MS Modernisation Services UK, Ltd. - Limited company accounts 16.1

REGISTERED NUMBER: 04283023

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 December 2015

for

MS Modernisation Services UK, Ltd.

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Profit and Loss Account

7

Balance Sheet

8

Notes to the Financial Statements

9

DIRECTORS:

M Bell

J P Regan

R Chance

S Miller

REGISTERED OFFICE:

1st Floor, Healthaid House

Marlborough Hill

Harrow

Middlesex

HA1 1UD

REGISTERED NUMBER:

04283023

SENIOR STATUTORY AUDITOR:

Jeremy Harrod FCCA

AUDITORS:

Grant Harrod Lerman Davis LLP

Chartered Accountants

Statutory Auditor

1st Floor

Healthaid House

Marlborough Hill

Harrow

Middlesex

HA1 1UD

MS Modernisation Services UK Ltd , formerly known as BluePhoenix Solutions UK Limited, as part of Modern

Systems , develops and markets enterprise legacy migration solutions and provides tools and professional services to

selected customers. These technologies and services allow businesses to migrate from their legacy mainframe and

distributed information technology infrastructures to modern environments and programming languages. Our complete

modernisation solutions consist of a combination of automated technologies and services that minimise the risk through

the whole life cycle of the modernisation process. The solutions allow companies to fully leverage their current systems

and applications, speed up and reduce the cost of the renewal process, and effectively update their systems in order to

adapt to new business demands Our modernisation solutions are offered to customers in all business market sectors,

particularly financial services, and governmental entities. In addition, we provide consulting services, application

development services and maintenance for core banking systems.

Risks and uncertainties continue to be assessed by the company and by the parent company both within and outside the

UK. There are various types of risk, such as, risks related to the business, risks related to international operations, and

fluctuations of various currencies that may affect the company's results. The risks are assessed and the company

allocates resources to keep such risks to a minimum.

We believe our employees are the most valuable asset of the company of which their dedication, professionalism and

drive have contributed to the continued success of the company.

ON BEHALF OF THE BOARD:

R Chance - Director

9 September 2016

The directors present their report with the financial statements of the company for the year ended 31 December 2015.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2015.

FUTURE DEVELOPMENTS

The Directors continue to look for opportunities for the company and hope to expand the business in the coming year.

These opportunities include gaining new customers, new potential geographical areas, and new potential industries.

DIRECTOR

M Bell held office during the whole of the period from 1 January 2015 to the date of this report.

Other changes in directors holding office are as follows:

J P Regan , R Chance and S Miller were appointed as directors after 31 December 2015 but prior to the date of this report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Report of the Directors 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;

-	state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company's transactions and disclose with reasonable accuracy at any time the financial position of the company and

enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for

safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud

and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken

as a director in order to make himself aware of any relevant audit information and to establish that the company's

auditors are aware of that information.

AUDITORS

The auditors, Grant Harrod Lerman Davis LLP, will be proposed for re-appointment at the forthcoming Annual General

Meeting.

ON BEHALF OF THE BOARD:

R Chance - Director

9 September 2016

We have audited the financial statements of MS Modernisation Services UK, Ltd. for the year ended 31 December 2015

on pages seven to thirteen. The financial reporting framework that has been applied in their preparation is applicable law

and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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 a Report of the Auditors 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.

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give

reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.

This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and

have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by

the directors; and the overall presentation of the financial statements. In addition, we read all the financial and

non-financial information in the Strategic Report and the Report of the Directors to identify material inconsistencies with

the audited financial statements and to identify any information that is apparently materially incorrect based on, or

materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of

any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2015 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Report of the Directors for the financial year for

which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you

if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Jeremy Harrod FCCA (Senior Statutory Auditor)

for and on behalf of Grant Harrod Lerman Davis LLP

Chartered Accountants

Statutory Auditor

1st Floor

Healthaid House

Marlborough Hill

Harrow

Middlesex

HA1 1UD

9 September 2016

TURNOVER

2

772,911

1,324,183

Administrative expenses

716,494

1,547,207

OPERATING PROFIT/(LOSS) and

PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION

4

56,417

(223,024

)

Tax on profit/(loss) on ordinary activities

5

-

-

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

56,417

(223,024

)

CONTINUING OPERATIONS

None of the company's activities were acquired or discontinued during the current year or previous year.

TOTAL RECOGNISED GAINS AND LOSSES

The company has no recognised gains or losses other than the profit for the current year and the loss for the previous

year.

FIXED ASSETS

Intangible assets

6

-

-

Tangible assets

7

4,932

7,433

4,932

7,433

CURRENT ASSETS

Debtors

8

283,840

14,026

Cash at bank

70,309

36,200

354,149

50,226

CREDITORS

Amounts falling due within one year

9

6,472,100

6,227,095

NET CURRENT LIABILITIES

(6,117,951

)

(6,176,869

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(6,113,019

)

(6,169,436

)

CAPITAL AND RESERVES

Called up share capital

10

2

2

Profit and loss account

11

(6,113,021

)

(6,169,438

)

SHAREHOLDERS' FUNDS

13

(6,113,019

)

(6,169,436

)

The financial statements were approved by the Board of Directors on 9 September 2016 and were signed on its behalf by:

R Chance - Director

1.	ACCOUNTING POLICIES

Accounting convention

The financial statements have been prepared under the historical cost convention and are in accordance with

applicable accounting standards.

The company continued to receive financial support from other group companies in order to meet its day to day

working capital and other financial requirements. The Directors have also reviewed the company's strategy and

consider that the company has adequate resources to continue operating for the foreseeable future and therefore it

is appropriate to adopt the Going Concern basis in preparing these financial statements. The financial statements

do not include any adjustments that would result from a withdrawal or discontinuance of financial support from

other companies within the group. The Directors continues to monitor the company's financial and trading

position on a regular basis.

Preparation of consolidated financial statements

The financial statements contain information about MS Modernisation Services UK, Ltd. as an individual

company and do not contain consolidated financial information as the parent of a group. The company has taken

the option under Section 398 of the Companies Act 2006 not to prepare consolidated financial statements.

Turnover

Turnover represents income receivable for the year, excluding value added tax.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2006, is being amortised evenly over its estimated useful life of five years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Fixtures and fittings

-

at varying rates on cost

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance

sheet date.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at

the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension

scheme are charged to the profit and loss account in the period to which they relate.

Related party disclosure

The company has taken advantage of the exemption conferred by Financial reporting Standard 8, 'Related party

disclosures', not to disclose transactions with members or investees of the group headed by Advanced Systems

Europe BV on the grounds that at least 90% of the voting rights in the company are controlled within that group

and the company is included in consolidated financial statements.

2.

TURNOVER

The turnover and profit (2014 - loss) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2015

2014

£

£

Europe

13,432

-

United Kingdom

726,172

1,191,734

Guernsey

472

29,969

United States of America

32,835

32,780

Switzerland

-

67,500

South Africa

-

2,200

772,911

1,324,183

3.	STAFF COSTS

2015

2014

£

£

Wages and salaries

344,673

324,124

Social security costs

41,355

33,668

Other pension costs

6,903

6,903

392,931

364,695

The average monthly number of employees during the year was as follows:

2015

2014

Consulting

5

5

4.	OPERATING PROFIT/(LOSS)

The operating profit (2014 - operating loss) is stated after charging:

2015

2014

£

£

Depreciation - owned assets

3,882

2,375

Auditors' remuneration

8,500

8,500

Foreign exchange differences

2,345

-

Director's remuneration

-

-

5.

TAXATION

Analysis of the tax charge

No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2015 nor for the

year ended 31 December 2014.

Factors affecting the tax charge

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is

explained below:

2015

2014

£

£

Profit/(loss) on ordinary activities before tax

56,417

(223,024

)

Profit/(loss) on ordinary activities

multiplied by the standard rate of corporation tax

in the UK of 20% (2014 - 20%)

11,283

(44,605

)

Effects of:

Utilisation of tax losses

(6,142

)

-

Expenses not deductible for tax purposes

983

1,520

Depreciation for period in excess of capital allowances

(6,124

)

(2,764

)

Losses in year

-

45,849

Current tax charge

-

-

6.	INTANGIBLE FIXED ASSETS

Goodwill

£

COST

At 1 January 2015

and 31 December 2015

538,492

AMORTISATION

At 1 January 2015

and 31 December 2015

538,492

NET BOOK VALUE

At 31 December 2015

-

At 31 December 2014

-

7.	TANGIBLE FIXED ASSETS

Fixtures

and

fittings

£

COST

At 1 January 2015

301,534

Additions

1,381

At 31 December 2015

302,915

DEPRECIATION

At 1 January 2015

294,101

Charge for year

3,882

At 31 December 2015

297,983

NET BOOK VALUE

At 31 December 2015

4,932

At 31 December 2014

7,433

8.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2015

2014

£

£

Trade debtors

281,537

11,887

Other debtors

-

380

Prepayments and accrued income

2,303

1,759

283,840

14,026

9.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2015

2014

£

£

Trade creditors

126,606

1,811

Amounts owed to group undertakings

5,937,894

5,881,776

Social security and other taxes

24,307

11,909

VAT

42,118

66,890

Other creditors

245,393

236,911

Accruals and deferred income

95,782

27,798

6,472,100

6,227,095

10.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2015

2014

value:

£

£

2

Ordinary

1

2

2

11.

RESERVES

Profit

and loss

account

£

At 1 January 2015

(6,169,438

)

Profit for the year

56,417

At 31 December 2015

(6,113,021

)

12.	ULTIMATE CONTROLLING PARTY

The company is jointly owned by Advanced Systems Europe BV and BluePhoenix Solutions BV, companies

incorporated in the Netherlands. The ultimate parent company is ModSys International Limited, a company

incorporated in Israel.

The consolidated accounts of ModSys International Limited are available to the public. ModSys International

Limited currently has no shareholder holding more than 50% of its share capital.

13.	RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

2015

2014

£

£

Profit/(loss) for the financial year

56,417

(223,024

)

Shares issued

Net addition/(reduction) to shareholders' funds

56,417

(223,024

)

Opening shareholders' funds

(6,169,436

)

(5,946,412

)

Closing shareholders' funds

(6,113,019

)

(6,169,436

)

14.

PENSIONS

The company operates a defined contribution pension scheme. The assets of the scheme are held separately from

those of the company in an independently administered fund. The pension charge amounted to £6,903 (2014 -

£6,903). Contributions amounting to £0 (2014 - £0) were payable to the fund and are included in creditors.