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Registration number: 05742297

MTrec Limited

Annual Report and Financial Statements

for the Period from 29 March 2021 to 27 March 2022

 

MTrec Limited

Contents

Company Information

1

Strategic Report

2 to 4

Director's Report

5 to 6

Statement of Director's Responsibilities

7

Independent Auditor's Report

8 to 11

Income Statement

12

Statement of Financial Position

13

Statement of Changes in Equity

14

Statement of Cash Flows

15

Notes to the Financial Statements

16 to 31

 

MTrec Limited

Company Information

Director

D Musgrave

Registered office

MTrec House
8 Market Lane
Newcastle upon Tyne
NE1 6QQ

Solicitors

Swinburne Maddison LLP
Venture House
Aykley Heads Business Centre
Durham
DH1 5TS

Auditor

Ryecroft Glenton
32 Portland Terrace
Newcastle upon Tyne
NE2 1QP

 

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 director on 15 September 2023
 

.........................................
D Musgrave
Director

 

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:

Y Kamata (resigned 4 August 2021)

Y Nishida (resigned 4 August 2021)

D Musgrave

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 director on 15 September 2023
 

.........................................
D Musgrave
Director

 

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.

......................................
Deborah Graham (Senior Statutory Auditor)

For and on behalf of
Ryecroft Glenton
Chartered Accountants
Statutory Auditors
32 Portland Terrace
Jesmond
Newcastle upon Tyne
NE2 1QP

15 September 2023


 

 

MTrec Limited

Income Statement for the Period from 29 March 2021 to 27 March 2022

Note

27 March
2022
£

28 March
2021
£

Turnover

3

24,600,307

23,173,915

Cost of sales

 

(21,155,327)

(20,133,325)

Gross profit

 

3,444,980

3,040,590

Administrative expenses

 

(3,060,264)

(2,658,846)

Other operating income

4

2,111

200,859

Operating profit

5

386,827

582,603

Income from shares in group undertakings

 

-

259,556

Other interest receivable and similar income

6

-

61

Interest payable and similar expenses

7

(73,041)

-

Profit before tax

 

313,786

842,220

Tax on profit

11

(126,417)

(127,831)

Profit for the financial period and total comprehensive income

 

187,369

714,389

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)

2021
£

Fixed assets

 

Tangible assets

12

676,812

847,181

Current assets

 

Debtors

13

4,187,059

4,757,591

Cash at bank and in hand

 

2,682,370

6,188,178

 

6,869,429

10,945,769

Creditors: Amounts falling due within one year

15

(4,603,309)

(2,146,370)

Net current assets

 

2,266,120

8,799,399

Total assets less current liabilities

 

2,942,932

9,646,580

Creditors: Amounts falling due after more than one year

15

(2,617,677)

-

Provisions for liabilities

17

(1,596,912)

(1,800,000)

Net (liabilities)/assets

 

(1,271,657)

7,846,580

Capital and reserves

 

Called up share capital

19

-

2,020

Other reserves

(2,184,587)

-

Profit and loss account

912,930

7,844,560

Total equity

 

(1,271,657)

7,846,580

Approved and authorised by the director on 15 September 2023
 

.........................................
D Musgrave
Director

 

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)

2,020

7,130,171

-

7,132,191

Profit for the period

-

714,389

-

714,389

Total comprehensive income

-

714,389

-

714,389

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

2,020

7,844,560

-

7,846,580

Profit for the period

-

187,369

-

187,369

Total comprehensive income

-

187,369

-

187,369

Dividends

-

(4,575,702)

-

(4,575,702)

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

-

912,930

(2,184,587)

(1,271,657)

 

MTrec Limited

Statement of Cash Flows for the Period from 29 March 2021 to 27 March 2022

Note

27 March
2022
£

(As restated)

28 March
2021
£

Cash flows from operating activities

Profit for the period

 

187,369

714,389

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

5

29,451

39,499

Finance income

6

-

(259,617)

Finance costs

7

73,041

-

Income tax expense

11

126,417

127,831

Impairment loss on fixed assets

 

140,918

-

 

557,196

622,102

Working capital adjustments

 

Decrease/(increase) in trade debtors

13

574,269

(421,228)

Increase in trade creditors

15

86,184

1,164,274

Decrease in provisions

17

(203,088)

-

Cash generated from operations

 

1,014,561

1,365,148

Income taxes paid

11

(136,350)

(127,577)

Net cash flow from operating activities

 

878,211

1,237,571

Cash flows from investing activities

 

Interest received

6

-

259,617

Acquisitions of tangible assets

-

(1,979)

Net cash flows from investing activities

 

-

257,638

Cash flows from financing activities

 

Interest paid

7

(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

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is MTrec House, 8 Market Lane, Newcastle upon Tyne, NE1 6QQ.

2

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.

3

Turnover

The analysis of the company's revenue for the period from continuing operations is as follows:

27 March
2022
£

28 March
2021
£

Rendering of services

24,600,307

23,173,915

4

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

-

184,192

Supplier rebates

2,111

16,667

2,111

200,859

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)

5

Operating profit

Arrived at after charging/(crediting)

27 March
2022
£

28 March
2021
£

Depreciation expense

29,451

39,499

Impairment on freehold property

140,918

-

Bad debts written off

3,694

54,686

Operating lease rentals

11,240

13,579

6

Other interest receivable and similar income

27 March
2022
£

28 March
2021
£

Other finance income

-

61

7

Interest payable and similar expenses

27 March
2022
£

28 March
2021
£

Interest on bank overdrafts and borrowings

57,783

-

Interest on preference shares

15,258

-

73,041

-

8

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

6,912,421

2,608,838

Social security costs

628,119

264,117

Other pension costs

96,605

39,544

7,637,145

2,912,499

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
2022
No.

28 March
2021
No.

Administrative staff

31

32

Direct staff

210

202

Management

6

6

247

240

9

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

407,245

407,970

Contributions paid to money purchase schemes

10,000

10,000

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
 No.

30 March 2020 to 28 March 2021
 No.

Accruing benefits under money purchase pension scheme

1

1

In respect of the highest paid director:

29 March 2021 to 27 March 2022
 £

30 March 2020 to 28 March 2021
 £

Aggregate Remuneration

407,245

407,970

Company contributions to money purchase pension schemes

10,000

10,000

 

MTrec Limited

Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)

10

Auditors' remuneration

27 March
2022
£

28 March
2021
£

Audit of the financial statements

27,690

26,000


 

11

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

128,077

129,840

UK corporation tax adjustment to prior periods

12

46

128,089

129,886

Deferred taxation

Arising from origination and reversal of timing differences

(1,672)

(2,055)

Tax expense in the income statement

126,417

127,831

 

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 19% (2021 - 19%).

The differences are reconciled below:

27 March
2022
£

28 March
2021
£

Profit before tax

313,786

842,220

Corporation tax at standard rate

59,619

160,022

Effect of revenues exempt from taxation

-

(49,316)

Effect of expense not deductible in determining taxable profit (tax loss)

63,331

12,488

UK deferred tax credit relating to changes in tax rates or laws

(1,137)

-

Increase in UK and foreign current tax from adjustment for prior periods

12

46

Other tax effects for reconciliation between accounting profit and tax expense (income)

4,592

4,591

Total tax charge

126,417

127,831

Deferred tax

Deferred tax assets and liabilities

27 March
2022

Asset
£

Fixed asset timing differences

3,387

Short term timing differences - trading

1,350

 

4,737

28 March
2021

Asset
£

Fixed asset timing differences

2,210

Short term timing differences - trading

855

 

3,065

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)

12

Tangible assets

Land and buildings
£

Fixtures and fittings
£

Motor vehicles
 £

Total
£

Cost or valuation

At 29 March 2021 (as restated)

996,588

851,855

13,000

1,861,443

At 27 March 2022

996,588

851,855

13,000

1,861,443

Accumulated depreciation

At 29 March 2021

156,504

844,758

13,000

1,014,262

Charge for the period

24,166

5,285

-

29,451

Impairment

140,918

-

-

140,918

At 27 March 2022

321,588

850,043

13,000

1,184,631

Carrying amount

At 27 March 2022

675,000

1,812

-

676,812

At 28 March 2021 (as restated)

840,084

7,097

-

847,181

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
The freehold property was revalued on 4th February 2022. The revaluation of the property resulted in an impairment charge in the year. The amount of impairment loss included in profit or loss is £140,918 (2021 - £Nil).

13

Debtors

Note

2022
£

(As restated)

2021
£

Current

 

Trade receivables

 

2,947,650

3,522,840

Other debtors

 

737,897

745,035

Prepayments

 

78,484

70,425

Deferred tax assets

11

4,737

3,065

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)

14

Cash and cash equivalents

2022
£

2021
£

Cash at bank and in hand

2,682,370

6,188,178

15

Creditors

Note

2022
 £

2021
 £

Amounts falling due within one year

 

Loans and borrowings

16

2,378,971

-

Trade creditors

 

395,154

452,798

Accruals and deferred income

 

1,006,779

1,026,688

Corporation tax liability

 

73,079

81,340

Other taxation and social security

 

576,179

404,852

Other creditors

 

173,147

180,692

 

4,603,309

2,146,370

Amounts falling due after more than one year

 

Loans and borrowings

16

2,617,677

-

16

Loans and borrowings

27 March 2022
 £

28 March 2021
 £

Current loans and borrowings

Redeemable preference shares

2,184,802

-

Other borrowings

194,169

-

2,378,971

-

 

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

2,617,677

-

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)

17

Provisions for liabilities

Other provisions
£

Total
£

At 29 March 2021

1,800,000

1,800,000

Payments made on account

(203,088)

(203,088)

As at 27 March 2022

1,596,912

1,596,912

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.

18

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 £96,605 (2021 - £39,544).

Contributions totalling £13,380 (2021 - £10,007) were payable to the scheme at the end of the period and are included in creditors.

19

Called up Share capital

Allotted, called up and fully paid shares

 

2022

2021

 

No.

£

No.

£

Ordinary A shares of £0.00000001 (2021 - £1) each

10,000

-

2,000

2,000

Ordinary B shares of £0.00000001 (2021 - £1) each

3,334

-

20

20

 

13,334

-

2,020

2,020

 

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


During the period the company undertook the following transactions relating to its share capital.

The company issued 2,210,041 Preference shares of £1 each at par value. The Preference shares are redeemable at the option of the shareholder at the original subscription price of the shares and carry a fixed preference dividend. The preference shares have been classified as a liability in these financial statements as a result of the terms attached to them.

The company undertook a capital reduction. The nominal value of the £1 A Ordinary shares, £1 B Ordinary shares and Preference shares of £1 each was reduced so that the nominal value for each class of shares is £0.0001 each. The credit of £2,211,840 created from the capital reduction was credited to the profit and loss reserve.

The company repurchased 1,999 A Ordinary shares of £0.0001 each and 20 B Ordinary shares of £0.0001 each, for total consideration of £4,706,364.

The company redeemed 25,236 Preference shares of £0.0001 each for total consideration of £25,236.

The company subdivided the A Ordinary shares of £0.0001 each into ten thousand A Ordinary shares of £0.0000001 each.

The company issued 3,334 B Ordinary shares of £0.0000001 each at par value.
 

 

MTrec Limited

Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)

20

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

2,028

6,990

Later than one year and not later than five years

-

5,438

2,028

12,428

21

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

416,226

2,065

418,291

       

2021

At 30 March 2020
£

Advances to director
£

At 28 March 2021
£

D Musgrave

Private transactions paid by company

416,226

-

416,226

       
     

 

 

MTrec Limited

Notes to the Financial Statements for the Period from 29 March 2021 to 27 March 2022 (continued)

22

Non adjusting events after the financial period

After the period end the company reached agreement with HMRC in respect of their enquiry into potentially unpaid income tax (PAYE) and National Insurance Contributions (NIC). The final agreement was reached in July 2023 and the liabilities were settled in full following agreement being confirmed.

After the period end the company modified the terms of the Preference shares of £0.0001 each with agreement of the holders of the Preference shares. The changes made mean the Preference shares are only redeemable at the option of the company and the Preference dividend was also removed as part of the modifications of the terms attached to the Preference shares.