Workable Technology Limited - Limited company accounts 20.1

REGISTERED NUMBER: 08789789 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

FOR

WORKABLE TECHNOLOGY LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Consolidated Profit and Loss Account

9

Consolidated Balance Sheet

10

Company Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Company Statement of Changes in Equity

13

Consolidated Cash Flow Statement

14

Notes to the Consolidated Cash Flow Statement

15

Notes to the Consolidated Financial Statements

16

DIRECTORS:

L C Bowden

M W Evans

S Magiatis

N Moraitakis

D D Waterhouse

N A Medlock

REGISTERED OFFICE:

5 Golden Square

5th Floor

London

W1F 9BS

REGISTERED NUMBER:

08789789 (England and Wales)

AUDITORS:

George Hay & Company

Chartered Accountants

& Statutory Auditors

83 Cambridge Street

London

SW1V 4PS

The directors present their strategic report of the company and the group for the year ended 31 December 2019.

PRINCIPAL ACTIVITIES

The principal activity of the company continued to be that of a holding company. The company itself does not carry out a direct trade, but did incur general running expenses during the year, which resulted in a loss being is recognised within these group financial statements. The group had increased its workforce in size from 219 employees worldwide as at 1 January 2019 to 273 employees worldwide at 31 December 2019.

The principal activity of the company's UK subsidiary, Workable Software Limited ("WSL"), is that of the development and sale of software that facilitates and automates the recruiting process for employers. In 2019, WSL had customers in countries around the world. The Group uses a SaaS ("Software-as-a-Service") business model and sells both monthly and annual plans to customers.

The group receives support services from its US and Greek subsidiaries which, during 2019, provided marketing and R&D services, respectively, to WSL. The R&D activities are in respect of the development of software that facilitates and automates the recruiting process for employers, as mentioned above. In addition to providing marketing support services, the US subsidiary also began licensing the software for sale to customers in North America in 2018, and the Greek subsidiary began licensing software for sale in 2019.

REVIEW OF BUSINESS

According to information monitored for management purposes, the Group increased its Monthly Recurring Revenue (MRR) from subscription fees to $2.0M as of 31 December 2019 (from $1.4M as at 31 December 2018). The number of active customers decreased during this time to 5,528 as of 31 December 2019 (from 5,973 active customers as at 31 December 2018) due to the change in the Group’s strategy to focus on sales to larger, enterprise customers. As such, Average Contract Value increased to $4,216 as at 31 December 2019 (from $2,789 as at 31 December 2018).

The Directors plan to further develop the software and other offerings while expanding the Group’s client base by investing in product development and by refining its sales strategy.

PRINCIPAL RISKS AND UNCERTAINTIES

The Group's key financial instruments comprise of trade debtors, cash at bank, trade creditors and loan financing.

The Group is exposed to risks including foreign currency risk, credit risk, liquidity risk, cash flow risk, market risk, competition risk and laws and regulations risk, all of which arise from the group's normal business activities. The board reviews and agrees policies for managing each of these risks and they are summarised below:

Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro, the British Pound and the US Dollar. Foreign currency risk arises from future commercial transactions as well as recognized assets and liabilities.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and principally arises from the Group's receivables from customers. The Group's exposure to credit risk arises also from the debts of customers taking into account forward looking factors, as well as the economic environment.

The carrying amount of financial assets represents the maximum credit exposure.

Liquidity risk

The Group closely monitors its bank balance and other credit facilities in comparison to its outstanding commitments to ensure it has sufficient funds to meet its obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions.

Cash flow risk

At the moment, the Group's revenue does not cover its expenses due to the fact that the Group is choosing to invest heavily in product development and company growth. Nonetheless, the Group receives continued support from its shareholders as it has gone through several rounds of investment over the last few years. Please refer to note 2 in the accounting policies for a description of the current position.

Market risk

Demand for the services of the Group is dependent on the economic environment and the buoyancy of the hiring market. Any significant changes to our clients' working practices or a downturn in the economy, could result in the deferment or cancelling of recruitment. The group earns revenues from both small and mid-size businesses and continues to make a concerted effort to strengthen relationships for both types of customers.

Competition risk

The Group is exposed to competition risk as the industry in which the group operates is mature and highly competitive. The conversion rate from enquiries to agreement of contract is maximised by careful selection of customers and partners in order to preserve our brand and work collaboratively.

Laws and regulations risk

The Group develops software which must adhere to local data protection laws. In particular, specific investment to develop a GDPR compliant system was required. This was considered to be an essential upgrade to maintain the product's viability in the market place.

Interest rate risk

The Group is exposed to interest rate risk primarily in relation to its outstanding debt. The existing debt facility, as of 31 December 2019, stands at $12.7 million. The Group follows all market developments with regards to the interest rate environment and acts accordingly. On 31 December 2019, the Group is exposed to interest rate risk on the entirety of its loan. A change of 100 basis points in the interest rate would have increased or decreased equity by $30,839. This analysis assumes that all other variables remain constant.

Brexit

The Group is aware of Brexit and is monitoring the progress in order to ensure that Brexit concerns are taken into consideration in future plans.

FINANCIAL KEY PERFORMANCE INDICATORS

The financial key performance indicators used by the directors to assess the performance of the business are turnover, gross profit margin, net loss before tax and annual run rate ("ARR"). A brief analysis of these is provided below:

2019

2018

$

$

Turnover

23,158,299

18,617,712

Gross profit

15,655,470

13,273,443

Net loss before tax

14,100,090

15,121,829

Annual run rate

24,300,000

18,820,000

ON BEHALF OF THE BOARD:

S Magiatis - Director

18 December 2020

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2019.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2019.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 to the date of this report.

L C Bowden

M W Evans

S Magiatis

N Moraitakis

D D Waterhouse

N A Medlock

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, 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 the group 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;

-	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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, George Hay & Company, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

S Magiatis - Director

18 December 2020

Opinion

We have audited the financial statements of Workable Technology Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2019 which comprise the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, 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 Financial Reporting Standard 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 of the parent company affairs as at 31 December 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 Auditors' 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 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 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 in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the Group 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; and

-	the Group Strategic Report and the Report of the Directors have 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 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 Report of the Directors.

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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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.

Auditors' 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 a Report of the Auditors 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 www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 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.

Michael Davis (Senior Statutory Auditor)

for and on behalf of George Hay & Company

Chartered Accountants

& Statutory Auditors

83 Cambridge Street

London

SW1V 4PS

18 December 2020

TURNOVER

3

23,158,299

18,617,712

Cost of sales

7,502,829

5,344,269

GROSS PROFIT

15,655,470

13,273,443

Sales and marketing costs

23,312,017

23,683,891

Administrative expenses

6,108,748

4,489,228

29,420,765

28,173,119

(13,765,295

)

(14,899,676

)

Other operating income

418

10,400

OPERATING LOSS

6

(13,764,877

)

(14,889,276

)

Interest receivable and similar income

8,185

-

(13,756,692

)

(14,889,276

)

Interest payable and similar expenses

8

343,398

232,553

LOSS BEFORE TAXATION

(14,100,090

)

(15,121,829

)

Tax on loss

9

(2,251,971

)

(3,900

)

LOSS FOR THE FINANCIAL YEAR

(11,848,119

)

(15,117,929

)

OTHER COMPREHENSIVE INCOME

Remeasurements of net defined benefit

(54,804

)

(27,211

)

Currency translation differences

(10,242

)

(67,133

)

Income tax relating to components of other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

(65,046

)

(94,344

)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(11,913,165

)

(15,212,273

)

Loss attributable to:

Owners of the parent

(11,848,119

)

(15,117,929

)

Total comprehensive income attributable to:

Owners of the parent

(11,913,165

)

(15,212,273

)

FIXED ASSETS

Intangible assets

11

3,174

4,444

Tangible assets

12

1,284,322

1,595,142

Investments

13

-

-

1,287,496

1,599,586

CURRENT ASSETS

Stocks

14

220,048

250,833

Debtors

15

6,354,053

4,717,665

Cash at bank

15,850,199

17,844,291

22,424,300

22,812,789

CREDITORS

Amounts falling due within one year

16

14,789,496

11,608,712

NET CURRENT ASSETS

7,634,804

11,204,077

TOTAL ASSETS LESS CURRENT LIABILITIES

8,922,300

12,803,663

CREDITORS

Amounts falling due after more than one year

17

(10,708,728

)

(3,000,000

)

PROVISIONS FOR LIABILITIES

21

-

(78,713

)

PENSION LIABILITY

23

(349,972

)

(211,059

)

NET (LIABILITIES)/ASSETS

(2,136,400

)

9,513,891

CAPITAL AND RESERVES

Called up share capital

22

12,382

12,303

Share premium

57,963,417

57,128,575

Other reserves

479,461

1,063,841

Retained earnings

(60,591,660

)

(48,690,828

)

SHAREHOLDERS' FUNDS

(2,136,400

)

9,513,891

The financial statements were approved by the Board of Directors and authorised for issue on 18 December 2020 and were signed on its behalf by:

S Magiatis - Director

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

-

-

Investments

13

5,994,797

5,994,797

5,994,797

5,994,797

CURRENT ASSETS

Debtors

15

47,522,817

34,559,830

Cash at bank

2,908,964

16,115,551

50,431,781

50,675,381

CREDITORS

Amounts falling due within one year

16

3,514,562

2,393,871

NET CURRENT ASSETS

46,917,219

48,281,510

TOTAL ASSETS LESS CURRENT LIABILITIES

52,912,016

54,276,307

CAPITAL AND RESERVES

Called up share capital

22

12,382

12,303

Share premium

57,006,502

56,171,660

Other reserves

479,461

1,063,841

Retained earnings

(4,586,329

)

(2,971,497

)

SHAREHOLDERS' FUNDS

52,912,016

54,276,307

Company's loss for the financial year

(1,627,165

)

(1,252,704

)

The financial statements were approved by the Board of Directors and authorised for issue on 18 December 2020 and were signed on its behalf by:

S Magiatis - Director

Called up

share

Retained

Share

Other

Total

capital

earnings

premium

reserves

equity

$

$

$

$

$

Balance at 1 January 2018

10,822

(33,502,415

)

33,862,107

1,230,353

1,600,867

Changes in equity

Share issue

1,407

-

23,266,468

-

23,267,875

ESOP movements

74

23,860

-

(166,512

)

(142,578

)

Total comprehensive income

-

(15,212,273

)

-

-

(15,212,273

)

Balance at 31 December 2018

12,303

(48,690,828

)

57,128,575

1,063,841

9,513,891

Changes in equity

Share issue

40

-

119,391

-

119,431

ESOP movements

39

12,333

715,451

(584,380

)

143,443

Total comprehensive income

-

(11,913,165

)

-

-

(11,913,165

)

Balance at 31 December 2019

12,382

(60,591,660

)

57,963,417

479,461

(2,136,400

)

Called up

share

Retained

Share

Other

Total

capital

earnings

premium

reserves

equity

$

$

$

$

$

Balance at 1 January 2018

10,822

(1,742,653

)

32,905,192

1,230,353

32,403,714

Changes in equity

Share issue

1,407

-

23,266,468

-

23,267,875

ESOP movements

74

23,860

-

(166,512

)

(142,578

)

Total comprehensive income

-

(1,252,704

)

-

-

(1,252,704

)

Balance at 31 December 2018

12,303

(2,971,497

)

56,171,660

1,063,841

54,276,307

Changes in equity

Share issue

40

-

119,391

-

119,431

ESOP movements

39

12,333

715,451

(584,380

)

143,443

Total comprehensive income

-

(1,627,165

)

-

-

(1,627,165

)

Balance at 31 December 2019

12,382

(4,586,329

)

57,006,502

479,461

52,912,016

Cash flows from operating activities

Cash generated from operations

1

(10,972,029

)

(11,427,149

)

Interest paid

(343,398

)

(232,553

)

Tax paid

(67,897

)

(164,311

)

Net cash from operating activities

(11,383,324

)

(11,824,013

)

Cash flows from investing activities

Purchase of tangible fixed assets

(289,062

)

(870,665

)

Sale of tangible fixed assets

5,908

(331

)

Interest received

8,185

-

Net cash from investing activities

(274,969

)

(870,996

)

Cash flows from financing activities

New loans in year

10,000,000

3,000,000

Loan repayments in year

(310,175

)

-

Share issue

855

22,948,552

Net cash from financing activities

9,690,680

25,948,552

(Decrease)/increase in cash and cash equivalents

(1,967,613

)

13,253,543

Cash and cash equivalents at beginning of year

2

17,844,291

4,635,289

Effect of foreign exchange rate changes

(26,479

)

(44,541

)

Cash and cash equivalents at end of year

2

15,850,199

17,844,291

1.	RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

$

$

Loss before taxation

(14,100,090

)

(15,121,829

)

Depreciation charges

583,730

520,678

(Profit)/loss on disposal of fixed assets

(2,687

)

120,754

Equity settled share based transactions

127,054

155,452

Defined benefit obligation

88,120

19,334

Finance costs

343,398

232,553

Finance income

(8,185

)

-

(12,968,660

)

(14,073,058

)

Decrease/(increase) in stocks

30,785

(15,289

)

Decrease/(increase) in trade and other debtors

532,163

(1,776,835

)

Increase in trade and other creditors

1,433,683

4,438,033

Cash generated from operations

(10,972,029

)

(11,427,149

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2019

31.12.19

1.1.19

$

$

Cash and cash equivalents

15,850,199

17,844,291

Year ended 31 December 2018

31.12.18

1.1.18

$

$

Cash and cash equivalents

17,844,291

4,635,289

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.19

Cash flow

At 31.12.19

$

$

$

Net cash

Cash at bank

17,844,291

(1,994,092

)

15,850,199

17,844,291

(1,994,092

)

15,850,199

Debt

Debts falling due within 1 year

-

(1,981,096

)

(1,981,096

)

Debts falling due after 1 year

(3,000,000

)

(7,708,728

)

(10,708,728

)

(3,000,000

)

(9,689,824

)

(12,689,824

)

Total

14,844,291

(11,683,916

)

3,160,375