Registered number: 08008548
SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
COMPANY INFORMATION
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Nicholas Louis Detchepare (appointed 10 May 2022)
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Jason Richard Goodwin (appointed 10 May 2022)
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Duncan Peter Hughes-Phillips
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Jean-Francois Pierre Louis Landry (appointed 2 June 2022)
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Tara Bellenger (resigned 10 May 2022)
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Danny Frost (resigned 10 May 2022)
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Bastien Soret (appointed 10 May 2022, resigned 2 June 2022)
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55-56 Lincoln's Inn Fields
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Chartered Accountants & Statutory Auditor
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
CONTENTS
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Independent Auditors' Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Company Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
STRATEGIC REPORT
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
Socotec Advisory Limited is a fast-growing business dedicated to providing Quantity Surveying services to the Construction and Infrastructure sectors. Our services include pre and post contract commercial management for both Contractors and Employers, commercial troubleshooting, dispute, and Expert Witness services where we have given evidence on the evaluation of change, loss, damages and risks in disputes and litigation in relation to a wide range of construction and infrastructure projects across the globe.
Our team includes registered quantum experts, specialist forensic analysts, forensic accountants, Chartered quantity surveyors, commercial and technical experts, risk analysts, Civil Engineers, and construction economists.
We pride ourselves on our client-focused approach and continual drive to meet expectations using our technical expertise.
Our subsidiaries Base Midlands and Base Quantum Ireland have ceased trading and in the processes of being closed.
Our expert team has grown with the transfer of SOCOTEC UK employees with similar skills to our expert team moving over to SOCOTEC Advisory in April 2023. This gives them greater access to a variety of projects and an increased training programme.
Our London office lease expired in October 2022 and SOCOTEC Advisory now share a floor in Queens House with other businesses of SOCOTEC UK. Our branding has been updated to SOCOTEC’s allowing us to strengthen our position in the Construction and infrastructure sectors where SOCOTEC have a larger presence.
The Socotec Advisory Limited business model has proven to be resilient despite the market challenges. Our diverse client base continues to grow which allows us to make the most of the opportunities that are present in the market, despite the issues.
Similarly, we have plans in place to deal with the future economic and political situations.
QSS Turnover has risen by 27.5% from year ending March 2022 to December 2022 on a like-for-like basis, due to increased long term projects with the aim for this section of the business to support the company during any downturn in work from the Expert business. We see a pattern of peaks and troughs in this sector where projects demand high support followed by periods of lower activity whilst waiting on further evidence, reports or attendance at hearings which has occurred in this 9-month period following very high levels of work in the previous period. The timings of these can be difficult to predict. Our expert work has therefore reduced by 32% (like-for-like basis). As our expert work demands higher prices our overall turnover has decreased by 20% (like-for-like basis).
Cost of sales is in line with prior year due to average salary rates being driven up by the market, recruitment costs and a change in the mix of employees.
The liquidity of the company remains strong and has been bolstered by the clearance of the large commission receivable on a large project located in the Middle East.
The company now has access to a central team of Directors and support staff to support in day to day activities.
At the time of this report the Directors note the income continues to deliver a profit whilst we await the instruction of several long term large expert commissions.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
STRATEGIC REPORT (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
Principal risks and uncertainties
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Like most companies, the Company is exposed to a variety of risks and actively manages them through its risk management procedures. While risk cannot be eliminated altogether, actions are taken to mitigate them wherever possible through the establishment and maintenance of key controls.
The key risks that the Company is exposed to include but are not limited to:
∙Damage to the Company's reputation as a leader in the Forensic Expert Witness sector or loss of accreditations;
∙Exposure to uninsured commercial claims and liabilities;
∙Non-compliance with relevant laws and regulations;
∙Not maintaining technical knowledge and skills;
∙Erosion of our expertise due to movement of staff; and
∙Data breaches or cyber attacks;
The broad portfolio of customers, services and markets served, reduces the Company's exposure to risk associated with individual customers and markets.
Financial key performance indicators
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The key financial measurements that are used and reported against within the businesses are amongst others, revenue, gross profit margins, EBITDA, and cash generation with a focus on DSO days.
In addition to financial parameters, the business also uses several other key performance indicators ("KPls") to monitor performance in delivering its strategic targets; these include full time employees (FTE), fee earner utilisation, productivity, and employee retention.
The Company's results for the year and financial position at the balance sheet date are shown in the attached financial statements and have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (UK (United Kingdom) GAAP), including Financial Reporting Standard 102 (FRS 102).
Following marketing trips to new areas of the globe being South American, Vietnam, Zurich and South Korea, we have a number of opportunities and proposals in the pipeline which would secure long term work for a number years. This together with the long term contracts with airports and infrastructure companies has the potential to place the company in a strong position for the short to medium term.
This report was approved by the board and signed on its behalf.
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Duncan Peter Hughes-Phillips
Director
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
DIRECTORS' REPORT
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the 9 month period ended 31 December 2022.
Directors' responsibilities statement
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The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and 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 for the Company's financial statements 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 Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The principal activity of the Group is the provision of quantity surveying and expert witness services.
The profit for the 9 month period, after taxation, amounted to £586,417 (2022 - £2,990,980).
No dividends were declared or paid in the period (year ended March 2022: £1,500,035).
The directors who served during the 9 month period were:
Nicholas Louis Detchepare (appointed 10 May 2022)
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Jason Richard Goodwin (appointed 10 May 2022)
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Duncan Peter Hughes-Phillips
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Jean-Francois Pierre Louis Landry (appointed 2 June 2022)
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Tara Bellenger (resigned 10 May 2022)
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Danny Frost (resigned 10 May 2022)
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Bastien Soret (appointed 10 May 2022, resigned 2 June 2022)
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
DIRECTORS' REPORT (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
The company is continuing with its growth plans, with the focus on development of the Expert Witness team with recruitment, new clients, and new projects.
Disclosure of information to auditors
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
Post balance sheet events
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In early 2023 following a MIP (Management Incentive Plan) Scheme, this has not affected control.
On the 7 Feburary 2023, the Company issued 1,633 C1 Ordinary Shares, which have a nominal value of £0.01 per share, for consideration of £399.69 per share, paid in cash.
Under section 487(2) of the Companies Act 2006, BKL Audit LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
Duncan Peter Hughes-Phillips
Director
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
We have audited the financial statements of SOCOTEC ADVISORY LIMITED (formerly Base Quantum Limited) (the 'Company') for the 9 month period ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
∙give a true and fair view of the state of the Company's affairs as at 31 December 2022 and of its profit for the 9 month period 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.
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 Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED) (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial 9 month period for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which 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.
Responsibilities of directors
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As explained more fully in the Directors' Responsibilities Statement set out on page 3, 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 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 Company or to cease operations, or have no realistic alternative but to do so.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED) (CONTINUED)
Auditors' responsibilities for the audit of the financial statements
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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 Auditors' 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙Enquiring of management around actual and potential litigation and claims;
∙Reviewing minutes of meetings of those charged with governance;
∙Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
∙Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias;
∙Reviewing the general ledger in detail for all transactions with related parties;
∙Performing walkthrough testing to ensure systems and controls are operating as recorded where appropriate.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' Report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' Report. However,
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED) (CONTINUED)
future events or conditions may cause the Company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Nick Bishop ACA (Senior Statutory Auditor)
for and on behalf of
BKL Audit LLP
Chartered Accountants
Statutory Auditor
London
28 September 2023
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
STATEMENT OF COMPREHENSIVE INCOME
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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9 month period ended
31 December
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Income from fixed assets investments
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit for the financial 9 month period
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There was no other comprehensive income for 2022 (2022:£NIL).
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The notes on pages 13 to 31 form part of these financial statements.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
REGISTERED NUMBER: 08008548
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
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Current asset investments
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
REGISTERED NUMBER: 08008548
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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Duncan Peter Hughes-Phillips
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The notes on pages 13 to 31 form part of these financial statements.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
STATEMENT OF CHANGES IN EQUITY
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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Total transactions with owners
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Comprehensive income for the 9 month period
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Profit for the 9 month period
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Total comprehensive income for the 9 month period
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The notes on pages 13 to 31 form part of these financial statements.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
The principal activity of the Company is the provision of quantity surveying and expert witness services.
The Company is a private company limited by shares and is incorporated in England and Wales.
The registered office address is 2nd Floor, Queens House, 55-56 Lincoln's Inn Fields, London, England, WC2A 3LJ.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Socotec UK Limited as at 31 December 2022 and these financial statements may be obtained from the registered office.
The financial statements have been prepared on the going concern basis, which assumes that the Company will continue to be able to meet its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements.
Based on the results to date and future projections, the directors are confident that the Company will continue to meet its liabilities as they fall due, looking forward at least twelve months from the date of signing these financial statements. The directors have a reasonable expectation that the Company has adequate resources to meet future working capital requirements and to continue in operation.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
The Company generates revenue from the following services, and the revenue recognition policy for each is outlined as follows:
Revenue from the supply of Quantity Surveying services represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the fair value of the consideration received or receivable. Where a contract has only been partially completed at the Statement of Financial Position date, turnover represents the fair value of the service provided to date based on the stage of completion of the contract activity as at that date. Where payments are received from customers in advance of services provided, the amounts are recorded as deferred income and included as part of creditors due within one year.
Expert Witness projects fall into two categories. Revenue from time-based fee projects is recognised on a fair value basis in line with Quantity Surveying services. Revenue for event-based Expert Witness projects is recognised on the completion of the specific project.
The Company also acts a sub-contractor to a third party, and income for these projects is accrued on a fair value basis in line with Quantity Surveying services and is held as a debtor due within one year.
Other operating income consists of furlough income and rental income in respect of surplus office space let out to third parties and is recognised on an accruals basis in accordance with the tenancy agreement in place.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Operating leases: the Company as lessor
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Rental income from operating leases is credited to profit or loss on a straight-line basis over the lease term.
Amounts paid and payable as an incentive to sign an operating lease are recognised as a reduction to income over the lease term on a straight-line basis, unless another systematic basis is representative of the time pattern over which the lessor's benefit from the leased asset is diminished.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense for the 9 month period comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.
Depreciation is provided on the following basis:
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Short-term leasehold property
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Over the life of the lease
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
(i) Financial assets
Basic financial assets, including trade and other debtors, and amounts due from related companies, are initially recognised at transaction price, 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.
Such assets are subsequently carried at amortised cost using the effective interest method. At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in the Statement of Comprehensive Income.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has restrictions.
(ii) Financial liabilities
Basic financial liabilities, including trade and other creditors and accruals, 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 receipts discounted at a market rate of interest.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors 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.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
(iii) Offsetting
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.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Financial instruments (continued)
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Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the Statement of Financial Position date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements:
(i) Useful economic lives of tangible assets
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 13 for the carrying amount of the property plant and equipment, and note 2.11 for the useful economic lives for each class of assets.
(ii) Provision for bad debts
The Provision in respect of the trade debtors balance is subject to uncertainty. A full line-by-line review of trade debtors is carried out monthly. Whilst every attempt is made to ensure that the bad debt provision is as accurate as possible, there remains a risk that the provisions do not match the level of debts which ultimately provide to be collectable.
(iii) Accrued income
Due to the nature of the Company's trade, the accrued income balance may be outstanding for several months, during which period it is not known whether the full amount outstanding is likely to be received. Management have applied the prudence concept regarding clients who have historically requested discounts at a late stage in the commission. Management's assessment of the recoverability of these balances is therefore subject to a degree of uncertainty.
(iv) Advance payment discount accrual
The Company has accrued for discounts historically requested by clients at a late stage in the commission. Should the discount not be requested, the accrual is released to the Statement of Comprehensive Income in full at the time of receipt.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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An analysis of turnover by class of business is as follows:
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9 month period ended
31 December
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Turnover from professional services
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Analysis of turnover by country of destination:
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9 month period ended
31 December
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9 month period ended
31 December
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Income received under the Coronavirus Job Retention Scheme
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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The operating profit is stated after charging:
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9 month period ended
31 December
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Other operating lease rentals
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During the 9 month period, the Company obtained the following services from the Company's auditors:
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9 month period ended
31 December
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Fees payable to the Company's auditors for the audit of the Company's financial statements
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Fees payable to the Company's auditors in respect of:
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Taxation compliance services
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All non-audit services not included above
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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Staff costs, including directors' remuneration, were as follows:
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9 month period ended
31 December
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the 9 month period was as follows:
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9 month period ended
31 December
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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9 month period ended
31 December
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During the 9 month period retirement benefits were accruing to 2 directors (2022 - 4) in respect of defined contribution pension schemes.
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The highest paid director received remuneration of £134,077 (2022 - £79,516).
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The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £4,500 (2022 - £2,765).
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9 month period ended
31 December
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Dividends received from subsidiary
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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9 month period ended
31 December
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
11.Taxation (continued)
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Factors affecting tax charge for the 9 month period/year
|
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The tax assessed for the 9 month period/year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 19% (2022 - 19%). The differences are explained below:
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9 month period ended
31 December
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of % (2022 - 19%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Capital allowances for 9 month period/year in excess of depreciation
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Other differences leading to an increase (decrease) in the tax charge
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Total tax charge for the 9 month period/year
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Factors that may affect future tax charges
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On 3 March 2021, the UK Government announced its intention to increase the rate of UK corporation tax from 19% to 25% with effect from 01 April 2023. The increase in the rate of UK corporation tax was enacted in the Finance Act 2021 which received Royal Assent on 10 June 2021.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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Short-term leasehold property
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Charge for the 9 month period on owned assets
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Investments in subsidiary companies
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
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The following were subsidiary undertakings of the Company:
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Base Quantum Ireland Limited
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38 Upper Mount Street, Dublin 2, Dublin, Ireland
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2nd Floor, Queens House, 55-56 Lincoln's Inn Fields, London, England, WC2A 3LJ
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The aggregate of the share capital and reserves as at 31 December 2022 and the profit or loss for the 9 month period ended on that date for the subsidiary undertakings were as follows:
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Aggregate of share capital and reserves
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Base Quantum Ireland Limited
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Due after more than one year
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Amounts owed by group undertakings
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Prepayments and accrued income
|
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
|
Current asset investments
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Cash and cash equivalents
|
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Creditors: Amounts falling due within one year
|
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Amounts owed to group undertakings
|
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Other taxation and social security
|
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Accruals and deferred income
|
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|
SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
|
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Charged to profit or loss
|
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|
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The provision for deferred taxation is made up as follows:
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|
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Accelerated capital allowances
|
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|
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Short term timing differences
|
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Charged to profit or loss
|
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In 2022 a onerous contract arrised whereas the company is commited to paying the salary of a employee for a period of two years during which the company will receive no economc benefit from these payments.
|
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
|
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Allotted, called up and fully paid
|
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12,600 (2022 - 126) A Ordinary shares of £0.01 each
|
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5,400 (2022 - 54) B Ordinary shares of £0.01 each
|
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B Ordinary shares have voting rights and rank pari passu to A Ordinary shares.
During the period the Ordinary shares were re-designated as A Ordinary shares and the A Ordinary shares were re-designated as B Ordinary shares. The 126 A Ordinary £1 shares were then subdivided into 12,600 A Ordinary £0.01 shares and the 54 B Ordinary £1 shares were then subdivided into 5,400 B Ordinary shares of £0.01.
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Other reserves
The other reserves represents the amount of the bonus share issue that was not distributable as dividends or part of retained earnings. The reserve was created on 16 December 2020.
Profit and loss account
The profit and loss account reserve represents the accumulated profits that have not been distributed to shareholders as dividends or transferred to other reserves.
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 cost charge represents contributions payable by the Company to the fund and for the period amounted to £125,772 (year ended March 2022: £183,624). Contributions totalling £Nil (year ended March 2022: £30,753) were payable to the fund at the reporting date.
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SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
|
Commitments under operating leases
|
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At 31 December 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
|
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Operating lease commitments as a lessor
|
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At 31 December 2022, the Company had future minimum lease receipts due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
|
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Related party transactions
|
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Included in trade and other debtors was an amount totalling £452,120 (year ended March 2022: £203,207) due from three subsidiaries.
Included in trade and other creditors was an amount totalling £0 (year ended March 2022: £305,808) due to two subsidiaries.
At the balance sheet date, the balances due to directors of the company totalled £285,240 (year ended March 2022: £285,240), these amounts were interest free and repayable on demand.
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Post balance sheet events
|
On the 7 Feburary 2023, the Company issued 1,633 C1 Ordinary Shares, which have a nominal value of £0.01 per share, for consideration of £399.69 per share, paid in cash.
|
SOCOTEC ADVISORY LIMITED (FORMERLY BASE QUANTUM LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2022
The immediate parent undertaking is Socotec UK Limited, a company registered in England and Wales.
The ultimate parent undertaking is Soco 1 SAS, a Company incorporated in France, which owns 100% of Holding Socotec SAS, which as at 31 December 2021 held 98.67% of the issued share capital of Phoenix UK 2020 Limited, a company registered in England and Wales, which has been the ultimate domestic parent of this entity from 10 May 2022. Soco 1 SAS is the parent undertaking of the smallest and largest group to consolidate these financial statements and this company is included in the consolidated financial statements of Soco 1 SAS, a copy of which will be submitted alongside these financial statements and may be obtained from The Registrar of Companies, Companies Registration Office, Companies House, Crown Way, Maindy, Cardiff, CF14 3UZ.
In the opinion of the directors the ultimate controlling party is Sophinvest SA, a company registered in Luxembourg. Sophinvest SA, owns 65.24% of Soco 1 SAS which is the ultimate parent undertaking of the Company.
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