Company Registration No. SC161678 (Scotland)
Brightsolid Online Technology Limited
Annual report and financial statements
for the year ended 31 March 2023
Brightsolid Online Technology Limited
Company information
Directors
MF Thomson
E Maddison
BJH Gray
(Appointed 1 February 2023)
Secretary
S Evans
Company number
SC161678
Registered office
Gateway House
Luna Place
Technology Park
Dundee
DD2 1TP
Auditor
Henderson Loggie LLP
The Vision Building
20 Greenmarket
Dundee
DD1 4QB
Brightsolid Online Technology Limited
Contents
Page
Strategic report
1
Directors' report
2
Directors' 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 - 22
Brightsolid Online Technology Limited
Strategic Report
for the year ended 31 March 2023
- 1 -
The directors present the strategic report for the year ended 31 March 2023.
Fair review of the business
Turnover for the year to 31 March 2023 was unchanged at £10m. A small reduction in private cloud revenue (customers continuing to optimise their infrastructure in pursuit of cost savings) was offset by higher public cloud revenue and inaugural sales of cyber resilience products and services.
A significant up-front investment in the company’s cyber resilience and hybrid cloud propositions increased administrative expenses for the year by 42%, resulting in an operating loss for the year of £576k. That investment, alongside capital expenditure of £2.0m, will facilitate the longer-term development and delivery of world-class products and services.
Principal risks and uncertainties
The Brightsolid Board has developed, and regularly reviews, a risk appetite statement and treatment strategies for all risks outside of appetite.
Risk appetite is lowest for information security risks, broadly the risk that a failure to address IT vulnerabilities in a timely manner leads to compromised company and customer systems and data.
Loss of key employees is also a risk focus for management. Digital skills continue to be in high demand and recruitment and retention of talented colleagues remains critical to the success of the business.
An inability to deliver leading products and services in rapidly changing markets could materially constrain growth and profitability, jeopardising longer term investment and innovation.
Key performance indicators
The Brightsolid Board monitors a range of KPIs measuring financial performance, customer satisfaction, investment in employees, technical capabilities and marketing execution.
E Maddison
Director
26 October 2023
Brightsolid Online Technology Limited
Directors' report
for the year ended 31 March 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 March 2023.
Principal activities
The principal activity of the company is to design, build and manage hybrid cloud services that securely and seamlessly maximise the benefits of complex cloud environments for customers.
The company also provides a range of cyber resilience products and services that monitor customer infrastructure for threats and vulnerabilities, providing a prompt and effective threat response 24x7x365.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
MF Thomson
C Jagusz
(Resigned 31 January 2023)
E Maddison
BJH Gray
(Appointed 1 February 2023)
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
No preference dividends were paid.
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
E Maddison
Director
26 October 2023
Brightsolid Online Technology Limited
Directors' responsibilities statement
for the year ended 31 March 2023
- 3 -
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.
Brightsolid Online Technology Limited
Independent auditor's report
to the members of Brightsolid Online Technology Limited
- 4 -
Opinion
We have audited the financial statements of Brightsolid Online Technology Limited (the 'company') for the year ended 31 March 2023 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 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 March 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are 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.
Brightsolid Online Technology Limited
Independent auditor's report (continued)
to the members of Brightsolid Online Technology Limited
- 5 -
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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 identified material misstatements in the strategic report and the directors' report.
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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, are detailed below.
Brightsolid Online Technology Limited
Independent auditor's report (continued)
to the members of Brightsolid Online Technology Limited
- 6 -
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. Management informed us that there were no instances of known, suspected or alleged fraud;
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, The Data Protection Act 2018, Privacy Electronic Communications Regulations 2011, PCI/DSS (version 3.0); Health and Safety; employment law (including the Working Time Directive); and compliance with the UK Companies Act.
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetrated, and tailored our risk assessment accordingly; and
Using our knowledge of the company, together with the discussions held with management at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations and fraud;
Reviewing feedback from recent third party compliance visits;
Reviewing senior leadership team meeting minutes;
Reading correspondence with regulators to determine the extent of compliance;
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to the carrying value of tangible assets;
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness;
Testing key revenue lines, in particular cut-off, for evidence of management bias; and
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
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.
Brightsolid Online Technology Limited
Independent auditor's report (continued)
to the members of Brightsolid Online Technology 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.
Gavin Black (Senior Statutory Auditor)
For and on behalf of Henderson Loggie LLP
26 October 2023
Chartered Accountants
Statutory Auditor
The Vision Building
20 Greenmarket
Dundee
DD1 4QB
Brightsolid Online Technology Limited
Statement of comprehensive income
for the year ended 31 March 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
9,972,767
9,943,424
Cost of sales
(4,842,372)
(4,551,468)
Gross profit
5,130,395
5,391,956
Administrative expenses
(5,707,555)
(5,155,600)
Other operating income
717
2,707
Operating (loss)/profit
4
(576,443)
239,063
Interest receivable and similar income
7
823
Interest payable and similar expenses
8
(70,514)
(16,858)
(Loss)/profit before taxation
(646,134)
222,205
Tax on (loss)/profit
9
119,591
132,732
(Loss)/profit for the financial year
(526,543)
354,937
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
Brightsolid Online Technology Limited
Balance sheet
as at 31 March 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
5,343,314
4,225,549
Current assets
Debtors
11
2,414,016
2,581,662
Cash at bank and in hand
712,228
1,044,327
3,126,244
3,625,989
Creditors: amounts falling due within one year
12
(1,664,113)
(1,513,828)
Net current assets
1,462,131
2,112,161
Total assets less current liabilities
6,805,445
6,337,710
Creditors: amounts falling due after more than one year
13
(1,762,334)
(768,056)
Net assets
5,043,111
5,569,654
Capital and reserves
Called up share capital
16
19,040,000
19,040,000
Profit and loss reserves
17
(13,996,889)
(13,470,346)
Total equity
5,043,111
5,569,654
The financial statements were approved by the board of directors and authorised for issue on 26 October 2023 and are signed on its behalf by:
E Maddison
Director
Company Registration No. SC161678
Brightsolid Online Technology Limited
Statement of changes in equity
for the year ended 31 March 2023
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 April 2021
19,040,000
(13,825,283)
5,214,717
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
354,937
354,937
Balance at 31 March 2022
19,040,000
(13,470,346)
5,569,654
Year ended 31 March 2023:
Loss and total comprehensive income for the year
-
(526,543)
(526,543)
Balance at 31 March 2023
19,040,000
(13,996,889)
5,043,111
Brightsolid Online Technology Limited
Notes to the financial statements
for the year ended 31 March 2023
- 11 -
1
Accounting policies
Company information
Brightsolid Online Technology Limited is a private company limited by shares incorporated in Scotland. The registered office is Gateway House, Luna Place, Technology Park, Dundee, DD2 1TP.
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 amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
On the basis that the consolidated financial statements of the ultimate parent company, D.C. Thomson & Company Limited, provide disclosures which are equivalent to FRS 102, the financial statements of Brightsolid Online Technology Limited have adopted the following disclosure exemptions:
- the requirement to disclose the remuneration of key management personnel;
- the requirement to present a statement of cash flows and related notes; and
- related party transaction disclosures for transactions entered into between one or two members of the group on the basis that all parties are wholly owned within the group.
1.2
Going concern
The financial statements have been prepared on a going concern basis. The directors have considered relevant information, including the financial projections, forecast future cash flows and the impact of subsequent events in making their assessment. The directors have performed a robust analysis of forecast future cash flows taking into account the potential impact on the business of possible future scenarios arising from rising input costs and general economic conditions. This analysis also considers the effectiveness of available measures to assist in mitigating the impact. true
Based on these assessments and having regard to the resources available to the company, including the ongoing financial support of its parent company D.C. Thomson & Company Limited, the directors have concluded that there is no material uncertainty and that they can continue to adopt the going concern basis in preparing the annual report and financial statements.
1.3
Turnover
Turnover consists entirely of sales made in the United Kingdom, being the provision of online business services, managed hosting and associated technical services.
Revenue is recognised as the services are provided. Revenue receivable is accrued and revenue received in advance is deferred and released over the period of the contract.
1.4
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.
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
1
Accounting policies (continued)
- 12 -
Fixed assets are stated at cost. Depreciation and amortisation is calculated so as to write off the cost of an asset less its estimated residual value over the useful economic life of that asset as follows:
Land and buildings Freehold
10-15 years
Plant & machinery
10 years
Furniture, fixtures & fittings
5 years
Computer equipment & office equipment
3-15 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.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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 (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) 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 (or cash-generating unit) 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 (or cash-generating unit) 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.
1.6
Cash at bank and in hand
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.
1.7
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.
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
1
Accounting policies (continued)
- 13 -
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.
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 payments 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. Amounts 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
1
Accounting policies (continued)
- 14 -
1.8
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.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.9
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.
1.10
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.
1.11
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 leases asset are consumed.
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
1
Accounting policies (continued)
- 15 -
1.12
Government grants
Government grants receivable on capital expenditure are credited to a deferral account and are released over the expected useful life of the relevant asset in line with the depreciation charge.
Government grants receivable in compensation for operating costs are released on a basis that matches the costs incurred.
1.13
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 directors are 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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Carrying value of tangible assets
Directors and key management assess the useful lives of tangible assets, primarily data centres, using known information regarding key contracts and revenue and EBITDA generation. However, tangible assets can potentially generate revenue over a longer period.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Principal activity
9,972,767
9,943,424
2023
2022
£
£
Turnover analysed by geographical market
UK
9,972,767
9,943,424
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
3
Turnover and other revenue (continued)
- 16 -
2023
2022
£
£
Other significant revenue
Interest income
823
-
Grants received
717
2,707
4
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
(17,793)
(5,722)
Government grants
(717)
(2,707)
Fees payable to the company's auditor for the audit of the company's financial statements
22,550
19,605
Depreciation of owned tangible fixed assets
918,287
1,235,408
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Average
59
55
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,026,196
2,751,339
Social security costs
319,773
285,635
3,345,969
3,036,974
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
240,550
241,000
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
6
Directors' remuneration (continued)
- 17 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
178,050
166,000
Two directors were remunerated through the company totalling £240,550 (2022 - £241,000). Other directors are remunerated through D.C. Thomson & Company Limited.
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
823
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
70,514
14,317
Other interest
2,541
70,514
16,858
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
- 18 -
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(520,769)
70,159
Adjustments in respect of prior periods
(3,859)
(38,544)
Total current tax
(524,628)
31,615
Deferred tax
Origination and reversal of timing differences
401,259
(19,404)
Changes in tax rates
(145,459)
Adjustment in respect of prior periods
3,778
516
Total deferred tax
405,037
(164,347)
Total tax credit
(119,591)
(132,732)
The actual credit for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
(Loss)/profit before taxation
(646,134)
222,205
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19% (2022: 19%)
(122,765)
42,219
Tax effect of expenses that are not deductible in determining taxable profit
647
147
Effect of change in corporation tax rate
96,303
(145,459)
Permanent capital allowances in excess of depreciation
(87,309)
8,389
Research and development tax credit
(6,386)
(38,544)
Under/(over) provided in prior years
(3,859)
Deferred tax adjustments in respect of prior years
3,778
516
Taxation credit for the year
(119,591)
(132,732)
The Finance (No.2) Act 2015 reduced the main rate of UK corporation tax to 19% and this was effective from 1 April 2017. A further reduction in the UK corporation tax rate to 17% was expected to come into effect from 1 April 2020 (as enacted by the Finance Act 2016 on 15 September 2016). However, legislation introduced in the Finance Act 2020 (enacted on 22 July 2020) repealed the reduction of corporation tax, maintaining the current rate of 19%.
On 3 March 2021, the UK Budget 2021 announcements included measures to support economic recovery as a result of the COVID-19 pandemic. These included an increase to the UK’s main corporation tax rate to 25%, which is effective from 1 April 2023. The 25% rate was granted Royal Assent on 10 June 2021 and so was substantively enacted at the balance sheet date. As a result the closing deferred tax balances as at 31 March 2023 are recognised at 25% (2022 - 25%).
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
- 19 -
10
Tangible fixed assets
Land and buildings Freehold
Assets under construction
Plant & machinery
Furniture, fixtures & fittings
Computer equipment & office equipment
Total
£
£
£
£
£
£
Cost
At 1 April 2022
11,506,965
211,078
51,850
793,278
7,120,929
19,684,100
Additions
326,055
672,000
1,037,997
2,036,052
Transfers
131,876
(211,078)
(51,850)
131,052
At 31 March 2023
11,964,896
672,000
793,278
8,289,978
21,720,152
Depreciation and impairment
At 1 April 2022
7,902,984
51,850
700,835
6,802,882
15,458,551
Depreciation charged in the year
684,435
58,071
175,781
918,287
Transfers
51,850
(51,850)
At 31 March 2023
8,639,269
758,906
6,978,663
16,376,838
Carrying amount
At 31 March 2023
3,325,627
672,000
34,372
1,311,315
5,343,314
At 31 March 2022
3,603,981
211,078
92,443
318,047
4,225,549
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
888,619
979,648
Corporation tax recoverable
454,466
Other debtors
137,426
5,745
Prepayments and accrued income
732,466
990,193
2,212,977
1,975,586
Deferred tax asset (note 15)
201,039
606,076
2,414,016
2,581,662
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
- 20 -
12
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loan
14
35,378
58,333
Trade creditors
380,543
173,855
Corporation tax
250,875
Other taxation and social security
274,757
20,969
Government grants
8,600
Accruals and deferred income
964,835
1,009,796
1,664,113
1,513,828
13
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loan
14
773,399
768,056
Amounts due to group undertakings
14
869,257
Government grants
119,678
1,762,334
768,056
Amounts included above which fall due after five years are as follows:
Payable by instalments
601,144
534,722
14
Loans and overdrafts
2023
2022
£
£
Bank loans
808,777
826,389
Loans from group undertakings
869,257
1,678,034
826,389
Payable within one year
35,378
58,333
Payable after one year
1,642,656
768,056
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
- 21 -
15
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Assets
Assets
2023
2022
Balances:
£
£
Accelerated capital allowances
201,039
606,076
2023
Movements in the year:
£
Asset at 1 April 2022
(606,076)
Charge to profit or loss
405,037
Asset at 31 March 2023
(201,039)
16
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
13,154,000
13,154,000
13,154,000
13,154,000
2023
2022
2023
2022
Preference share capital
Number
Number
£
£
Issued and fully paid
Preference shares of £1 each
5,886,000
5,886,000
5,886,000
5,886,000
Preference shares classified as equity
5,886,000
5,886,000
Total equity share capital
19,040,000
19,040,000
Brightsolid Online Technology Limited
Notes to the financial statements (continued)
for the year ended 31 March 2023
16
Share capital (continued)
- 22 -
Each ordinary share carries one vote and is entitled to participate pari passu with other ordinary shares in any dividend or capital distribution.
The preference shareholders are not entitled to receive any dividend. The company alone has the right at any time to redeem the whole or any number of the preference shares on giving to the holders of the preference shares to be redeemed not less than one month's notice in writing. On this basis they are treated as equity.
On a return of capital on liquidation or otherwise, the surplus assets of the company remaining after payment of its liabilities shall be applied first in repaying to the preference shareholders the paid up amount on each preference share held.
Preference shareholders are entitled to receive notice of and attend all general or other meetings of the company, they shall not be entitled to vote at such meetings.
17
Profit and loss reserves
Profit and loss reserves include all current and prior period retained profits and losses.
18
Financial commitments, guarantees and contingent liabilities
The bank holds a standard security over the property and a floating charge over all the assets of the company.
19
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
-
807,926
20
Ultimate controlling party
The company is a wholly owned subsidiary of Brightsolid Online Innovation Limited, a company incorporated in Great Britain and registered in Scotland.
The ultimate parent company is D.C. Thomson & Company Limited, a company incorporated in Great Britain and registered in Scotland.
There is no individual controlling party of D.C. Thomson & Company Limited.
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