Registration number:
MTrec Limited
for the Period from 29 March 2021 to 27 March 2022
MTrec Limited
Contents
Company Information |
|
Strategic Report |
|
Director's Report |
|
Statement of Director's Responsibilities |
|
Independent Auditor's Report |
|
Income Statement |
|
Statement of Financial Position |
|
Statement of Changes in Equity |
|
Statement of Cash Flows |
|
Notes to the Financial Statements |
MTrec Limited
Company Information
Director |
D Musgrave |
Registered office |
|
Solicitors |
|
Auditor |
|
MTrec Limited
Strategic Report for the Period from 29 March 2021 to 27 March 2022
Principal activity
The principal activity of the company is a recruitment agency.
The director presents his strategic report for the period from 29 March 2021 to 27 March 2022.
Review of the business
MTrec Limited has gone through a significant change in ownership in 2021-2022. The business was previously a consolidated subsidiary of Open Up Group Inc (formerly BeNext Yumeshin Group co), having been acquired in August 2016. The Open Up Group (OPG) Board presented an MBO opportunity to MTrec, with a business self-funding vendor finance package which was agreed and implemented in August 2021. There are long term loan obligations to OPG, from MTrec, to finance the deal as well as obligations in respect of preference shares which were issued to OPG as part of the MBO.
The notable highlights of this year include the following;
• |
The successful agreement of the MBO deal with the Open Up Group. |
• |
The recruitment and retention of a new sales team, who have developed a significant number of new business opportunities in all recruitment sectors. |
• |
The continued adoption of a flexible hybrid working from home/office system, during periods of 2021. |
• |
The launch of a new marketing campaign and rebrand for all MTrec divisions. |
• |
The retention of key and long term MTrec clients. |
• |
The Permanent Technical Recruitment market returning to pre-pandemic levels. |
• |
The early adoption of client rate increases, in preparation for April 2022. |
• |
The successful retention of long serving key staff members. |
A significant part of the earlier part of the year was taken up with the detailed and extensive negotiations relating to the MBO deal between both parties and their advisers. The negotiations ran throughout April, May, June and July, with final and successful agreement being reached in August 2021.
The temporary recruitment for commercial appoints did experience its seasonal growth from September 2021 to January 2022 with a long term client showing particular growth as a result of them expanding their operations with a new location being established in Middlesborough, with the MTrec team helping support their established site and the new facility.
Through the consistent and systematic business development system within MTrec, which has been enhanced by the MTrec sales Team, there were a number of new client acquisitions, which did strengthen the MTrec client portfolio.
The business also benefited again from having a number of long standing and loyal customers within warehousing and logistics operations as well as its diversified client sectors.
Both the Permanent Technical division and Commercial Divisions did experience an improved year, as permanent vacancy recruitment activity did return to similar levels pre-covid, as regional businesses looked to strengthen their organizational structures. To support this further development, new graduate recruiters were brought into the team, to help facilitate this growth, along with new sales recruiters, to open up new commercial opportunities.
MTrec Limited
Strategic Report for the Period from 29 March 2021 to 27 March 2022 (continued)
Key strengths within the business include the following;
• |
The results for the company show a profit on ordinary activities before taxation of 2022 £313,786 (2021 £842,220) and turnover of £24.60m (2021: £23.17m). |
• |
The company has net assets / -liabilities of 2022 £-1,27m (2021: £7.85m). |
• |
An Experienced Senior Team - The senior team remains unchanged, which is highly experienced and completely dedicated to the success of MTrec. |
• |
Financial/Budgetary Planning - MTrec has gained further experience in financial planning, having worked through the new OPG MBO deal. |
• |
Staff Loyalty and Flexibility - The MTrec staff and service records remains a key strength, with minimal leavers and a very strong retention record. |
• |
A Strong and Loyal Customer Base - The business continued to retain the majority of its customers throughout FY22, through strong and embedded account management practices, with many returning to normal hiring patterns throughout the year. |
• |
New Business Development Expertise - The MTrec sales team was strengthened with new staff appointments. This added further depth into the team, and greater market penetration into the North East markets. |
• |
Credit Control Management - The business continues to operate a strong and robust credit control and checking system, with any new business clients immediately credit checked on Experian and all clients on the ledger closely checked and monitored daily, with a highly effective internal escalation process for any ledger concerns. Despite the markets in FY22, there were very minimal cases of bad debt. |
• |
Integration of New Technology - MTrec continued to integrate the new candidate screening technology implemented in the previous year, and video interviewing to provide the recruitment teams with a more agile and responsive service. |
• |
Business and industry accreditations - MTrec still maintained many of its Investors in People practices, despite the working from home systems. The business also continued corporate member of the REC - Recruitment and Employment Confederation. |
• |
Pricing Policy - The review of client pricing and providing a value-added service continued throughout FY22. |
• |
Solid financial foundations - Following the MBO, and the implementation of a new 5-year plan, |
To summarise, MTrec has performed well, and achieved its financial goals and objectives. The business also retained all of its key staff, with very minimal attrition and recruited new staff members in most operational departments.
The business has retained most of its long term and high-volume industrial clients, with industry leading account management services firmly embedded in all levels of the organisation.
Principle risks and uncertainties
• |
The candidate labour market was very tight throughout FY22, with challenges recruiting staff in most sectors, particularly in temporary manufacturing and engineering areas. The labour market remains a similar outlook for FY23. |
• |
There is a developing trend of clients taking temporary workers on a temporary to permanent basis quicker and more consistently than in previous years, due to the labour market and a reliance of retaining key talent. |
MTrec Limited
Strategic Report for the Period from 29 March 2021 to 27 March 2022 (continued)
Future developments
• |
MTrec has recruited further sales team members which will provide greater volume of sales calls and contacts and further penetration into key market sectors. |
• |
The business will be reviewing all client terms to mitigate any erosion on the volume of total workers with new pricing and longer-term assignments to be agreed. |
• |
As MTrec has operated in the North East Industrial sector for 17 years, the business has developed a strong and loyal customer base, which will be diversified on a continuous basis, particularly in the technical and commercial market sectors. |
Key performance indicators
Given the straightforward nature of the business and the information shown in the following financial statements, directors are of the opinion that further analysis using KPl's is not necessary for an understanding of the development performance or position of the business.
Approved and authorised by the
......................................... |
MTrec Limited
Director's Report for the Period from 29 March 2021 to 27 March 2022
The director presents his report and the financial statements for the period from 29 March 2021 to 27 March 2022.
Directors of the company
The directors who held office during the period were as follows:
Dividends
The directors do not recommend the payment of a final dividend.
Financial risk management
Objectives and policies
The company has an established, structured approach to risk management. The company's activities expose it to a variety of financial risks, including the effects of credit, liquidity and interest rate risks. The company has adopted risk management policies that seek to mitigate these risks in a cost effective manner. Financial assets that expose the company to financial risk consist primarily of trade debtors and cash. Financial liabilities that expose the company to financial risk consist of principally of trade creditors.
Credit risk, liquidity risk and interest rate risk
Credit risk is the risk of loss in the value of financial assets due to the counterparties failing to meet all or part of their obligations. The company performs ongoing credit evaluation of its customer's financial condition.
Liquidity risk is the risk that the company does not have sufficient liquid assets to meet its obligations as they fall due. Liquidity is maintained at a prudent level and the company ensures there is an adequate liquidity buffer to cover contingencies.
Interest rate risk with regards to unfavourable movements in interest rates is not perceived as being material to the accounts due to the borrowing agreements in place.
MTrec Limited
Director's Report for the Period from 29 March 2021 to 27 March 2022 (continued)
Going concern
The company meets its day to day working capital requirements through cash generated from operations.
The company’s forecasts and projections for the next twelve months from the approval of these statements show that the company has adequate resources to continue in operational existence. The director has also considered the potential cash flow impact of the HMRC provision, details of which are set out in key sources of estimation uncertainty and note 16 to the financial statements, as well as the cash flow impact of loan repayments disclosed in note 15 of the financial statements.
Having considered the current cash forecasts of the company, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for a period of a least twelve months from the date of signing these financial statements. The company therefore continues to adopt the going concern basis in preparing its financial statements.
Disclosure of information to the auditors
The director has taken steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. The director confirms that there is no relevant information that he knows of and of which he knows the auditors are unaware.
Reappointment of auditor
In accordance with section 485 of the Companies Act 2006, a resolution for the re-appointment of Ryecroft Glenton as auditors of the company is to be proposed at the forthcoming Annual General Meeting.
Approved and authorised by the
......................................... |
MTrec Limited
Statement of Director's Responsibilities
The director acknowledges his responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland"' and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
• |
select suitable accounting policies and apply them consistently; |
• |
state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• |
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 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 director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable him to ensure that the financial statements comply with the Companies Act 2006.
MTrec Limited
Independent Auditor's Report to the Members of MTrec Limited
Opinion
We have audited the financial statements of MTrec Limited (the 'Company') for the period ended 27 March 2022, which comprise the Income Statement, 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 27 March 2022 and of its profit for the 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. |
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 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
In auditing the financial statements, we have concluded that the director's 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.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor’s 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.
MTrec Limited
Independent Auditor's Report to the Members of MTrec Limited (continued)
Opinion 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 Strategic Report and Director's Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Director's Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our 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 and the Director's Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
• | the financial statements are not in agreement with the accounting records and returns; or |
• | certain disclosures of directors’ remuneration specified by law are not made; or |
• | we have not received all the information and explanations we require for our audit. |
Responsibilities of the director
As explained more fully in the Statement of Director's Responsibilities [set out on page 7], the director is 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 director determines 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 director is 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 director either intends to liquidate the 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 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.
The extent to which the audit was considered capable of detecting irregularities including fraud
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:
• |
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non compliance with applicable laws and regulations; |
MTrec Limited
Independent Auditor's Report to the Members of MTrec Limited (continued)
• |
we identified the laws and regulations applicable to the Company through discussions with directors and other management, and from our commercial knowledge and experience of the sector in which the company operates; |
• |
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the Company, including the Companies Act 2006 and taxation legislation; |
• |
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and |
• |
we ensured that the identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non compliance throughout the audit. |
We assessed the susceptibility of the Company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
• |
making enquiries of management as to where they considered there was susceptibility to fraud and their knowledge of actual, suspected and alleged fraud; |
• |
considering the internal controls in place to mitigate risks of fraud and non compliance with laws and regulations. |
To address the risk of fraud through management bias and override of controls, we:
• |
performed analytical procedures to identify any unusual or unexpected relationships; |
• |
tested journal entries to identify unusual transactions; |
• |
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias. |
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
• |
agreeing financial statement disclosures to underlying supporting documentation; |
• |
reading the minutes of meetings of those charged with governance; |
• |
enquiring of management as to actual and potential litigation and claims; |
• |
reviewing correspondence with HMRC, and the Company’s legal advisers where appropriate. |
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
MTrec Limited
Independent Auditor's Report to the Members of MTrec Limited (continued)
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 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 company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
......................................
For and on behalf of
Chartered Accountants
Statutory Auditors
32 Portland Terrace
Jesmond
NE2 1QP
MTrec Limited
Income Statement for the Period from 29 March 2021 to 27 March 2022
Note |
27 March |
28 March |
|
Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Other operating income |
|
|
|
Operating profit |
|
|
|
Income from shares in group undertakings |
- |
|
|
Other interest receivable and similar income |
- |
|
|
Interest payable and similar expenses |
( |
- |
|
Profit before tax |
|
|
|
Tax on profit |
( |
( |
|
Profit for the financial period and total comprehensive income |
|
|
The above results were derived from continuing operations.
The company has no recognised gains or losses for the period other than the results above.
MTrec Limited
(Registration number: 05742297)
Statement of Financial Position as at 27 March 2022
Note |
2022 |
(As restated) |
|
Fixed assets |
|||
Tangible assets |
|
|
|
Current assets |
|||
Debtors |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current assets |
|
|
|
Total assets less current liabilities |
|
|
|
Creditors: Amounts falling due after more than one year |
( |
- |
|
Provisions for liabilities |
( |
( |
|
Net (liabilities)/assets |
( |
|
|
Capital and reserves |
|||
Called up share capital |
- |
|
|
Other reserves |
( |
- |
|
Profit and loss account |
|
|
|
Total equity |
( |
|
Approved and authorised by the
......................................... |
MTrec Limited
Statement of Changes in Equity for the Period from 29 March 2021 to 27 March 2022
Share capital |
Profit and loss account |
Other reserves |
Total |
|
At 30 March 2020 (as restated) |
|
|
- |
|
Profit for the period |
- |
|
- |
|
Total comprehensive income |
- |
|
- |
|
At 28 March 2021 |
2,020 |
7,844,560 |
- |
7,846,580 |
Share capital |
Profit and loss account |
Other reserves |
Total |
|
At 29 March 2021 |
|
|
- |
|
Profit for the period |
- |
|
- |
|
Total comprehensive income |
- |
|
- |
|
Dividends |
- |
( |
- |
( |
Reduction of capital |
(2,020) |
2,211,840 |
- |
2,209,820 |
Share buybacks |
- |
(4,729,904) |
- |
(4,729,904) |
Transfers |
- |
(25,233) |
25,233 |
- |
Other movements on reserves |
- |
- |
(2,209,820) |
(2,209,820) |
At 27 March 2022 |
- |
|
( |
( |
MTrec Limited
Statement of Cash Flows for the Period from 29 March 2021 to 27 March 2022
Note |
27 March |
(As restated) |
|
Cash flows from operating activities |
|||
Profit for the period |
187,369 |
714,389 |
|
Adjustments to cash flows from non-cash items |
|||
Depreciation and amortisation |
29,451 |
39,499 |
|
Finance income |
- |
(259,617) |
|
Finance costs |
73,041 |
- |
|
Income tax expense |
126,417 |
127,831 |
|
Impairment loss on fixed assets |
140,918 |
- |
|
557,196 |
622,102 |
||
Working capital adjustments |
|||
Decrease/(increase) in trade debtors |
574,269 |
(421,228) |
|
Increase in trade creditors |
86,184 |
1,164,274 |
|
Decrease in provisions |
(203,088) |
- |
|
Cash generated from operations |
1,014,561 |
1,365,148 |
|
Income taxes paid |
(136,350) |
(127,577) |
|
Net cash flow from operating activities |
878,211 |
1,237,571 |
|
Cash flows from investing activities |
|||
Interest received |
- |
259,617 |
|
Acquisitions of tangible assets |
- |
(1,979) |
|
Net cash flows from investing activities |
- |
257,638 |
|
Cash flows from financing activities |
|||
Interest paid |
(57,783) |
- |
|
Payments for purchase of own shares |
(4,731,924) |
- |
|
New loans net of repayments in period |
2,811,846 |
- |
|
Net proceeds from issue of preference share |
2,184,802 |
- |
|
Interest on preference shares |
(15,258) |
- |
|
Dividends paid |
(4,575,702) |
- |
|
Net cash flows from financing activities |
(4,384,019) |
- |
|
Net (decrease)/increase in cash and cash equivalents |
(3,505,808) |
1,495,209 |
|
Cash and cash equivalents at 29 March |
6,188,178 |
4,692,969 |
|
Cash and cash equivalents at 27 March |
2,682,370 |
6,188,178 |
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022
General information |
The company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.
Basis of preparation
These financial statements have been prepared using the historical cost convention.
These financial statements are prepared in sterling which is the functional currency of the entity.
Going concern
The company has net liabilities of £1,271,657.
Following a management buyout in the year preference shares were reclassified as liability rather than equity. This has resulted in a net liability position, though the original terms attached to the preference shares are that the redemption of the preference shares is only required where the company has made a profit and has sufficient distributable profits and working capital to facilitate the redemption.
The director has reviewed current cash forecasts of the company and has a reasonable expectation that the company has adequate esources to continue in operational existence for a period of a least twelve months from the date of signing these financial statements. The company will remain profitable and will return to a positive net asset possition.
The company therefore continues to adopt the going concern basis in preparing its financial statements.
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
2 |
Accounting policies (continued) |
Prior period errors
Following a review of the prior year accounting transactions, it has been concluded that a number of non business expenses were incorrectly recorded within the financial statements. This has resulted in the following prior year adjustment.
Relating to the current period disclosed in these financial statements | Relating to the prior period disclosed in these financial statements | Relating to periods before the prior period disclosed in these financial statements | |
Directors loan account | - | - | 416,226 |
Land and buildings | - | - | (365,017) |
Retained earnings bfwd | - | - | (779,612) |
Other debtors | - | - | 728,403 |
Judgements
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
There are considered to be no significant judgements (apart from those involving estimations) that management has made in the process of applying the entity's accounting policies which effect the amounts recognised in the financial statements. |
Assessing indicators of impairment - In assessing whether there have been indicators of impairment of assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. |
Key sources of estimation uncertainty
Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:
Useful economic lives of tangible assets - The annual depreciation charge is sensitive to changes in the estimated useful lives of the assets. The useful economic lives are re-assessed annually. They are amended when necessary to reflect current estimates, future investments and economic utilisation.
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
2 |
Accounting policies (continued) |
A provision of £1,596,912 (2021 - £1,800,000) has been made in relation to potential unpaid income tax (PAYE) and National Insurance Contributions (NIC) as a consequence of an ongoing HMRC enquiry. The provision represents management’s best estimate of the potential liability based on all of the available information up to date of the financial statements.
Impairment of debtors - The company makes an estimate of the recoverable value of the trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience.
Revenue recognition
Turnover comprises the fair value of the consideration received or receivable for services rendered in the ordinary course of the company’s activities. Turnover is shown net of value added tax, returns, rebates and discounts.
Revenue from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period provided that the outcome can be reliably estimated. When the outcome cannot be reliably estimated, revenue is recognised only to the extent that expenses recognised are recoverable.
Government grants
Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income.
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
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 taxable income.
Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the financial statements. Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.
Tangible assets
Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
2 |
Accounting policies (continued) |
Asset class |
Depreciation method and rate |
|
Land and buildings |
2% straight line |
|
Fixtures and fittings |
33% straight line |
|
Motor vehicles |
33% straight line |
Trade debtors
Trade debtors are amounts due from customers for services rendered in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Borrowings
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Provisions
Provisions are recognised when the company has an obligation at the reporting date as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Dividends
Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
2 |
Accounting policies (continued) |
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Turnover |
The analysis of the company's revenue for the period from continuing operations is as follows:
27 March |
28 March |
|
Rendering of services |
|
|
Other operating income |
The analysis of the company's other operating income for the period is as follows:
29 March 2021 to 27 March 2022 |
30 March 2020 to 28 March 2021 |
|
Grants |
- |
|
Supplier rebates |
|
|
|
|
Included within grants are Coronavirus Job Retention Scheme receipts of £Nil (2021 - £174,192) and a DCC grant of £Nil (2021 - £10,000).
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
Operating profit |
Arrived at after charging/(crediting)
27 March |
28 March |
|
Depreciation expense |
|
|
Impairment on freehold property |
|
- |
Bad debts written off |
|
|
Operating lease rentals |
11,240 |
13,579 |
Other interest receivable and similar income |
27 March |
28 March |
|
Other finance income |
- |
|
Interest payable and similar expenses |
27 March |
28 March |
|
Interest on bank overdrafts and borrowings |
|
- |
Interest on preference shares |
|
- |
|
- |
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
29 March 2021 to 27 March 2022 |
30 March 2020 to 28 March 2021 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Other pension costs |
|
|
|
|
The average number of persons employed by the company (including the director) during the period, analysed by category was as follows:
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
8 |
Staff costs (continued) |
27 March |
28 March |
|
Administrative staff |
|
|
Direct staff |
|
|
Management |
|
|
|
|
Director's remuneration |
The directors' remuneration for the period was as follows:
29 March 2021 to 27 March 2022 |
30 March 2020 to 28 March 2021 |
|
Remuneration |
|
|
Contributions paid to money purchase schemes |
|
|
417,245 |
417,970 |
During the period the number of directors who were receiving benefits and share incentives was as follows:
29 March 2021 to 27 March 2022 |
30 March 2020 to 28 March 2021 |
|
Accruing benefits under money purchase pension scheme |
|
|
In respect of the highest paid director:
29 March 2021 to 27 March 2022 |
30 March 2020 to 28 March 2021 |
|
Aggregate Remuneration |
|
|
Company contributions to money purchase pension schemes |
|
|
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
Auditors' remuneration |
27 March |
28 March |
|
Audit of the financial statements |
|
|
Tax on profit |
Tax charged in the income statement
29 March 2021 to 27 March 2022 |
30 March 2020 to 28 March 2021 |
|
Current taxation |
||
UK corporation tax |
|
|
UK corporation tax adjustment to prior periods |
|
|
128,089 |
129,886 |
|
Deferred taxation |
||
Arising from origination and reversal of timing differences |
( |
( |
Tax expense in the income statement |
|
|
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
11 |
Tax on profit (continued) |
The tax on profit before tax for the period is higher than the standard rate of corporation tax in the UK (2021 - lower than the standard rate of corporation tax in the UK) of
The differences are reconciled below:
27 March |
28 March |
|
Profit before tax |
|
|
Corporation tax at standard rate |
|
|
Effect of revenues exempt from taxation |
- |
( |
Effect of expense not deductible in determining taxable profit (tax loss) |
|
|
UK deferred tax credit relating to changes in tax rates or laws |
( |
- |
Increase in UK and foreign current tax from adjustment for prior periods |
|
|
Other tax effects for reconciliation between accounting profit and tax expense (income) |
|
|
Total tax charge |
|
|
Deferred tax
Deferred tax assets and liabilities
27 March |
Asset |
Fixed asset timing differences |
3,387 |
Short term timing differences - trading |
1,350 |
|
28 March |
Asset |
Fixed asset timing differences |
2,210 |
Short term timing differences - trading |
855 |
|
A UK corporation tax rate of 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. This will increase the Company's future current tax charge accordingly.
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
Tangible assets |
Land and buildings |
Fixtures and fittings |
Motor vehicles |
Total |
|
Cost or valuation |
||||
At 29 March 2021 (as restated) |
|
|
|
|
At 27 March 2022 |
|
|
|
|
Accumulated depreciation |
||||
At 29 March 2021 |
|
|
|
|
Charge for the period |
|
|
- |
|
Impairment |
|
- |
- |
|
At 27 March 2022 |
|
|
|
|
Carrying amount |
||||
At 27 March 2022 |
|
|
- |
|
At 28 March 2021 (as restated) |
|
|
- |
|
Included within the net book value of land and buildings above is £675,000 (2021 - £840,084) in respect of freehold land and buildings.
Impairment
Freehold property
Debtors |
Note |
2022 |
(As restated) |
|
Current |
|||
Trade receivables |
2,947,650 |
3,522,840 |
|
Other debtors |
|
|
|
Prepayments |
|
|
|
Deferred tax assets |
|
|
|
Directors loan accounts |
418,291 |
416,226 |
|
4,187,059 |
4,757,591 |
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
Cash and cash equivalents |
2022 |
2021 |
|
Cash at bank and in hand |
|
|
Creditors |
Note |
2022 |
2021 |
|
Amounts falling due within one year |
|||
Loans and borrowings |
|
- |
|
Trade creditors |
|
|
|
Accruals and deferred income |
|
|
|
Corporation tax liability |
73,079 |
81,340 |
|
Other taxation and social security |
|
|
|
Other creditors |
|
|
|
|
|
||
Amounts falling due after more than one year |
|||
Loans and borrowings |
|
- |
Loans and borrowings |
27 March 2022 |
28 March 2021 |
|
Current loans and borrowings |
||
Redeemable preference shares |
|
- |
Other borrowings |
|
- |
|
- |
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
16 |
Loans and borrowings (continued) |
27 March 2022 |
28 March 2021 |
|
Non-current loans and borrowings |
||
Other borrowings |
|
- |
Other borrowings are secured in favour of Open Up Group Inc (formerly Be-Next Group) by way of a fixed and floating charge over the assets of the company.
Other borrowings represent two loan facilities with Open Up Group Inc, the Tranche A loan and the Tranche B loan.
At the year end the balance of the Tranche A loan including accrued interest was £801,665, which is repayable by quarterly instalments with the final instalment due in July 2026. Interest is charged on this loan at a rate of 3% per annum.
At the year end the balance of the Tranche B loan including accrued interest was £2,010,000. Interest is paid on a quarterly basis and the capital balance of £2,000,000 is due for repayment on 30 July 2024. Interest is charged on this loan at a rate of 3% to 30 July 2023 and at a rate of 4.5% from 31 July 2023.
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
Provisions for liabilities |
Other provisions |
Total |
|
At 29 March 2021 |
|
|
Payments made on account |
( |
( |
As at 27 March 2022 |
|
|
|
A provision of £1,596,912 (2021 - £1,800,000) has been made in relation to potential unpaid income tax (PAYE) and National Insurance Contributions (NIC) as a consequence of an HMRC enquiry. The provision represents management’s best estimate of the potential liability based on all of the available information up to the date of the financial statements. Final agreement in respect of the provision was reached with HMRC in July 2023 and payment of the liability was made at this time. The liabilities that arise as a result of the HMRC enquiry are expected to be partially recoverable by the company, however where the amounts potentially recoverable were contingent at the balance sheet date, no asset has been recognised in these financial statements.
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the period represents contributions payable by the company to the scheme and amounted to £
Contributions totalling £
Called up Share capital |
Allotted, called up and fully paid shares
2022 |
2021 |
|||
No. |
£ |
No. |
£ |
|
|
|
- |
|
2,000 |
|
|
- |
|
20 |
|
- |
|
|
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
19 |
Called up Share capital (continued) |
Share capital note
|
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
Obligations under leases and hire purchase contracts |
Operating leases
The total of future minimum lease payments is as follows:
2022 |
2021 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
- |
|
|
|
Related party transactions |
The company has taken advantage of the exemption available under paragraph 33.1A of FRS 102 and does not disclose related party transactions with members of the same group that are wholly owned.
During the year, the company made sales to GAP Personnel Holdings Limited, a company with the same parent, totalling £61,381 (2021 - £38,889). At the year end, included within debtors is a balance of £nil (2021 - £3,762) owed to the company.
During the year, the company advanced amounts to the director totalling £2,065 (2021 - £Nil) and received repayments totalling £Nil (2021 - £Nil). At the year end, included within debtors is a balance of £418,291 (2021 - £416,226) owed to the company.
Transactions with the director |
2022 |
At 29 March 2021 |
Advances to director |
At 27 March 2022 |
D Musgrave |
|||
Private transactions paid by company |
|
|
|
2021 |
At 30 March 2020 |
Advances to director |
At 28 March 2021 |
D Musgrave |
|||
Private transactions paid by company |
|
- |
|
MTrec Limited
Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)
Non adjusting events after the financial period |
|