ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Registered number:
FOR THE YEAR ENDED 31 MARCH 2023
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DIGITAL CATAPULT
COMPANY INFORMATION
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DIGITAL CATAPULT
CONTENTS
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DIGITAL CATAPULT
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
Introduction
The directors present their Group Strategic Report for the year ended 31 March 2023. Business Review Digital Catapult is the UK authority on advanced digital technology. Through collaboration and innovation, we accelerate industry adoption of advanced digital technologies, to drive growth, opportunity and sustainability across the economy. We bring together an expert and enterprising community of researchers, startups, scaleups and industry leaders to discover new ways to solve the big challenges limiting the UK's future potential. Through our specialist programmes and experimental facilities, we make sure that innovation thrives and the right solutions make it to the real world. Our goal is to accelerate new possibilities in everything we do and for every business with which we partner, breaking down barriers, de-risking innovation, helping reduce emissions and enabling the achievement of green digital goals, increasing productivity, opening up markets and responsibly shaping the products, services and experiences of the future. Although we continually develop teams of deep technical experts in individual areas such as 5G and machine learning, our approach to achieving the transformation of companies in industry has shifted from a single technology approach to working in more market-defined application areas where a combination of technologies brings real-world benefits. We have identified three key areas in which UK strengths can combine with global opportunity to create real investment focus in a new advanced digital technology stack. These three application areas are: Open and Interoperable Digital Infrastructure, Digital and Resilient Supply Chains, and Virtual Environments and Cyber Physical Systems. Underpinning all this, we will maintain our commitment to providing deep tech support for the startup ecosystem through our FutureScope acceleration framework that provides focused support at every step of the scaling and growth journey. FY 22/3 represented yet another record year in terms of the Company’s impact and income. It was the third year in a row that delivered double digit income growth with total income growing 28% year on year. Through this past year we have fully mobilised and grown the major projects launched in FY 21/22, these being (1) SONIC - our OpenRAN Telecoms supply chain diversification programme working with the UK Government’s Department for Science Innovation and Technology (DSIT) and the communication regulator Ofcom; (2) the Made Smarter Digital Supply Chain Hub, with multiple additions to this programme portfolio secured in FY 22/23; (3) the Digital Security by Design programme on behalf of UKRI, working with ARM and the University of Cambridge; and (4) the Smart Nano Manufacturing Corridor project in Northern Ireland working with Seagate. In FY 22/23 we have also secured and commenced additional aligned work on (1) UK Telecomms Innovation Network (UKTIN) - a 2.5 year collaboration with Cambridge Wireless, West Midlands 5G and University of Bristol to transform the UK into a world-leader in telecoms R&D&I across all technology readiness levels; (2) BridgeAI - working with Innovate UK, Alan Turing Institute, the Knowledge Transfer Network and the Hartree Centre to help connect AI developers to industry adopters in sectors that have not yet felt the benefits of AI solutions; (3) Future Open Network Research Challenge - Realising Enabling Architectures and Solutions For Open Networks (FORNC REASON) - a 2 year collaboration with 18 academic, industry and other Catapult partners to begin to consider the next generation of network technologies and; (4) Advanced Media Production Studios - the set up of 5G enabled Virtual Production Test Studios in London and Gateshead. Across our work in FY 22/23 we have firmly established our portfolio in the areas of Interoperable Digital Infrastructure; Virtual Environments and Cyber Physical Systems; and Digital & Resilient Supply Chains, alongside delivering our FutureScope acceleration programme, scaling our regional presence, and building new facilities. We have targeted key new projects on Digital Twins and interconnected Virtual Production facilities for FY 23/24. In addition to these new scaling programmes and initiatives, during the past year we have continued to support innovation policy development, including key support work for the UK Government in areas of Cyber Physical Infrastructure and Digital Twins. We feed regular information to relevant Departments about the needs of UK companies in the global context of emerging cyber physical systems and other emerging technologies. This engagement is additional to our other key policy engagements and initiatives to tackle regional innovation challenges, drive innovation in creative and manufacturing industries, and supporting policy development for the UK AI Strategy, Quantum Technologies, net zero and hydrogen innovation.
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DIGITAL CATAPULT
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Digital Catapult has invested in the North East and Northern Ireland since inception. In 2022, Digital Catapult Northern Ireland was integrated into the wider Catapult organisation. This has led to the Collaborative R&D (CR&D) project Smart Nano Manufacturing Corridor, an important project helping Seagate deliver leading edge Hard Disk Drive technology and a further proposed CR&D project for the next fiscal year which will create the National Digital Twins Centre. Other projects are enabled by staff supported by N.I. Department for the Economy funding. The year has shown good growth with further significant growth anticipated with Digital Twins. We continue to review, evolve and promote the employee benefits we have in place to support health and wellbeing - mental, physical and financial. All employees have access to our Employee Assistance Programme and Financial Wellbeing services, which are free at the point of use. We offer a range of benefits that can be selected according to preferences and differing lifestyles and which are funded via a flexible benefits allowance per employee. Some of our benefits are funded by the organisation and we have a number of benefits in place that are available via salary sacrifice schemes, for example, we launched a new e-vehicle scheme in June 2023. We run events and activities throughout the year to support the wellbeing of our staff. We operate an annual programme in support of initiatives relating to Equity, Diversity and Inclusion to ensure we are building a team that is both diverse and inclusive. Within this programme, we hold training and awareness raising sessions, as well as running specific campaigns and initiatives to connect with different demographic groups within our employee population as well as external communities we may be attempting to reach for recruitment purposes. This year, we have developed increased opportunities for people to join us at the early career stage, through high level apprenticeships and internships. We have also formalised our work experience proposition with a focus on providing opportunities to young people from underrepresented groups and to support social mobility. Our ambition is for 5% of our team to be in “earn and learn” roles as we feel we are then contributing to the tech industry and skills development in the UK job market. It is important to us that we create a sense of belonging within the organisation for everyone who works with us. Our success in entering the Great Place to Work index for the first time this year is testament to the effectiveness of our ongoing growth and development. At the same time, Digital Catapult has also been recognised as one of the Best Places to Work in Tech in the UK. These accreditations serve to provide a sense of pride in our organisation and to attract further talent to join us. We continue to work in a hybrid setting, encouraging our team members to keep a good balance between working in our collaborative office environments where team working is often more effective and working from home, or remotely, when it is easier to perform deep thinking or research based work. We believe this flexibility gives our employees a beneficial work/life balance and also serves to ensure inclusion in the workplace. Overall, the past year has seen Digital Catapult create real momentum in the marketplace. The Company has grown its reputation through a track record of high-level technical competence, leading edge innovation capability and a responsible approach to technology optimism, as well as our distinct ambition to grow innovative companies all across the UK. Highlights of achievements in FY 22/23 FY 22/3 represented another record year of income growth and impact for the Company. Total income has now delivered double digit growth for the past 3 years with the year ended March 2023 delivering a 28% uplift on the prior year. This was achieved via an impressive 55% increase in income from the Company’s CR&D activities as the scale and complexity of such work continues to grow.
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DIGITAL CATAPULT
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
FY 22/3 represented Digital Catapult’s final year of its 2018 to 2023 Delivery Plan, working across the UK to advance the adoption of digital technology. We fully mobilised the SmartRAN Open Network Interoperability Centre (SONIC Labs) programme announced as part of DSIT's 5G Diversification Strategy, commencing work with three cohorts of companies and opening an upgraded lab facility at Digital Catapult’s London headquarters. In Northern Ireland we delivered the first cohort of the technology adoption programme as part of the Smart Nano Manufacturing Corridor project, and specified and procured the 5G testbed installed at the Seagate plant in June 2023. We completed enhancement of our virtual production capability, opening 5G enabled Virtual Production Test Stages in London and Gateshead to provide access to facilities and technology, enabling hands-on training and skills development, CR&D in the sector and growth of commercial work. In the South West of England we continued work as part of the My World consortium, completing a successful call to commission eight collaborative R&D projects in the region, supporting those projects throughout their lifecycle. The Digital Supply Chain Hub programme grew substantially in 22/23, adding further flagship projects, 4 new testbeds, working with over 180 organisations across 14 sectors across the whole of the UK and with commitment secured of £9m of co-investment in the work. During the year, Digital Catapult continued to build and develop its innovation and acceleration programmes through our FutureScope activity. In FY 22/23 we worked with over 400 companies and noted that across the five year programme the high growth digital first companies that worked with Digital Catapult went on to raise over half a billion pounds in investment. For FY 22/23 Digital Catapult had ambitious plans to grow its offer across the UK and to develop deeper and new partnerships regionally. Success with this ambition is shown in the highlights listed above and in the further projects secured in the year, for example UKTIN and BridgeAI mentioned earlier. While we have expanded our capability around scaled adoption of these technologies, our continued strength in early stage research is demonstrated by our participation in, for example, the FORNC REASON consortium with over 18 partners across universities and Research and Technology Organisations. The Company’s staffing grew to 251 full time equivalents across the UK by the end of FY 22/23. We now commence a new five year plan in FY 23/24 with the ambition to continue that growth in size, income and impact year on year, targeting major specific opportunities in digital twins and connected advanced media production facilities in the first year. Funding Digital Catapult receives its core funding from Innovate UK in accordance with five year Grant Funding Agreements. In addition, the Company generates income from CR&D projects, which it wins competitively and Commercial business activities for which it charges market rates. Commercial Income This is the tenth year of trading for our subsidiary, Digital Catapult Services Limited and we are pleased to report £2,474,604 of income. Equality Inclusion and Diversity As part of our commitment to responsible working, we see Equity, Inclusion and Diversity as critical components of the way we work. We are members of Inclusive Employers, the Women Engineering Society and SheCanCode. We are also committed to being a Real Living Wage Employer. We believe that increasing the diversity of our staff and increasing the representation of people from all backgrounds positively enriches us as a team, enabling us to bring fresh thinking and innovative ideas to our work. We believe that our unique position in the innovation landscape means that we can influence our partners to improve their own diversity and inclusion. Through the course of the year, the Company has organised a series of initiatives aimed at its own workforce to improve the diversity and inclusiveness of the staff and we have also launched projects that underpin EDI, such as our Black Founders Accelerator programme in FY 23/4. The Company continues to use data and reporting, for example the gender pay gap report and data collected via employee surveys, in order to continually improve our position from an EDI perspective and we recognise that this requires ongoing determination and commitment.
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DIGITAL CATAPULT
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The risk register is reviewed in combination with the parent company register, which in turn is reviewed by the Audit and Risk Committee and the Board of Directors. Each risk is assessed and a mitigation plan agreed where practicable.
The most significant risks for the Company and its subsidiary (the “Group”) are: Public debt, inflation, geo-political and market uncertainty – there are UK specific and global issues affecting UK public finances and creating market uncertainties. Higher inflation and energy costs together with potential risks to the supply chain are all headwinds impacting Digital Catapult’s programmes and its ecosystem of partners. This uncertainty also impacts the private sector and the willingness to invest in innovation. Staff hiring, retention and well-being - The Company’s continued success is contingent on being able to hire and retain motivated, engaged employees who have a healthy work-life balance. However, the Company operates in a highly competitive market thereby putting significant pressure on its ability to hire and retain staff. Project and major programme delivery - the nature of our work is becoming increasingly complex and greater in size leading to an increased risk associated with the successful delivery of the projects and programmes.
This report was approved by the board and signed on its behalf.
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DIGITAL CATAPULT
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 the Group and of the surplus or deficit of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group'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 Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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DIGITAL CATAPULT
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Initially Digital Catapult successfully focused on individual technology areas, building proof of concepts and demonstrating the art of the possible. The Company now sees an opportunity to drive greater digital adoption by shifting its focus to real world deployment at scale. Digital Catapult has therefore undertaken a process of transition from standalone technology programmes to broader technology application areas where advanced digital technologies converge: • Open and Interoperable Digital Infrastructure - Digital Catapult will support the development and early adoption of open and interoperable advanced digital infrastructure. We will be a catalyst for the development of network software applications. We will help deliver the Government telecoms diversification strategy. • Digital and Resilient Supply Chains - Digital Catapult will work with industrial partners to develop new open and transparent supply chains and associated enabling tools and applications. These will focus on resilience and sustainability. • Virtual Environments and Cyber Physical Systems - we will enable the development of cross-sector national capability in virtual environments and cyber physical systems, to include advanced systems and technologies to virtualise services for design, manufacturing, production, distribution and discovery. Significant developments in these fields in the next decade represent opportunities for UK companies. Digital Catapult’s programmes are designed to enhance those opportunities and therefore to increase the global competitiveness of the UK economy. Digital Catapult builds and operates physical and virtual facilities that would not exist without its investment. It also designs and delivers specialised regional, national and international innovation programmes that tackle capability and market failures, driving UK leadership and economic growth; and builds combined technology proof of concepts and pilots through collaborative and commercial research & development, unlocking the economic potential of innovation, helping to prove the business case and accelerate the adoption of emerging technology start-ups and scaleups solutions into industry. We accelerate practical approaches to adoption - with ethical and security considerations - so that the UK can benefit from these technologies at a national scale. The review of the business is presented in the Group Strategic Report. Sources of Income During the year ended March 2023, Digital Catapult was funded at its core by a UK Government grant. In addition, the Company generated income from Collaborative Research and Development projects and Commercial business activities, which it won competitively.
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DIGITAL CATAPULT
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Turnover of £32,450,418 (2022: £25,426,849) was made up of grants totaling £29,975,814 (2022: £21,187,335) received from Innovate UK and Collaborative R&D projects and also £2,474,604 (2022: £4,239,514) of Commercial income from the Trading subsidiary, Digital Catapult Services Limited. Operational costs of the organisation were £32,482,976 (2022: £25,032,421) and Other operating income of £nil (2022: £208,528) resulting in an operating (loss) of £(32,558) (2022: profit £602,956).
The surplus for the year, after taxation, amounted to £18,571 (2022 - £498,087).
The directors have disclosed some required information within the Group Strategic Report.
The directors who served during the year were:
The rate of change in global technological development continues to offer exponential opportunities and competitive challenges. FY 23/24 is likely to be a challenging one for the UK economy, with continued high inflation and increased interest rates and corresponding impacts on the cost of living and the cost of doing business. Climate change and sustainability challenges will also be significant drivers in both commercial and policy decision making. The role of Digital Catapult is to help ensure that, during such a challenging context, companies will continue to find value in investment in innovation.
In this kind of challenging environment, it is clear that companies which choose to put a focus on sustainability alongside digitalisation, can increase both competitiveness and resilience. This is an area where the Company sees increasing demand for support in developing solutions to this twin challenge. Commercial customers who recognise this are businesses which see social responsibility and the role of sustainability as critical in driving future profit growth. Digital Catapult is currently supporting startups and scale ups working in climate tech and on specific sustainability research and development and commercial innovation programmes. Significant growth is expected in this area over the next five years. The Company will use its expertise from its deep tech acceleration programme, FutureScope, and its knowledge of industry requirements in this area to support client companies in the coming period.
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DIGITAL CATAPULT
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Digital Catapult is enabling industrial sustainability in three ways: · Moving to a circular economy - developing new business models based on data that prevent waste, drive a cradle to cradle approach and build a circular economy infrastructure. · Enabling an energy transition - supporting the digitalisation of existing energy networks and the development of clean fuels, such as wind, solar and green hydrogen. · Decarbonising supply chains - developing efficient carbon accounting practices to better understand scope 3 emissions, and incentivise supply chain partners to make sustainable choices and investments. Digital Catapult will be at the heart of the most critical digital technology developments for business and for national innovation and research and development strategies for the UK over the course of the next 3-5 years. In both the short and longer term, Digital Catapult will ensure that opportunities are grown for UK innovation - leveraging our strengths and the capabilities of advanced digital technology supply and demand to position UK companies for the future.
After the year end, the Group elected to convert loan notes held with Hammerhead Interactive Limited to equity and to immediately dispose of these shares. The balance of the loan notes at 31 March 2023 was £155,000 (2022: £155,000).
The loan notes were coverted into 781 £0.20 ordinary shares for a total consideration of £325,221. Subsequently, the equity was sold for £325,221. A new Five Year Grant Funding Agreement was signed with Innovate UK, providing for funding of Digital Catapult for the period from April 2023 to March 2028.
The auditor, James Cowper Kreston Audit, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DIGITAL CATAPULT
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DIGITAL CATAPULT
We have audited the financial statements of Digital Catapult (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2023, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company 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 Group 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 Group's or the parent 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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DIGITAL CATAPULT
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DIGITAL CATAPULT (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 Group 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 Group 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 Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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DIGITAL CATAPULT
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DIGITAL CATAPULT (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 Group financial statements.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. The specific procedures for this engagement that we designed and performed to detect material misstatements in respect of irregularities, including fraud, were as follows: · Enquiry of management and those charged with governance around actual and potential litigation and claims; · Enquiry of management and those charged with governance to identify any material instances of non- compliance with laws and regulations; · Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations; · Performing audit work to address the risk of irregularities due to management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for evidence of bias.
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.
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DIGITAL CATAPULT
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DIGITAL CATAPULT (CONTINUED)
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 and Statutory Auditor
2 Chawley Park
Cumnor Hill
Oxfordshire
OX2 9GG
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DIGITAL CATAPULT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
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DIGITAL CATAPULT
REGISTERED NUMBER: 07964699
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 25 October 2023.
The notes on pages 20 to 37 form part of these financial statements.
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DIGITAL CATAPULT
REGISTERED NUMBER: 07964699
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 20 to 37 form part of these financial statements.
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DIGITAL CATAPULT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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DIGITAL CATAPULT
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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DIGITAL CATAPULT
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
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DIGITAL CATAPULT
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2023
Page 19
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Digital Catapult is a company incorporated in England and Wales, and limited by guarantee.
Digital Catapult is the UK’s leading advanced digital technology innovation centre. It drives the early adoption of digital technologies to make UK businesses more competitive and productive to grow the country’s economy The Company's registered office is 101 Euston Road, London, NW1 2RA.
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 Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiary ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are, therefore, eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date upon which control is obtained. They are deconsolidated from the date control ceases.
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors' share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated Statement of Comprehensive Income includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated Statement of Financial Position, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition.
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Management confirm the Company's ability to continue as a going concern. It has assessed the business on financial, operational and other factors as part of this assessment. FY22/23 was the final year of the Company's current five year grant funding period A new Five Year Grant Funding Agreement has been signed with Innovate UK, providing funding for Digital Catapult for the period from April 2023 to March 2028. There are no other factors known which could impact on a going concern assessment.
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:
Software - 3 years on a straight line basis.
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Grants are accounted for under the accruals model as permitted by FRS 102.
Grants relating to expenditure on tangible fixed assets are credited to the Consolidated Statement of Comprehensive Income at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated Statement of Comprehensive Income in the same period as the related expenditure.
Functional and presentation currency
Transactions and balances
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: The recognition of income arising from government grants has been carefully considered to ensure compliance with the requirements of the accruals based approach permitted under FRS 102.
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Analysis of turnover by country of destination:
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 27
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 28
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
11.Taxation (continued)
The main rate of corporation tax will rise from 19% to 25% from 1 April 2023. On this basis deferred tax is
provided at the future rate of 25%.
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 30
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 31
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 32
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 33
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 34
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 35
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
All of the Group's provisions are held in the Parent Company.
The dilapidation provision relates to an estimate of costs for restoration, repair and redecoration of the Company's leased premises at the termination of the lease in accordance with the terms of the lease agreement.
Profit & loss account
The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension charge represents contributions payable by the Group to the fund and amounted to £1,131,817 (2022: £948,907).
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DIGITAL CATAPULT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The loan notes were coverted into 781 £0.20 ordinary shares for a total consideration of £325,221. Subsequently, the equity was sold for £325,221. A new Five Year Grant Funding Agreement was signed with Innovate UK, providing for funding of Digital Catapult for the period from April 2023 to March 2028.
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