Company Registration No. 09906028 (England and Wales)
IOVATION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
IOVATION LIMITED
COMPANY INFORMATION
Directors
D C Shafer
G J Pierson
Company number
09906028
Registered office
29/30 Fitzroy Square
London
United Kingdom
W1T 6LQ
Auditor
Goodman Jones LLP
29-30 Fitzroy Square
London
W1T 6LQ
IOVATION LIMITED
CONTENTS
Page
Directors' report
1 - 2
Independent auditor's report
3 - 4
Statement of comprehensive income
5
Balance sheet
6
Statement of changes in equity
7
Notes to the financial statements
8 - 12
IOVATION LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
- 1 -
The directors present their annual report and financial statements for the year to 31 December 2018.
Principal activities
The principal activity of the Company is that of marketing hosted software services. These services allow customers to identify and prevent online fraud and abuse. These services also provide flexible user identification and multi-factor authentication solutions at various touch points. Most of the Company’s customers operate in the online financial services, gambling, retail, gaming, and social networking industries.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
D C Shafer
G J Pierson
Auditor
The auditor, Goodman Jones LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 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 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 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.
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.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
IOVATION LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
- 2 -
On behalf of the board
D C Shafer
Director
28 September 2019
IOVATION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF IOVATION LIMITED
- 3 -
Opinion
We have audited the financial statements of iovation Limited (the 'company') for the year ended 31 December 2018 which comprise the statement of comprehensive income, the balance sheet, the 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 FRS 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 2018 and of its profit 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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
The directors are responsible for the other information. The other information comprises the information included in the annual 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 directors' r
eport 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.
IOVATION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF IOVATION LIMITED
- 4 -
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 directors'
r
eport
.
We have nothing to report in respect of the following matters where 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 prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and take advantage of the small companies exemption from the requirement to prepare a strategic report.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, 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.
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.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://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.
Amit Sharma (Senior Statutory Auditor)
for and on behalf of Goodman Jones LLP
30 September 2019
Chartered Accountants
Statutory Auditor
29-30 Fitzroy Square
London
W1T 6LQ
IOVATION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
- 5 -
2018
2017
Notes
£
£
Turnover
2,156,072
1,394,910
Administrative expenses
(2,114,508)
(1,303,653)
Profit before taxation
41,564
91,257
Tax on profit
4
(27,371)
(18,241)
Profit for the financial year
14,193
73,016
IOVATION LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2018
31 December 2018
- 6 -
2018
2017
Notes
£
£
£
£
Current assets
Debtors
5
214,193
77,451
Creditors: amounts falling due within one year
6
(88,692)
(64,510)
Net current assets
125,501
12,941
Creditors: amounts falling due after more than one year
7
(98,367)
-
Net assets
27,134
12,941
Capital and reserves
Called up share capital
9
100
100
Profit and loss reserves
27,034
12,841
Total equity
27,134
12,941
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 28 September 2019 and are signed on its behalf by:
D C Shafer
Director
Company Registration No. 09906028
IOVATION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
- 7 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2017
100
39,825
39,925
Period ended 31 December 2017:
Profit and total comprehensive income for the period
-
73,016
73,016
Dividends
-
(100,000)
(100,000)
Balance at 31 December 2017
100
12,841
12,941
Year ended 31 December 2018:
Profit and total comprehensive income for the year
-
14,193
14,193
Balance at 31 December 2018
100
27,034
27,134
IOVATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
- 8 -
1
Accounting policies
Company information
iovation Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
, 29/30 Fitzroy Square, London, United Kingdom, W1T 6LQ.
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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The 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 £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
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
.
All turnover is generated within the group.
1.3
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.
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.
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.
IOVATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
1
Accounting policies
(Continued)
- 9 -
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.
1.4
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.
1.5
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.
IOVATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
1
Accounting policies
(Continued)
- 10 -
1.6
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.
1.7
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. 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.
2
Auditor's remuneration
2018
2017
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
5,700
4,750
3
Employees
The average monthly number of persons (including directors) employed by the company during the year was 17 (2017 - 11).
4
Taxation
2018
2017
£
£
Current tax
UK corporation tax on profits for the current period
27,371
18,241
5
Debtors
2018
2017
Amounts falling due within one year:
£
£
Amounts owed by group undertakings
203,256
68,926
Other debtors
10,937
8,525
214,193
77,451
IOVATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
- 11 -
6
Creditors: amounts falling due within one year
2018
2017
£
£
Corporation tax
26,804
17,514
Other taxation and social security
5,370
3,870
Other creditors
56,518
43,126
88,692
64,510
7
Creditors: amounts falling due after more than one year
2018
2017
£
£
Other creditors
98,367
-
The amount in other creditors represents the liability arising in relation to equity settled share based payment transactions during the year.
8
Share-based payment transactions
The company operates a share incentive scheme which is equity settled.
The company share option plan is open to all employees. The employees are each granted 2,400 options in the shares of the US group company, iovation Inc, when they commence employment with iovation Limited. 25% of the options vest after 1 year, and the remaining options vest monthly thereafter for the remaining 3 years until 100% vested.
On 29 June 2018, the company was acquired by TransUnion LLC and on this date the options in iovation Inc held by employees to purchase shares of iovation Inc were cancelled with the net amount (fair value less exercise price) being paid to employees.
Three employees were subsequently granted 15,073 Performance Share Units under the TransUnion 2015 Omnibus Incentive Plan on 30 June 2018. This is a Restricted Stock Scheme. Share units are granted at the end of the period, once performance metrics are met and expire on 31 December 2020. There is no exercise price.
IOVATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
8
Share-based payment transactions
(Continued)
- 12 -
Number of share options
Weighted average exercise price
2018
2017
2018
2017
Number
Number
£
£
Outstanding at 1 January 2018
36,200
14,400
2.35
2.01
Granted
4,800
21,800
-
-
Forfeited
(3,800)
-
-
-
Cancelled
(37,200)
-
-
-
Outstanding at 31 December 2018
-
36,200
56.25
2.35
Exercisable at 31 December 2018
-
6,750
-
2.01
The weighted average share price at the date of exercise for the share options granted during the year was £56.25 (2017: £2.35).
During the year, the company recognised total share-based payment expenses of £102,198 (2017 - £nil) which related to equity settled share based payment transactions.
9
Called up share capital
2018
2017
£
£
Ordinary share capital
Issued and fully paid
100 Ordinary of £1 each
100
100
100
100
10
Related party transactions
The company has taken advantage of not disclosing transactions between wholly owned group companies, in accordance with the Financial Reporting Standard.
11
Parent company
The intermediary parent company is iovation Inc. The ultimate controlling party is TransUnion LLC, a publicly traded company in the US.
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