ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Registered number:
FOR THE YEAR ENDED 31 MARCH 2021
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BACK OFFICE TECHNOLOGY LIMITED
CONTENTS
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BACK OFFICE TECHNOLOGY LIMITED
COMPANY INFORMATION
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BACK OFFICE TECHNOLOGY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2021
The directors present their strategic report on the company for the year ended 31 March 2021.
Principal activity Back Office Technology Limited (trading as Form3) principal activity during the year continued to be that of providing cloud-native payment technology to regulated financial institutions.
During the financial year, Form3 continued to design, develop, implement, and run a technology platform for regulated financial institutions, that allows them to manage workflows and clearing and settlement scheme access for all of their account-based payments. Form3 customers include financial technology companies and banks, including large UK corporates and retail banks such as Lloyds Banking Group, Barclays Bank and Nationwide Building Society.
Revenues in the financial year reached £9.33m (FY2020: £3.90m), including project and transaction fees from 35 customers. Transaction volumes at the end of the financial year increased significantly to about 40m transactions per month in line with customer live dates, further significant increases are expected as more customers are transferring their payment processing to Form3. The key drivers behind our customers transferring their payment processing to Form3 are payments moving to real time, and the adoption of cloud based technology by regulated financial institutions. Administrative expenses in the year were £19.5m (FY2020: £10.8m), reflecting significant hiring and related costs of a growing team, in particular in Research and Development. The administrative expenses include a share based payment charge of £1.4m (FY2020: £1.0m), as explained in note 20. Form3 continues to invest in Research and Development to expand its product offering to increase functionally across existing markets, and to expand to offer new markets access. Total headcount in the year increased to 158 FTE (FY2020: 75 FTE), mainly driven by growth in product and engineering from 40 FTE to 81 FTE. To facilitate this growth and ensure a successful onboarding, the Company continues to build out its support functions, incl. recruitment and HR. Form3 has grown its workforce across 23 countries in Europe to date. Form3 is establishing branches to ensure compliance in all locations in which we engage workers. Additionally, Form3 has hired 31 independent sub-contractors, of which the majority are engineers. Global Pandemic and the business impact The COVID-19 pandemic has had an unprecedented impact worldwide having a significant effect on the financial markets and creating market volatility. Form3 has been relatively unimpacted by COVID-19. Form3 has seen minimal to no impact to revenue or expenses as a result of COVID-19. Form3 continues to offer colleagues the opportunity to work remotely, which allowed the Company to implement COVID-19 related rules and restrictions with no significant negative impact on the business. At the end of the financial year, net assets were £27.6m (FY2020: £9.2m) with a loss for the financial year of £7.2m (FY2020: £4.6m). The company raised a total of £24.3m in a strategic equity investment round with existing and new investors, this transaction was completed in October 2020. |
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BACK OFFICE TECHNOLOGY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
The Directors are responsible for identifying principal risks and for proposing suitable mitigating strategies. Form3 seeks to mitigate its risks through the identification of such risks and by applying robust controls.
At a business level the executives are responsible for assessing and evaluating risk in their business area, and maintaining their individual business risk register. These individual business registers are reviewed quarterly by the executive as a group to ensure all risks are reviewed and mitigated in a timely fashion. Form3 has a Risk & Audit Committee that meets quarterly. The Risk & Audit Committee monitors standing agenda items that have been determined as key indicators of risk, as well as elevating to the directors any new risk items, or changes to strategy or controls. The principal risks for Form3 are financial losses or other material adverse impacts arising from:
∙Macro Risks: events in the markets or political environment.
∙Information Security Risks: events impacting the confidentiality, availability and integrity of Form3 and its client’s data, systems and processes.
∙Product Quality & Performance Risks: events impacting the quality, functionality, reliability, and performance of our products.
∙Client Delivery & Services Risks: events impacting our ability to deploy our products to our clients, our clients ability to migrate volume to us or for us to provide ongoing services to support them.
∙IT & Operations Risks: inadequate or failed internal processes, systems, or policies, for example privileged access controls to our technology infrastructure or facilities, resulting in loss or dilution of our intellectual property.
∙Legal & Compliance Risks: non-compliance with our contractual, and other obligations including laws and regulations.
∙Commercial & Financial Risks: events impacting our commercial and financial positions including loss of revenue, gross and net margin, liquidity, and funding.
All of the above risk areas are monitored through Form3 risk management operating procedures and are reviewed by the directors quarterly through the Risk & Audit Committee meetings.
The directors monitor revenue, gross margin, earnings before Research and Development investment, Research and Development investment, and number of engineers as key performance indicators of the company. Engineer numbers are monitored to ensure Form3 has enough build capacity, as Form3 continues to scale and meet its build agenda.
Revenue year on year growth was 139%, reflecting the growth in customers and revenue in the year. Gross margin continues to be greater than 80%. The Company regards spending in Research and Development as a key perfomance indicator and is targeting a break even postion before such investment. The company invested £8.1m in Research and Development in the year, up from £4.6m in the prior year, and plans to continue investing at an accelerated rate. |
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BACK OFFICE TECHNOLOGY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
During the financial year, Form3 closed a strategic equity investment round of £24.3m. This followed a Series B funding round in November 2018. The new shareholders include Lloyds Banking Group, Nationwide Building Society, Mastercard and Venture Capital firm 83North. Draper Esprit also re-invested following its participation in November 2018.
Post year end, the Company secured funding via the issue of ordinary share capital. Total consideration in relation to this primary raise amounted to £105m. Form3 is a Going Concern on the basis of the further funding secured as noted above. Form3 continues to invest in Research and Development, therefore creating a loss making-position, a situation closely controlled by the executive and supported by its shareholder group.
This report was approved by the board and signed on its behalf.
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BACK OFFICE TECHNOLOGY LIMITED
DIRECTORS' REPORT
The directors present their report and the financial statements for the year ended 31 March 2021.
The loss for the year, after taxation, amounted to £7,201,040 (2020 - loss £4,572,806).
No dividends were paid during the year and the directors do not recommend a final dividend.
The directors who served during the year were:
Over the coming period Form3 will expand its product offering to explore future developments focussed on:
a) New Geographic Markets – an evaluation of the appropriate next locations around the world for addition of new currencies and clearing scheme access, enabling our clients to continue to grow their own businesses internationally using the same technical integrations and managed service model. b) International Payments – expansion of our services to include the processing of cross currency payments, enabling our clients to use the same infrastructure they already use for high volume real time and local payments for their broader payment needs.
Given the nature of the operations of the Company and the industry in which it operates, the Company incurs certain costs in connection with research and development. The treatment of these is explained in further detail in note 2.7.
The company continues to invest significantly in research and development relating to: a) Market Access – the expansion of and addition of new clearing schemes and partner connections in the UK and Europe, enabling our clients to use our single API to manage more payment types. b) Functional Services – the expansion and addition of value added services focussed on the payment processing lifecycle, enabling our clients to transition more of their internal processing of payments to Form3 products. c) Platform – the sustained investment in the scalability, security and resilience of the Form3 platform, supporting our clients rapid growth in volumes in a secure and reliable way. |
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BACK OFFICE TECHNOLOGY LIMITED
DIRECTORS' REPORT (CONTINUED)
On 30 January 2020 the World Health Organisation declared Coronavirus (COVID-19) a public health emergency. There are no comparable recent events which may provide guidance as to the effect of the spread of COVID-19 and a potential pandemic, and, as a result, the ultimate impact of the COVID-19 outbreak or similar health epidemic is highly uncertain and subject to change.
This report was approved by the board and signed on its behalf.
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BACK OFFICE TECHNOLOGY LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2021
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make 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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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BACK OFFICE TECHNOLOGY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BACK OFFICE TECHNOLOGY LIMITED
FOR THE YEAR ENDED 31 MARCH 2021
We have audited the financial statements of Back Office Technology Limited (the 'Company') for the year ended 31 March 2021, which comprise the Profit and Loss Account, the Balance Sheet, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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.
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BACK OFFICE TECHNOLOGY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BACK OFFICE TECHNOLOGY LIMITED (CONTINUED)
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.
In our opinion, based on the work undertaken in the course of the 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.
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 or the Directors' Report.
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BACK OFFICE TECHNOLOGY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BACK OFFICE TECHNOLOGY LIMITED (CONTINUED)
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:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the fintech sector;
∙we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection and employment legislation;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures to identify any unusual or unexpected relationships;
∙tested a sample of journal entries to identify unusual transactions;
∙assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 were indicative of potential bias; and
∙investigated the rationale behind significant or unusual transactions.
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BACK OFFICE TECHNOLOGY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BACK OFFICE TECHNOLOGY LIMITED (CONTINUED)
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation;
∙reading the minutes of meetings of those charged with governance;
∙enquiring of management as to actual and potential litigation and claims; and
∙reviewing correspondence with HMRC and the company’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: 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.
for and on behalf of
Chartered Accountants
Statutory Auditor
16 Great Queen Street
Covent Garden
WC2B 5AH
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BACK OFFICE TECHNOLOGY LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2021
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BALANCE SHEET
AS AT 31 MARCH 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 36 form part of these financial statements.
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BACK OFFICE TECHNOLOGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
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BACK OFFICE TECHNOLOGY LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2021
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Back Office Technology Limited is a private company limited by shares and registered and incorporated in England and Wales. The Company's trading address is 7 Harp Lane, London, EC3R 6DP and its registered office is 16 Great Queen Street, Covent Garden, London, WC2B 5AH.
The financial statements are presented in Sterling (£). Monetary amounts are rounded to the nearest pound.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The financial statements have been prepared on a going concern basis despite the continued generation of losses, with a loss after tax for the year of £7,201,040. The directors consider this basis to be appropriate as the Company has been able to successfully raise additional finance during the year based on its planned pipeline of product development and roll-out, such that total equity at the balance sheet date is £27,616,019.
Furthermore, the Company is expected to raise additional finance, in the form of share capital, post year end totalling £105m, with a termsheet for this fundraising signed as at the date these financial statements were approved. On 30 January 2020 the World Health Organisation declared Coronavirus (COVID-19) a public health emergency. Following the outbreak of COVID-19 the Company adapted its operations and overhead base accordingly. The directors have considered cash flow and profit/loss projections for a period of at least twelve months from the date these financial statements were approved, and have a reasonable expectation that the cash reserves as at the balance sheet date of £18,621,183, together with additional funds due to be raised post year end, mean that the Company has adequate resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, being a period of at least twelve months from the date these financial statements were approved. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. |
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
The Company has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial assets and financial liabilities are recognised when the Company becomes party to the contractual provisions of the instrument. 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. The Company’s policies for its major classes of financial assets and financial liabilities are set out below. Financial assets Basic financial assets, including trade and other debtors and cash and bank balances are initially recognised at transaction price, 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 for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate. Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment. |
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.Accounting policies (continued)
Financial liabilities Basic financial liabilities, including trade and other creditors 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 for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Impairment of financial assets Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account. For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the company would receive for the asset if it were to be sold at the reporting date. For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. 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 and financial liabilities Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions. Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires. Offsetting of financial assets and financial liabilities Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an 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. |
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding value added tax and other sales taxes. The following criteria must also be met before revenue is recognised: If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only. |
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.Accounting policies (continued)
Grants are accounted under the accruals model as permitted by FRS 102. Grants of a revenue nature are recognised in the Profit and Loss Account in the same period as the related expenditure. The deferred element of grants is included in creditors as deferred income.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Company keeping the scheme open or the employee maintaining any contributions required by the scheme). Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period. Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received. |
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.Accounting policies (continued)
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
3.Judgements in applying accounting policies (continued)
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 that period of the revision and future periods where the revision affects both current and future periods. 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: Capitalisation of product development costs An accounting policy choice exists for the Company to either recognise an internally generated intangible asset arising from the development phase of a new product (subject to satisfying certain specific recognition criteria) or to expense such development costs to profit or loss account as they are incurred. The policy should be applied consistently to all expenditure meeting the recognition criteria. The determination as to whether the asset recognition criteria have been satisfied and hence the amounts recognised as assets in the financial statements is a significant area of management judgement. This judgement includes a consideration of: In preparing these financial statements, the directors have exercised judgement in determining whether there are indicators of impairment of the Company's tangible and intangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit. Useful economic lives and amortisation of intangible assets Intangible assets are amortised over their estimated useful economic lives. Future results are impacted by the amortisation periods adopted and, potentially, any differences between estimated and actual circumstances related to individual intangible assets. Revenue recognition The Company recognises revenue in accordance with the agreed terms stipulated within customer contracts. Satisfaction of performance obligations are determined in line with contractual milestones. Share based payment charge The Company operates a share option plan for its employees. The charge is derived by way of reference to the Black-Scholes model. The directors have exercised judgement in determining the underlying parameters on which the basis for the charge has been formed. This includes the risk free interest rate, share price volatility and market value of the options at the grant date. The share based payment charge is recognised on a straight line basis over the contractual vesting period of the options. |
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Analysis of turnover by country of destination:
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
12.Taxation (continued)
In the Spring Budget 2021 on 3 March 2021, the Government announced that from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. From this date companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. At the balance sheet date, the increase in rate had not been substantively enacted and therefore its effects are not included in these financial statements.
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
The Company issued share capital during the year to increase working capital.
The following share issues were all in respect of the exercise of share options in the period. During June 2020, 7,158 Ordinary shares of £1 each were allotted as fully paid at par. On 14 August 2020, 73,659 Ordinary shares of £1 each were allotted as fully paid at par. On 11 December 2020, 41,332 Ordinary shares of £1 each were allotted as fully paid at par. On 21 February 2021, 75,000 Ordinary shares of £1 each were allotted as fully paid at par. On 25 June 2020, 28,439 Series B-3 shares of £1 each were allotted as fully paid at a premium of £24.3165 per share. On 3 July 2020, 444,504 Series B-3 shares of £1 each were allotted as fully paid at a premium of £24.3165 per share. On 13 September 2020, 222,252 Series B-3 shares of £1 each were allotted as fully paid at a premium of £24.3165 per share. On 11 December 2020, 152,457 Series B-3 shares of £1 each were allotted as fully paid at a premium of £25.973 per share. On 25 June 2020, 94,799 Series B-4 shares of £1 each were allotted as fully paid at a premium of £24.3165 per share. Costs associated with the issue of these shares amounted to £106,000, and have been charged to the share premium account. |
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
Share premium account
Other reserves
Profit and loss account
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £112,280 (2020: £60,826). Contributions totalling £36,870 (2020: £21,446) were payable to the fund at the balance sheet date.
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
23.Other financial commitments
As at the balance sheet date, the Company had available a £5m venture debt facility. The facility has not been drawndown and is due to expire on 31 September 2021. The facility is secured by way of senior fixed and floating charge over the Company's assets, including its intellectual property.
As at the balance sheet date, the Company had outstanding financial commitments in relation to contractual obligations with suppliers for future purchases totalling £137,425 and $8,622,295. The contractual obligations are due to expire between July 2022 and March 2024.
24.Key management remuneration
The key management personnel of the company comprise the Company directors and senior managment team. The total amount of employee benefits (including employer pension contributions) received by the key management personnel for their services to the Company was £868,005 (2020: £746,513).
The key management personnel also recieved benefits in the form of share based payments. The total share based payment charge recognised during the year in relation to the key management personnel was £516,983 (2020: £682,683 as restated). |
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
In the opinion of the directors there is no ultimate controlling party.
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BACK OFFICE TECHNOLOGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
28.Prior year adjustment (continued)
Explanation of changes to previously reported profit and equity:
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