Company Registration No. 04646508 (England and Wales)
VIRTALIS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2019
VIRTALIS LIMITED
COMPANY INFORMATION
Directors
Mr Guenter Dahm
(Appointed 16 April 2018)
Mr Russell Palmer
(Appointed 18 December 2018)
Mr Andrew Finn
(Appointed 13 June 2019)
Company number
04646508
Registered office
Chester House
79 Dane Road
Sale
M33 7BP
Auditor
Lopian Gross Barnett & Co
1st Floor, Cloister House
Riverside
New Bailey Street
Manchester
M3 5FS
Business address
Chester House
79 Dane Road
Sale
M33 7BP
VIRTALIS LIMITED
CONTENTS
Page
Directors' report
1 - 2
Independent auditor's report
3 - 5
Profit and loss account
6
Group statement of comprehensive income
7
Group balance sheet
8
Company balance sheet
9
Group statement of changes in equity
10
Company statement of changes in equity
11
Notes to the financial statements
12 - 26
VIRTALIS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 1 -

The directors present their annual report and financial statements for the year ended 28 February 2019.

Principal activities

The principal activity of the company and group continued to be that of the provision of advanced visualisation and virtual reality ("VR") software, display systems and services.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr David Cockburn-Price
(Resigned 29 June 2018)
Mr Guenter Dahm
(Appointed 16 April 2018)
Mr Russell Palmer
(Appointed 18 December 2018)
Mr Andrew Finn
(Appointed 13 June 2019)
Results and dividends

The results for the year are set out on page 6.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

Auditor

In accordance with the company's articles, a resolution proposing that Lopian Gross Barnett & Co be reappointed as auditor of the group will be put at a General Meeting.

Statement of directors' responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group 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 UK 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 group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

VIRTALIS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 2 -
Fair review of the business

Our primary customers are those who wish to understand, interact with and immerse themselves in either complex information (e.g. CAD models, simulated training environments, multiple disparate data sets) or ideas (e.g. design concepts, product launches). Traditionally, these have been in the academic/research, automotive, aerospace, shipbuilding, defence, engineering, mining and power sectors. We have helped numerous businesses and organisations to visualise their designs, to make their manufacturing processes more efficient, to sell/market their goods in an innovative way and to train users or maintainers of their products. Examples of our work and stories about our customers can be found on our updated website: www.virtalis.com.

 

We have continued with our investment in a range of innovative and creative R&D activities, seeking to create intellectual property for both specific products and for future VR developments. Interest in Visionary Render software has been high and sales have been strong, with a full pipeline developing, and we aim to roll out new features and capabilities in future point and major releases. The Visionary Render platform is at the heart of GeoVisionary, with development of v3.0 being well underway and this will add significant analytical functionality to the product to broaden its potential user base considerably. The ActiveWorks portfolio of display systems gives users the ability to immerse themselves and to interact with their data in a virtual environment. The range of standard and bespoke systems are designed to support customers’ use cases, available resources and budget.

 

We have continued to engage in a wide range of business development activities during the year through our subsidiary businesses in the USA, Germany and Malaysia and with a wide range of partners and collaborators, forging stronger links in Finland, Brazil and India. We made further sales to our existing customers as well as generating significant new sales of high-end systems and software to organisations around the world. Worldwide interest in visualisation continues to be strong, helped by extra media coverage of the use of VR in consumer gaming/entertainment environments and the launch of more accessible, lower cost hardware. We expect that our additional marketing efforts to highlight how enterprise users are reaping benefits and saving money from using accessible and collaborative VR will take us into many new markets and organisations.

 

In June 2017 a new investor. Alpina Partners (www.alpinapartners.com) acquired a Significant share capital of the business, which with their leadership and investment we see the Virtalis Group going to the next level of development of products and world wide footprint of our Sales and operations.

On behalf of the board
Mr Guenter Dahm
Director
2 April 2020
VIRTALIS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF VIRTALIS LIMITED
- 3 -
Opinion

We have audited the financial statements of Virtalis Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 28 February 2019 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity and notes to the financial statements, 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

  •     give a true and fair view of the state of the group's and the parent company's affairs as at 28 February 2019 and of the group's loss for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard , and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

  • the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

  • the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue .

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.

 

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

VIRTALIS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF VIRTALIS LIMITED
- 4 -

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit :

  • the information given in the directors' r eport for the financial year for which the financial statements are prepared is consistent with the financial statements ; and

  • the directors' report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and parent company and its environment obtained in the course of the audit, we have not identifie d material misstatements in the directors' r eport .

 

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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

  • the parent company 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; or

  • the company is entitled to claim exemption in preparing a strategic report due to it being a member of an ineligible group.

Responsibilities of directors

As explained more fully in the directors' r esponsibilities s tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the group's and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor’s report.

VIRTALIS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF VIRTALIS LIMITED
- 5 -

Use of our 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Jason Selig BA ACA CTA DChA (Senior Statutory Auditor)
for and on behalf of Lopian Gross Barnett & Co
3 April 2020
Chartered Accountants
Statutory Auditor
1st Floor, Cloister House
Riverside
New Bailey Street
Manchester
M3 5FS
VIRTALIS LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 6 -
2019
2018
Notes
£
£
Turnover
3
7,834,363
8,918,217
Cost of sales
(3,312,243)
(4,035,271)
Gross profit
4,522,120
4,882,946
Distribution costs
(325,852)
(314,192)
Administrative expenses
(4,261,375)
(4,614,422)
Other operating (expenses)/income
(2)
2,032
Operating loss before exceptional items
(65,109)
(43,636)
Exceptional items
4
(465,764)
-
Operating loss after exceptional items
5
(530,873)
(43,636)
Interest receivable and similar income
9
140
32,730
Interest payable and similar expenses
10
(5,448)
(10,185)
Loss before taxation
(536,181)
(21,091)
Tax on loss
11
(5,005)
(3,188)
Loss for the financial year
(541,186)
(24,279)
Loss for the financial year is all attributable to the owners of the parent company.
VIRTALIS LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 7 -
2019
2018
£
£
Loss for the year
(541,186)
(24,279)
Other comprehensive income
Currency translation differences
(69,416)
(38,683)
Total comprehensive income for the year
(610,602)
(62,962)
Total comprehensive income for the year is all attributable to the owners of the parent company.
VIRTALIS LIMITED
GROUP BALANCE SHEET
AS AT
28 FEBRUARY 2019
28 February 2019
- 8 -
2019
2018
Notes
£
£
£
£
Fixed assets
Intangible assets
12
2,065,503
1,725,717
Tangible assets
13
221,232
258,106
2,286,735
1,983,823
Current assets
Stocks
17
365,634
332,733
Debtors
18
2,950,643
2,831,254
Cash at bank and in hand
422,906
1,126,484
3,739,183
4,290,471
Creditors: amounts falling due within one year
19
(2,233,299)
(1,871,073)
Net current assets
1,505,884
2,419,398
Total assets less current liabilities
3,792,619
4,403,221
Creditors: amounts falling due after more than one year
20
(18,355)
(18,355)
Net assets
3,774,264
4,384,866
Capital and reserves
Called up share capital
25
80,329
80,329
Share premium account
26,868
26,868
Profit and loss reserves
3,667,067
4,277,669
Total equity
3,774,264
4,384,866
The financial statements were approved by the board of directors and authorised for issue on 2 April 2020 and are signed on its behalf by:
02 April 2020
Mr Guenter Dahm
Director
VIRTALIS LIMITED
COMPANY BALANCE SHEET
AS AT 28 FEBRUARY 2019
28 February 2019
- 9 -
2019
2018
Notes
£
£
£
£
Fixed assets
Intangible assets
12
2,065,503
1,725,717
Tangible assets
13
146,221
163,870
Investments
14
20,329
20,329
2,232,053
1,909,916
Current assets
Stocks
17
235,816
114,020
Debtors
18
2,404,341
3,500,889
Cash at bank and in hand
324,599
820,626
2,964,756
4,435,535
Creditors: amounts falling due within one year
19
(2,285,143)
(1,464,028)
Net current assets
679,613
2,971,507
Total assets less current liabilities
2,911,666
4,881,423
Creditors: amounts falling due after more than one year
20
(18,355)
(18,355)
Net assets
2,893,311
4,863,068
Capital and reserves
Called up share capital
25
80,329
80,329
Share premium account
26,868
26,868
Profit and loss reserves
2,786,114
4,755,871
Total equity
2,893,311
4,863,068

As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s loss for the year was £1,969,758 (2018 - £237,598 profit).

The financial statements were approved by the board of directors and authorised for issue on 2 April 2020 and are signed on its behalf by:
02 April 2020
Mr Guenter Dahm
Director
Company Registration No. 04646508
VIRTALIS LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 March 2017
80,329
26,868
4,340,631
4,447,828
Year ended 28 February 2018:
Loss for the year
-
-
(24,279)
(24,279)
Other comprehensive income:
Currency translation differences
-
-
(38,683)
(38,683)
Total comprehensive income for the year
-
-
(62,962)
(62,962)
Balance at 28 February 2018
80,329
26,868
4,277,669
4,384,866
Year ended 28 February 2019:
Loss for the year
-
-
(541,186)
(541,186)
Other comprehensive income:
Currency translation differences
-
-
(69,416)
(69,416)
Total comprehensive income for the year
-
-
(610,602)
(610,602)
Balance at 28 February 2019
80,329
26,868
3,667,067
3,774,264
VIRTALIS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 11 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 March 2017
80,329
26,868
4,518,273
4,625,470
Year ended 28 February 2018:
Profit and total comprehensive income for the year
-
-
237,598
237,598
Balance at 28 February 2018
80,329
26,868
4,755,871
4,863,068
Year ended 28 February 2019:
Loss and total comprehensive income for the year
-
-
(1,969,757)
(1,969,757)
Balance at 28 February 2019
80,329
26,868
2,786,114
2,893,311
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 12 -
1
Accounting policies
Company information

Virtalis Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Chester House, 79 Dane Road, Sale, M33 7BP.

 

The group consists of Virtalis Limited and all of its subsidiaries.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling , which is the functional currency of the company. Monetary a mounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The consolidated financial statements incorporate those of Virtalis Limited and all of its subsidiaries (ie entities that the g roup controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.

 

All financial statements are made up to 28 February 2019 . Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the g roup.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates. In the group financial statements, associates are accounted for using the equity method.

1.2
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
1
Accounting policies
(Continued)
- 13 -
1.4
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated .

1.5
Intangible fixed assets other than goodwill

Research expenditure is charged to the profit and loss account in the year in which it is incurred.

 

Development expenditure is charged to the profit and loss account in the same way as research expenditure unless the directors are satisfied as to the technical, commercial and financial viability of individual projects. In this situation, the expenditure relating to relevant staff costs, on-costs and benefits as well as materials and services consumed is capitalised and amortised over the period during which the company is expected to benefit, matched to the levels of turnover generated and commencing when sales of the product are first made, but not exceeding five years.

1.6
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold improvements
Straight line over 5 years
Plant and equipment
Straight line over 3 or 4 years
Fixtures and fittings
Straight line over 5 years
Computers
Straight line over 3 or 4 years
Motor vehicles
Straight line over 3 years

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

1.7
Fixed asset investments

I n the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.8
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.9
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
1
Accounting policies
(Continued)
- 14 -
1.10
Financial instruments

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest m ethod unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future paymen ts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

1.11
Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

1.12
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
1
Accounting policies
(Continued)
- 15 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.13
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease d asset are consumed.

1.14
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.

2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

3
Turnover and other revenue
2019
2018
£
£
Turnover analysed by class of business
Provision of advanced visualisation and virtual reality
7,834,363
8,918,217
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
3
Turnover and other revenue
(Continued)
- 16 -
2019
2018
£
£
Other significant revenue
Interest income
140
334
Dividends received
-
32,396
4
Exceptional item
2019
2018
£
£
Restructuring costs
465,764
-

The exceptional costs incurred in the year relate to business restructuring costs and exit payments to the founding shareholders.

 

As at the financial year end date there were no legal or constructive obligations for further restructuring. As such, no provisions or further costs have been recognised.

5
Operating loss
2019
2018
£
£
Operating loss for the year is stated after charging:
Exchange losses
6,144
23,850
Depreciation of owned tangible fixed assets
94,827
75,480
Amortisation of intangible assets
381,214
546,298
Cost of stocks recognised as an expense
3,312,243
4,000,887
Operating lease charges
176,589
157,060

Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £6,144 (2018 - £23,850).

6
Auditor's remuneration
2019
2018
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
12,000
12,000
Audit of the financial statements of the company's subsidiaries
11,933
13,117
23,933
25,117
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 17 -
7
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2019
2018
2019
2018
Number
Number
Number
Number
45
38
45
38

Their aggregate remuneration comprised:

Group
Company
2019
2018
2019
2018
£
£
£
£
Wages and salaries
2,188,998
2,116,891
1,349,285
1,636,002
Social security costs
254,958
257,873
254,958
257,873
Pension costs
88,353
119,576
88,353
119,576
2,532,309
2,494,340
1,692,596
2,013,451
8
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
340,632
528,133
Company pension contributions to defined contribution schemes
4,391
62,069
345,023
590,202
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2019
2018
£
£
Remuneration for qualifying services
121,400
181,042
Company pension contributions to defined contribution schemes
1,894
28,917
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 18 -
9
Interest receivable and similar income
2019
2018
£
£
Interest income
Interest on bank deposits
140
334
Income from fixed asset investments
Income from shares in group undertakings
-
32,396
Total income
140
32,730

Investment income includes the following:

Interest on financial assets not measured at fair value through profit or loss
140
334
10
Interest payable and similar expenses
2019
2018
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
5,448
10,185
11
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
5,005
3,188

The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2019
2018
£
£
Loss before taxation
(536,181)
(21,091)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
(101,874)
(4,007)
Unutilised tax losses carried forward
101,874
4,007
Other permanent differences
5,005
3,188
Taxation charge
5,005
3,188
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 19 -
12
Intangible fixed assets
Group
Development costs
£
Cost
At 1 March 2018
3,424,716
Additions - internally developed
721,000
At 28 February 2019
4,145,716
Amortisation and impairment
At 1 March 2018
1,698,999
Amortisation charged for the year
381,214
At 28 February 2019
2,080,213
Carrying amount
At 28 February 2019
2,065,503
At 28 February 2018
1,725,717
Company
Development costs
£
Cost
At 1 March 2018
3,424,716
Additions - internally developed
721,000
At 28 February 2019
4,145,716
Amortisation and impairment
At 1 March 2018
1,698,999
Amortisation charged for the year
381,214
At 28 February 2019
2,080,213
Carrying amount
At 28 February 2019
2,065,503
At 28 February 2018
1,725,717
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 20 -
13
Tangible fixed assets
Group
Leasehold land and buildings
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 March 2018
30,467
29,743
474,397
1,876
128,850
8,741
674,074
Additions
9,108
-
35,154
-
13,691
-
57,953
At 28 February 2019
39,575
29,743
509,551
1,876
142,541
8,741
732,027
Depreciation and impairment
At 1 March 2018
24,156
12,421
316,838
378
53,434
8,741
415,968
Depreciation charged in the year
4,935
8,146
56,976
575
24,195
-
94,827
At 28 February 2019
29,091
20,567
373,814
953
77,629
8,741
510,795
Carrying amount
At 28 February 2019
10,484
9,176
135,737
923
64,912
-
221,232
At 28 February 2018
6,311
17,322
157,559
1,498
75,416
-
258,106
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
13
Tangible fixed assets
(Continued)
- 21 -
Company
Leasehold land and buildings
Plant and equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 March 2018
30,467
474,397
8,741
513,605
Additions
9,108
35,154
-
44,262
At 28 February 2019
39,575
509,551
8,741
557,867
Depreciation and impairment
At 1 March 2018
24,156
316,838
8,741
349,735
Depreciation charged in the year
4,935
56,976
-
61,911
At 28 February 2019
29,091
373,814
8,741
411,646
Carrying amount
At 28 February 2019
10,484
135,737
-
146,221
At 28 February 2018
6,311
157,559
-
163,870
14
Fixed asset investments
Group
Company
2019
2018
2019
2018
Notes
£
£
£
£
Investments in subsidiaries
15
-
-
20,329
20,329
Movements in fixed asset investments
Company
Shares in group undertakings
£
Cost or valuation
At 1 March 2018 and 28 February 2019
20,329
Carrying amount
At 28 February 2019
20,329
At 28 February 2018
20,329
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 22 -
15
Subsidiaries

Details of the company's subsidiaries at 28 February 2019 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Virtalis Inc
USA
Ordinary shares
100.00
Virtalis Gmbh
Germany
Ordinary shares
100.00
Virtalis Sdn Bhd
Malaysia
Ordinary shares
100.00
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 23 -
16
Financial instruments
Group
Company
2019
2018
2019
2018
£
£
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
2,709,794
2,456,868
2,171,976
3,147,528
Carrying amount of financial liabilities
Measured at amortised cost
1,537,355
1,321,362
1,622,158
917,469
17
Stocks
Group
Company
2019
2018
2019
2018
£
£
£
£
Raw materials and consumables
129,818
218,713
-
-
Finished goods and goods for resale
235,816
114,020
235,816
114,020
365,634
332,733
235,816
114,020
18
Debtors
Group
Company
2019
2018
2019
2018
Amounts falling due within one year:
£
£
£
£
Trade debtors
1,876,721
2,089,319
770,247
1,384,545
Corporation tax recoverable
6,072
2,855
-
-
Amounts owed by group undertakings
790,828
266,322
1,400,574
1,751,288
Other debtors
42,245
101,227
1,155
11,695
Prepayments and accrued income
147,777
284,531
145,365
266,361
2,863,643
2,744,254
2,317,341
3,413,889
Deferred tax asset (note 22)
87,000
87,000
87,000
87,000
2,950,643
2,831,254
2,404,341
3,500,889

The amounts owed by group undertakings in the group figures above, reflect the amounts due by Virtalis Holdings Limited, which is the Ultimate parent company.

VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 24 -
19
Creditors: amounts falling due within one year
Group
Company
2019
2018
2019
2018
Notes
£
£
£
£
Trade creditors
696,581
818,982
561,037
690,259
Amounts owed to group undertakings
-
-
607,015
-
Corporation tax payable
-
-
-
3,158
Other taxation and social security
229,251
160,123
196,292
153,813
Deferred income
23
485,048
407,943
485,048
407,943
Other creditors
119,890
83,288
45,807
-
Accruals and deferred income
702,529
400,737
389,944
208,855
2,233,299
1,871,073
2,285,143
1,464,028
20
Creditors: amounts falling due after more than one year
Group
Company
2019
2018
2019
2018
Notes
£
£
£
£
Other borrowings
21
18,355
18,355
18,355
18,355
21
Loans and overdrafts
Group
Company
2019
2018
2019
2018
£
£
£
£
Preference shares
18,355
18,355
18,355
18,355
Payable after one year
18,355
18,355
18,355
18,355

The preference shares relate to redeemable preference shares.

22
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Assets
Assets
2019
2018
Group
£
£
Tax losses
87,000
87,000
VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
22
Deferred taxation
(Continued)
- 25 -
Assets
Assets
2019
2018
Company
£
£
Tax losses
87,000
87,000
There were no deferred tax movements in the year.
23
Deferred income
Group
Company
2019
2018
2019
2018
£
£
£
£
Other deferred income
485,048
407,943
485,048
407,943
24
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
88,353
119,576

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

25
Share capital
Group and company
2019
2018
Ordinary share capital
£
£
Issued and fully paid
60,000 Ordinary shares of £1 each
60,000
60,000
20,329 Ordinary "A" shares of £1 each
20,329
20,329
80,329
80,329

There are £18,355 of redeemable preference shares classed as liabilities included in note 9.

 

VIRTALIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2019
- 26 -
26
Events after the reporting date

After the year end the company entered into a lease for a new office premises in Trafford Park. The duration of the new lease is 10 years with a 5 year break clause. The annual rent is £150,000 and there is also a rent holiday at the beginning of the lease.

27
Controlling party

The Ultimate Controlling Party is Virtalis Holdings Ltd, a company incorporated in England & Wales.

28
Related party transactions

There were no related party transactions outside the normal course of business during the year.

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