite 1
4th Floor
1 Derby Square
Liverpool
L2 9XX
Auditor
Azets Audit Services Limited
33 Park Place
Leeds
LS1 2RY
KVH MEDIA GROUP COMMUNICATION LIMITED
CONTENTS
Page
Strategic report
1
Director's report
2
Director's responsibilities statement
3
Independent auditor's report
4 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 24
KVH MEDIA GROUP COMMUNICATION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The director presents the strategic report for the year ended 31 December 2021.
Principal activity
The principal activity of the Company continues to be that of the maintenance and development of an
international news and electronic mail service.
Business review
The results for the year show gross profit of £1,206k (20
20
: £1,400k) and a pre-tax loss of £1,025k (20
20
: loss £460k). The directors are satisfied with the results for the year in light of what is a continuingly challenging global economy
.
Principal risks and uncertainties
The key business risks and uncertainties affecting the company are considered to be related to foreign currency exchange rate fluctuation and competition. The company does not make speculative trades on foreign currency, but monitors day to day rates and aims to trade currencies to meet company requirements when rates are favourable where possible. The company is exposed to the usual credit risk associated with selling on credit and manages this through appropriate credit control procedures.
The company has also been heavily impacted by Coronovirus in 2021 and 2022, making a loss of £825k (2021), however management continues to assess and respond as appropriate to the macro-economic impact of Coronavirus. Management continues to develop products and services as a response and additionally further support is available from the ultimate parent company.
Financial key performance indicators
The key performance indicators which the business uses to ensure an understanding of the developments, performance or position of the business are sales growth and net profit margin percentage. As illustrated by the improving sales growth percentage, churn on business is recovering to pre-covid pandemic levels.
2021 sales decline: (29.7%), 2020: (36%) and 2021 net loss margin percentage: (4
6
.2)%, 2020: (15%). Although net margin is down, a cost review exercise is planned for 2022, and therefore this is anticipated to improve moving into the next fiscal year.
Financial instruments
The entity continues to operate a long term incentive plan for employees in respect of services to the company. This includes issuance of equity settled share options.
Mr A F Pike
Director
21 December 2022
KVH MEDIA GROUP COMMUNICATION LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
The director presents his annual report and financial statements for the year ended 31 December 2021.
Principal activities
The principal activity of the company continued to be that of
the maintenance and development of an international news and electronic mail service.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £1,000,000. The director does not recommend payment of a further dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr A F Pike
(Appointed 1 May 2021)
Mr M Woodhead
(Resigned 1 May 2021)
Auditor
Azets Audit Services Limited were appointed auditor to the company following their acquisition of the trade of Garbutt & Elliott Audit Limited on 1 December 2021. In accordance with s487(2) of the Companies Act 2006 they are deemed reappointed annually.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
On behalf of the board
Mr A F Pike
Director
21 December 2022
KVH MEDIA GROUP COMMUNICATION LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is 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 enable them to ensure that the financial statements comply with the Companies Act 2006. He is 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.
KVH MEDIA GROUP COMMUNICATION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KVH MEDIA GROUP COMMUNICATION LIMITED
- 4 -
Opinion
We have audited the financial statements of KVH Media Group Communication Limited (the 'company') for the year ended 31 December 2021 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2021 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 conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the
financial statements
section of our report. We are independent of the
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
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 director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the director's
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
KVH MEDIA GROUP COMMUNICATION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KVH MEDIA GROUP COMMUNICATION LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report or the director's
r
eport
. 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
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
director is
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has
no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
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.
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.
KVH MEDIA GROUP COMMUNICATION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KVH MEDIA GROUP COMMUNICATION LIMITED
- 6 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, through discussion with the directors and other management, and from inspection of the company's regulatory and legal correspondence. We discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance during the audit.
The company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation, pension regulation, taxation legislation and further laws and regulations that could indirectly affect the financial statements, comprising employment, environmental and health and safety legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. These procedures did not identify any potentially material actual or suspected non-compliance.
To identify risks of material misstatement due to fraud we considered the opportunities and incentives and pressures that may exist within the company to commit fraud. Our risk assessment procedures included: enquiry of directors to understand the high level policies and procedures in place to prevent and detect fraud, reading Board minutes and considering performance targets and incentive schemes in place for management. We communicated identified fraud risks throughout our team and remained alert to any indications of fraud during the audit.
As a result of these procedures we identified the greatest potential for fraud in the following areas:
- revenue recognition and in particular the risk that revenue is recorded in the wrong period;
- management override of controls;
and
-
capitalisation of development costs.
All of these risks arise
due to a
potential
desire to present stronger results and enable management to benefit from enhanced incentives
.
We performed the following procedures to address the risks of fraud identified:
- testing the timing and recognition of income and, in particular, that it was appropriately recognised or deferred
;
-
identifying and testing high risk journal entries through vouching the entries to supporting documentation and;
-
reviewed and tested management's procedures for capitalising costs and intangible assets and ensured these procedures were in line with appropriate accounting standards.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
KVH MEDIA GROUP COMMUNICATION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KVH MEDIA GROUP COMMUNICATION LIMITED
- 7 -
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.
Matthew Grant (Senior Statutory Auditor)
For and on behalf of Azets Audit Services Limited
21 December 2022
Chartered Accountants
Statutory Auditor
33 Park Place
Leeds
LS1 2RY
KVH MEDIA GROUP COMMUNICATION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 8 -
2021
2020
Notes
£000
£000
Turnover
3
1,783
2,534
Cost of sales
(577)
(1,134)
Gross profit
1,206
1,400
Administrative expenses
(2,140)
(1,790)
Operating loss
4
(934)
(390)
Interest payable and similar expenses
6
(91)
(70)
Loss before taxation
(1,025)
(460)
Tax on loss
7
133
80
Loss for the financial year
(892)
(380)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
KVH MEDIA GROUP COMMUNICATION LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 9 -
2021
2020
Notes
£000
£000
£000
£000
Fixed assets
Intangible assets
9
172
162
Tangible assets
10
33
49
Investments
11
1
1
206
212
Current assets
Debtors
13
11,022
12,398
Cash at bank and in hand
148
499
11,170
12,897
Creditors: amounts falling due within one year
14
(8,696)
(8,546)
Net current assets
2,474
4,351
Net assets
2,680
4,563
Capital and reserves
Called up share capital
19
6
6
Share premium account
87
87
Profit and loss reserves
2,587
4,470
Total equity
2,680
4,563
The financial statements were approved by the board of directors and authorised for issue on 21 December 2022 and are signed on its behalf by:
Mr A F Pike
Director
Company Registration No. 01905935
KVH MEDIA GROUP COMMUNICATION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£000
£000
£000
£000
Balance at 1 January 2020
6
87
4,810
4,903
Year ended 31 December 2020:
Loss and total comprehensive income for the year
-
-
(380)
(380)
Capital contribution
-
-
40
40
Balance at 31 December 2020
6
87
4,470
4,563
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
-
(892)
(892)
Dividends
8
-
-
(1,000)
(1,000)
Capital contribution
-
-
9
9
Balance at 31 December 2021
6
87
2,587
2,680
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
1
Accounting policies
Company information
KVH Media Group Communication Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Suite 1, 4th Floor, 1 Derby Square, Liverpool, L2 9XX.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £000.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues
: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
-
Section 26 ‘Share based Payment’
:
Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements
;
-
Section 33 ‘Related Party Disclosures’
:
Compensation for key management personnel
.
The company has taken advantage of the exemption under section 400 of the
Companies Act 2006 not to prepare consolidated accounts. The
financial statements
present information about the company as an individual entity and not about its group
.
KVH Media Group Communication Limited is a wholly owned subsidiary of KVH Industries Inc and the results of KVH Media Group Communication Limited are included in the consolidated financial statements of KVH Industries Inc which are available from 50 Enterprise Center, Middletown, RI 02842, United States.
1.2
Going concern
The director has considered all factors, including in the wider economy, as part of their assessment of going concern. The company has been loss making during the year due to the Coronovirus pandemic. Post year end, trading results and forecasts have also been affected by adverse Coronovirus implications. Although this current economic climate creates both cashflow and profitability risks for the company, the company has support from its immediate parent company; KVH Media Group Limited and ultimate parent company; KVH Industries Inc. Post year end trading and budgets and cash flow projections indicate continued profitability and cash generation for the overall group. The director therefore believes on balance that the company has sufficient resources to enable trading to continue for a period of at least one year from the date of approval of the financial statements. Accordingly, these financial statements have been prepared on the going concern basis.
true
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 12 -
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that
it is probable will be
recover
ed
.
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated
.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date
where
it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the
fair
value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
Straight line over 5 years
Development costs
Straight line over 3 - 5 years
1.6
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and equipment
Straight line over 3 - 5 years
Fixtures and fittings
Straight line over 10 years
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 13 -
1.7
Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in
profit
or
loss
.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
1.8
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.9
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including
creditors
, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities.
Trade creditors
are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in
profit
or
loss
in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the
Black - Scholes
model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
1.16
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.17
Foreign exchange
Transactions in currencies other than
pounds sterling
are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows.
Depreciation
The depreciation policy has been set according to managements' experience of the useful lives of a typical asset in each category, something which is reviewed annually. It is not considered practical to use a per unit basis to allocate depreciation without undue cost and therefore amounts are charged annually. The depreciation charged during the year was £24,000 (2020 - £19,000), which the directors feel is a fair reflection of the benefits derived from the consumption of the tangible fixed assets in use during the period.
Bad debt provision
Outstanding trade debtor balances are reviewed on a line by line basis by management to identify possible amounts where a provision is required. Management closely manage the collection of trade debtors and therefore are able to identify balances where there is uncertainty about its recoverability, and determine what provision is required (if any).
Capitalisation of development costs
The key judgements and sources of estimation uncertainty are that development costs are directly attributable to relevant projects during the year, and have therefore been capitalised to the Statement of Comprehensive Income. In addition, the directors consider whether there are any indicators of impairment present for the company as a whole or on a project basis. The directors have not identified any indicators at 31 December 2021 (2020 -
n
one).
3
Turnover
2021
2020
£000
£000
Turnover analysed by class of business
Sale of services
1,783
2,534
2021
2020
£000
£000
Turnover analysed by geographical market
United Kingdom
1,783
2,534
4
Operating loss
2021
2020
Operating loss for the year is stated after charging/(crediting):
£000
£000
Exchange losses/(gains)
243
(42)
Fees payable to the company's auditor for the audit of the company's financial statements
11
16
Depreciation of owned tangible fixed assets
24
19
Amortisation of intangible assets
59
37
Share-based payments
9
Operating lease charges
24
15
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 18 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
46
63
Their aggregate remuneration comprised:
2021
2020
£000
£000
Wages and salaries
847
934
Social security costs
63
86
Pension costs
33
43
943
1,063
6
Interest payable and similar expenses
2021
2020
£000
£000
Interest payable to group undertakings
91
70
7
Taxation
2021
2020
£000
£000
Current tax
UK corporation tax on profits for the current period
(76)
Adjustments in respect of prior periods
(105)
(5)
Group tax relief
(23)
Total current tax
(128)
(81)
Deferred tax
Origination and reversal of timing differences
(5)
1
Total tax credit
(133)
(80)
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
7
Taxation
(Continued)
- 19 -
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2021
2020
£000
£000
Loss before taxation
(1,025)
(460)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
(195)
(87)
Tax effect of expenses that are not deductible in determining taxable profit
57
7
Effect of change in corporation tax rate
(2)
Other permanent differences
7
Taxation credit for the year
(133)
(80)
8
Dividends
2021
2020
£000
£000
Final paid
1,000
9
Intangible fixed assets
Software
Development costs
Total
£000
£000
£000
Cost
At 1 January 2021
17
688
705
Additions
69
69
At 31 December 2021
17
757
774
Amortisation and impairment
At 1 January 2021
17
526
543
Amortisation charged for the year
59
59
At 31 December 2021
17
585
602
Carrying amount
At 31 December 2021
172
172
At 31 December 2020
162
162
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
10
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Total
£000
£000
£000
Cost
At 1 January 2021
164
45
209
Additions
8
8
At 31 December 2021
172
45
217
Depreciation and impairment
At 1 January 2021
124
36
160
Depreciation charged in the year
20
4
24
At 31 December 2021
144
40
184
Carrying amount
At 31 December 2021
28
5
33
At 31 December 2020
40
9
49
11
Fixed asset investments
2021
2020
Notes
£000
£000
Investments in subsidiaries
12
1
1
12
Subsidiaries
Details of the company's subsidiaries at 31 December 2021 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
KVH Media Group India Private Limited
M-55 - 1 Floor Basement, M Block Market, Greater Kailash 2, New Delhi 110048
Ordinary
99.00
KVH Media Group Communication Inc
C/o KVH Industries 6535 Nova Drive Suite 100 Davie FL 33317 USA
Ordinary
100.00
Voting rights in respect of the subsidiary are held in the same proportion as the Company's share of the ordinary share capital. The Company was incorporated on 2 November 2016 and the principal activity of this subsidiary is media services.
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
13
Debtors
2021
2020
Amounts falling due within one year:
£000
£000
Trade debtors
165
274
Corporation tax recoverable
107
331
Amounts owed by group undertakings
10,610
11,596
Other debtors
52
82
Prepayments and accrued income
75
107
11,009
12,390
2021
2020
Amounts falling due after more than one year:
£000
£000
Deferred tax asset (note 15)
13
8
Total debtors
11,022
12,398
Amounts due from group undertakings are interest free and repayable on demand.
14
Creditors: amounts falling due within one year
2021
2020
Notes
£000
£000
Trade creditors
62
129
Amounts owed to group undertakings
8,196
7,778
Deferred income
296
480
Other creditors
24
36
Accruals and deferred income
118
123
8,696
8,546
Amounts due to group undertakings are interest free and repayable on demand
with the exception of KVH Media Group Ltd
.
Interest is payable at 3.5% per annum. The loan is repayable on demand.
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2021
2020
Balances:
£000
£000
Accelerated capital allowances
13
8
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
15
Deferred taxation
(Continued)
- 22 -
2021
Movements in the year:
£000
Asset at 1 January 2021
(8)
Charge to profit or loss
8
Effect of change in tax rate - profit or loss
(13)
Asset at 31 December 2021
(13)
In the March 2021 budget, a change to the future UK corporation tax rate was announced, indicating that the rate will increase to 25% from April 2023. Deferred tax balances at the reporting date are therefore measured at 25% (2020 - 19%).
16
Retirement benefit schemes
2021
2020
Defined contribution schemes
£000
£000
Charge to profit or loss in respect of defined contribution schemes
33
43
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
17
Restricted Stock Awards
The ultimate parent company has issued restricted shares to an employee in respect of services to that Company.
396 shares were issued on 31 March 2021. These are restricted in that one quarter of the shares will become unrestricted on the first anniversary subsequent to the issue, the second quarter will vest on the second anniversary, and so on until 31 March 2025.
As the restricted shares require no contributions from the employee, and the dividend yield has been assumed to be Nil, the fair value at award date is considered to approximate to the market value of US$12.68 on that date because the effect of the interest rate assumption is not significant to the Black-Scholes valuation.
As the shares relate to the ultimate parent company, and that company received no payment in return, an amount equal the charge incurred of £
946
(2020: £Nil) is recorded as a capital contribution directly in equity.
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
18
Share-based payment transactions
The ultimate parent company has issued equity-settled share options to one employee in respect of services to the Company.
One quarter of each employee's total options can be exercised after a period of one year, a further quarter of each employee's total options can be exercised after two years, a further quarter after three years, and the remaining and final quarter can be exercised after four years.
The options are exercisable at the market price established when the options were granted. The only performance condition attached to the options are for the employee to remain in employment. All options expire five year after the date of grant.
The Black-Scholes valuation model has been used to estimate the fair value of each share option granted in the year, with risk-free rates taken from United States treasury bond yields, each option was valued as at the date of grant. A reconciliation of options outstanding during the year are summarised below along with their respective inputs.
Number of share options
Weighted average exercise price
2021
2020
2021
2020
Number
Number
US$
US$
Outstanding at 1 January 2021
41,561
5,961
8.60
11.45
Granted
1,071
35,600
12.68
8.12
Outstanding at 31 December 2021
42,632
41,561
8.70
8.60
Inputs were as follows:
2021
2020
Share price
$8 - $13
$11 - $13
Exercise price
$8 - $13
$11 - $13
Expected volatility
36% - 50%
36% - 49%
Expected life
4.22 - 4.29 years
4.22 - 4.24 years
Risk free rate
0.21% - 2.33%
1.45% - 2.06%
Expected dividends yields
0%
0%
19
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£000
£000
Authorised
Ordinary Shares of £1 each
100,000
100,000
100
100
Issued and fully paid
Ordinary Shares of £1 each
5,711
5,711
6
6
KVH MEDIA GROUP COMMUNICATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2021
2020
£000
£000
Within one year
50
55
Between two and five years
23
73
73
128
21
Related party transactions
T
he Company has taken advantage of the exemption available in section 33.1a of FRS 102 to not disclose transactions or balances with wholly owned subsidiaries which form part of the KVH Industries Inc group.
22
Ultimate controlling party
The Company is a subsidiary undertaking of KVH Industries Inc, which is the ultimate parent company incorporated in the USA. The immediate parent company is KVH Media Group Limited, a company registered in England & Wales.
The largest and smallest group into which the results of the Company are consolidated is that headed by KVH Industries Inc. The consolidated accounts of KVH Industries Inc are available to the public and can be obtained from KVH Industries Inc, 50 Enterprise Center, Middletown, Rhode Island, USA or alternatively from the website at www.kvh.com/investors.
2021-12-31
2021-01-01
false
CCH Software
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Mr A F Pike
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