Enghouse Networks (UK) Limited - Limited company accounts 16.3

REGISTERED NUMBER: 03544792 (England and Wales)

Report of the Director and

Audited Financial Statements

for the Year Ended 31 October 2016

for

ENGHOUSE NETWORKS (UK) LIMITED

Page

Company Information

1

Report of the Director

2

Report of the Independent Auditors

4

Profit and Loss Account

6

Balance Sheet

7

Notes to the Financial Statements

8

DIRECTOR:

S J Sadler

SECRETARY:

D C Bryson

REGISTERED OFFICE:

Imperium

Imperial Way

Reading

Berkshire

RG2 0TD

REGISTERED NUMBER:

03544792 (England and Wales)

AUDITORS:

Masons Statutory Auditors

337 Bath Road

Slough

Berkshire

SL1 5PR

The director presents his report with the financial statements of the company for the year ended 31 October 2016.

DIVIDENDS

No dividends will be distributed for the year ended 31 October 2016.

FUTURE DEVELOPMENTS

The company continues to position itself as a leading provider of software and services for the

telecommunications market and continues to align its operations with its parent company, Enghouse Systems

Limited, to improve operating efficiencies and provide both fixed line and wireless solutions to its customer

base.

DIRECTOR

S J Sadler held office during the whole of the period from 1 November 2015 to the date of this report.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Report of the Director and the financial statements in

accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law

the director has 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 director must not approve the financial statements unless he is 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 director is 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 director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is

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 director is 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 he 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, Masons Statutory Auditors, will be proposed for re-appointment at the forthcoming Annual

General Meeting.

ON BEHALF OF THE BOARD:

S J Sadler - Director

16 July 2017

We have audited the financial statements of Enghouse Networks (UK) Limited for the year ended

31 October 2016 on pages six 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 director and auditors

As explained more fully in the Statement of Director's Responsibilities set out on page two, the director is 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 director; and the overall presentation of the

financial statements. In addition, we read all the financial and non-financial information in the Report of the

Director 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 October 2016 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 Report of the Director 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 director's remuneration specified by law are not made; or

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

Neil John Gadeke FCCA (Senior Statutory Auditor)

for and on behalf of Masons Statutory Auditors

337 Bath Road

Slough

Berkshire

SL1 5PR

16 July 2017

TURNOVER

2

2,792,511

1,697,671

Cost of sales

2,313,721

1,505,530

GROSS PROFIT

478,790

192,141

Administrative expenses

46,815

144,572

431,975

47,569

Other operating income

476,869

118,601

OPERATING PROFIT and

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

4

908,844

166,170

Tax on profit on ordinary activities

5

86,205

(40,021

)

PROFIT FOR THE FINANCIAL YEAR

822,639

206,191

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 profits for the current year or previous year.

CURRENT ASSETS

Debtors

7

2,337,950

521,788

Cash at bank

482,696

1,341,687

2,820,646

1,863,475

CREDITORS

Amounts falling due within one year

8

659,591

525,059

NET CURRENT ASSETS

2,161,055

1,338,416

TOTAL ASSETS LESS CURRENT LIABILITIES

2,161,055

1,338,416

CAPITAL AND RESERVES

Called up share capital

9

97,473

97,473

Share premium

10

3,369,268

3,369,268

Profit and loss account

10

(1,305,686

)

(2,128,325

)

SHAREHOLDERS' FUNDS

12

2,161,055

1,338,416

The financial statements were approved by the director on 16 July 2017 and were signed by:

S J Sadler - 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.

Financial reporting standard number 1

Exemption has been taken from preparing a cash flow statement on the grounds that the parent

company includes the subsidiary in its published financial statements.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 8

Related Party Disclosures, not to disclose related party transactions with wholly owned subsidiaries

within the group.

Turnover

Turnover represents the net invoiced sales of goods and services excluding value added tax.

The policies relating to the different categories of turnover are:

a)

Licence fees

The sale of a licence fee is recognised on delivery.

b)

Resource sales

Resources provided are recognised at the time the work is undertaken.

c)

Support and maintenance fees

Support and maintenance fees are deferred and the income is recognised over the period of the agreements.

Tangible fixed assets

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

Short leasehold

-

Straight line over period of lease

Computer equipment

-

33% 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.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

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.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to the profit and loss account on a straight line basis

over the period of the lease.

Investments

The company is designated as holding the following investments in subsidiary undertakings:

Enghouse (Kenya) Limited (Kenya)

Dormant

Netboss UK Limited

Provision of communication software

Government grants

A government grant is recognised only when there is reasonable assurance that the company has

complied with any conditions attached to the grant and the grant is received.

Pension costs and other post-retirement benefits

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

from those of the company in an independently administered fund. The amount charged against

profits represents the contributions payable to the scheme in respect of the accounting period.

2.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

31.10.16

31.10.15

£

£

Maintenance revenue

880,976

1,263,119

Professional services

288,782

430,659

Other revenue

28,514

3,893

Software sales

1,434,689

-

Hardware sales

159,550

-

2,792,511

1,697,671

An analysis of turnover by geographical market is given below:

31.10.16

31.10.15

£

£

Rest of the World

2,792,511

1,697,671

2,792,511

1,697,671

3.	STAFF COSTS

31.10.16

31.10.15

£

£

Wages and salaries

166,120

355,565

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

31.10.16

31.10.15

Sales and administration

3

6

4.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

31.10.16

31.10.15

£

£

Other operating leases

-

38,344

Depreciation - owned assets

-

4,389

Foreign exchange differences

(476,869

)

46,482

Auditors remuneration

6,000

6,000

Auditors remuneration - other services

-

1,344

Director's remuneration

-

-

5.

TAXATION

Analysis of the tax charge/(credit)

The tax charge/(credit) on the profit on ordinary activities for the year was as follows:

31.10.16

31.10.15

£

£

Current tax:

UK corporation tax

92,338

(22

)

Deferred tax

(6,133

)

(39,999

)

Tax on profit on ordinary activities

86,205

(40,021

)

Factors affecting the tax charge/(credit)

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

difference is explained below:

31.10.16

31.10.15

£

£

Profit on ordinary activities before tax

908,844

166,170

Profit on ordinary activities

multiplied by the standard rate of corporation tax

in the UK of 20% (2015 - 20%)

181,769

33,234

Effects of:

Expenses not deductible for tax purposes

(550

)

182

Capital allowances in excess of depreciation

(1,552

)

(1,015

)

Utilisation of tax losses

(179,667

)

-

Adjustments to tax charge in respect of previous periods

92,338

(22

)

of taxation

Group relief

-

(32,401

)

Current tax charge/(credit)

92,338

(22

)

Factors that may affect future tax charges

The company has £205,847 tax losses carried forward as the 31 October 2016.

6.	TANGIBLE FIXED ASSETS

Short

Computer

leasehold

equipment

Totals

£

£

£

COST

At 1 November 2015

16,500

33,435

49,935

Disposals

(16,500

)

(33,435

)

(49,935

)

At 31 October 2016

-

-

-

DEPRECIATION

At 1 November 2015

16,500

33,435

49,935

Eliminated on disposal

(16,500

)

(33,435

)

(49,935

)

At 31 October 2016

-

-

-

NET BOOK VALUE

At 31 October 2016

-

-

-

At 31 October 2015

-

-

-

7.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31.10.16

31.10.15

£

£

Trade debtors

1,374,201

321,335

Amounts owed by group undertakings

778,102

-

Other debtors

5,696

-

Tax

-

127,300

VAT

18,771

3,130

Deferred tax asset

91,592

59,999

Prepayments

69,588

10,024

2,337,950

521,788

A deferred tax asset has been provided for the utilisation of tax losses against future profits.

8.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31.10.16

31.10.15

£

£

Trade creditors

2,254

2,788

Amounts owed to group undertakings

-

351,969

Tax

(6,019

)

-

Social security and other taxes

-

15,653

Other creditors

2,174

-

Accrued expenses

661,182

154,649

659,591

525,059

9.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

31.10.16

31.10.15

value:

£

£

517,857

Preferred ordinary shares

1p

5,179

5,179

21,577

Ordinary

1p

216

216

21,577

A Ordinary

1p

215

215

9,186,271

Deferred

1p

91,863

91,863

97,473

97,473

The preferred ordinary shares and the ordinary shares confer upon the holders the same rights subject

to enhanced distribution rights conferred upon the holders of the preferred ordinary shares as at the

date of a liquidation event.

The Preferred ordinary shares carry no income rights, no voting rights and the right on a return of

capital to receive the sum of £1 in total.

All shares denominated as Preferred shares have been treated as equity in accordance with FRS 25

Financial Instruments. The shares are controlled by the parent company who also hold the ordinary

share capital.

10.

RESERVES

Profit

and loss

Share

account

premium

Totals

£

£

£

At 1 November 2015

(2,128,325

)

3,369,268

1,240,943

Profit for the year

822,639

822,639

At 31 October 2016

(1,305,686

)

3,369,268

2,063,582

11.	ULTIMATE PARENT COMPANY

Enghouse Systems Limited (incorporated in Canada ) is regarded by the director as being the

company's ultimate parent company.

The company's immediate parent undertaking is Enghouse Holdings (UK) Limited, a company

incorporated in England and Wales. Copies of the financial statements for the company may be

obtained from the Registrar of Companies, Companies House, Crown Way, Cardiff CF14 3UZ.

The only group in which the results of the company for the year ended 31 October 2016 were

consolidated was that headed by Enghouse Systems Limited. The consolidated accounts of this group

for that year are available to the public and may be obtained from

www.enghouse.com/investors/financials.html.

12.	RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

31.10.16

31.10.15

£

£

Profit for the financial year

822,639

206,191

Net addition to shareholders' funds

822,639

206,191

Opening shareholders' funds

1,338,416

1,132,225

Closing shareholders' funds

2,161,055

1,338,416