Company registration number 04187661 (England and Wales)
MWAY COMMUNICATIONS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
MWAY COMMUNICATIONS LIMITED
COMPANY INFORMATION
Directors
L J Day
S A Crawford
T Watson
(Appointed 19 December 2022)
Company number
04187661
Registered office
Unit B
Meadowbank Industrial Estate
Harrison Street
Rotherham
S61 1EE
Auditor
BHP LLP
2 Rutland Park
Sheffield
S10 2PD
MWAY COMMUNICATIONS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
MWAY COMMUNICATIONS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -

The directors present the strategic report for the year ended 31 March 2023.

Fair review of the business

Turnover has reduced, year on year, to £11,448,707 (2022: £15,032,921). This reflects a conscious decision by the Board to no longer target high revenue, low margin projects but rather focus on core specialisms to deliver smaller projects with high gross profit contributions. This is in addition to the ongoing eight National Highways SDF Framework lots which have a further four years to run. The Board are pleased with the tendering activity in the year, where the focus has been to ensure even greater care is taken when working on bids to ensure strong margins are achievable from all successful tenders. The value of the order book now exceeds £35m.

The Board have, over the past year, significantly reduced the overhead cost base of the business. This has included headcount reductions and a reorganisation of management responsibilities resulting in a more efficient support function. The Board remains confident there are likely to be more savings to be made that will further improve the financial performance in the coming financial year.

The Commercial Finance function continues to make improvements in the way we plan and review our projects and has introduced new pricing tools to underpin our project performance. An overhaul of the accounting system is planned for 2024, to build on the cost capture improvements we have made, and to better reflect the reporting required on the increased National Highways Frameworks.

During the year, we have streamlined our capital asset base, disposing of under-utilised vehicles and plant. Despite this, we remain well-placed to self-deliver as much work as possible, using Group assets. We are well on our way to achieving the goal of providing all specialist work on the Strategic Road Network, from within the group. The next financial year will see a stabilisation of turnover but with the target of a further improved gross and net margin. We will continue to use Mway Services as our investment centre for assets used across all projects.

Principal risks and uncertainties

Bad and uncertain debt remains a risk on the major projects, however given these projects are now largely at an end, the risk is significantly diminished from previous years. The improvements made to the financial control environment, to increase the level of review and challenge internally, are effective in identifying material risks and making adequate provisions within the financial statements.

Key performance indicators

The company has introduced a range of safety, operational, commercial and financial indicators to manage and improve company performance.

GP 2023 14.4% (2022 9.7%)

EBITDA 2023 £432,219 (2022 loss of £41,510)

Pre-tax profit of £279,709 (2022 loss of £187,662)

At the time of completing this report, the group surpassed 7 years without a RIDDOR working in a high-risk environment.

Future developments

The directors expect turnover to remain relatively stable during the forthcoming year, but the profit to increase. This is a result of the combination of the long-term Framework contracts, the full year impact of the cost savings already implemented and the focus on smaller, high margin projects. We will build on the work with Highways England to secure similar work across our now expanded national footprint and capitalise on the specialist capabilities we have added to complement our core business. The National Highways Framework awards have secured a strong baseline performance for the group for a number of years.

MWAY COMMUNICATIONS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -

On behalf of the board

S A Crawford
Director
5 October 2023
MWAY COMMUNICATIONS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 March 2023.

Principal activities

The principal activity of the company continued to be that of Highway Technology Works.

Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £55,000. The directors do not recommend payment of a further dividend.

Directors

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

L J Day
S A Crawford
G J Hunt
(Resigned 12 July 2022)
J P R Derrick
(Resigned 31 May 2023)
T Watson
(Appointed 19 December 2022)
Auditor

In accordance with the company's articles, a resolution proposing that BHP LLP be reappointed as auditor of the company will be put at a General Meeting.

Statement of directors' responsibilities

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

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

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

MWAY COMMUNICATIONS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 4 -
On behalf of the board
S A Crawford
Director
5 October 2023
MWAY COMMUNICATIONS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MWAY COMMUNICATIONS LIMITED
- 5 -
Opinion

We have audited the financial statements of Mway Communications Limited (the 'company') for the year ended 31 March 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including 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:

Basis for opinion

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

Material uncertainty relating to going concern

We draw attention to note 1.2 in the financial statements which provides detail around management's assessment of going concern. Sensitivities within the cashflow forecasts present a risk and potential breaches in bank covenants may cast doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

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.

Opinions on other matters prescribed by the Companies Act 2006

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

MWAY COMMUNICATIONS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MWAY COMMUNICATIONS LIMITED
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

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

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

MWAY COMMUNICATIONS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MWAY COMMUNICATIONS LIMITED
- 7 -

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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.

Charles Ringrose
Senior Statutory Auditor
For and on behalf of BHP LLP
5 October 2023
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
S10 2PD
MWAY COMMUNICATIONS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
11,448,707
15,032,921
Cost of sales
(9,805,369)
(13,570,025)
Gross profit
1,643,338
1,462,896
Administrative expenses
(1,278,724)
(1,614,386)
Other operating income
-
0
22,418
Operating profit/(loss)
4
364,614
(129,072)
Interest payable and similar expenses
8
(84,905)
(58,590)
Profit/(loss) before taxation
279,709
(187,662)
Tax on profit/(loss)
9
(71,250)
197,250
Profit for the financial year
208,459
9,588

The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.

MWAY COMMUNICATIONS LIMITED
BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
11
-
0
409
Tangible assets
12
67,752
146,821
67,752
147,230
Current assets
Stocks
13
134,727
30,000
Debtors
14
4,207,025
4,602,457
Cash at bank and in hand
225
252
4,341,977
4,632,709
Creditors: amounts falling due within one year
15
(3,559,266)
(4,029,386)
Net current assets
782,711
603,323
Total assets less current liabilities
850,463
750,553
Creditors: amounts falling due after more than one year
16
(230,293)
(355,092)
Provisions for liabilities
Deferred tax liability
19
(81,000)
(152,250)
81,000
152,250
Net assets
701,170
547,711
Capital and reserves
Called up share capital
21
100
100
Profit and loss reserves
701,070
547,611
Total equity
701,170
547,711
The financial statements were approved by the board of directors and authorised for issue on 5 October 2023 and are signed on its behalf by:
S A Crawford
Director
Company Registration No. 04187661
MWAY COMMUNICATIONS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 April 2021
100
803,023
803,123
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
9,588
9,588
Dividends
10
-
(265,000)
(265,000)
Balance at 31 March 2022
100
547,611
547,711
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
208,459
208,459
Dividends
10
-
(55,000)
(55,000)
Balance at 31 March 2023
100
701,070
701,170
MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 11 -
1
Accounting policies
Company information

Mway Communications Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit B, Meadowbank Industrial Estate, Harrison Street, Rotherham, S61 1EE.

1.1
Accounting convention

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

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

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Notul Limited. These consolidated financial statements are available from its registered office.

MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 12 -
1.2
Going concern

These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. In considering status of the company, the directors have reviewed the balance sheet position and the monthly management accounts that are produced to assess the recent financial performance and standing. They then reviewed their current order book, being confirmed work that they are due to deliver over the next 12 months, and included an element of speculative work, although this is a small proportion of the total, to produce a forecast.

 

The company has agreed a Time to Pay (“TTP”) repayment schedule to HMRC in respect of monies owed, which has now commenced. The arrangement requires the HMRC debt to be repaid in full by August 2024. The impact of the TTP proposal is reflected in the company’s forward projections, and the agreement with HMRC has brought to an end a period of uncertainty and eliminated the risk of HMRC recalling the debt for immediate repayment.

 

The level of underlying debt in the business has reduced over the last year, in particular the amount owed to HMRC (prior to the Time to Pay arrangement being confirmed) reduced by almost £300,000 in the year. The directors do acknowledge a material uncertainty however, that potential breaches in bank covenants and sensitivities within the cashflow forecasts represent a degree of risk, and the company is reliant in that sense on the continued support of the bank and funders.

 

The directors' review of the management information, forecasts and orderbook has given them comfort that, although the cash position will worsen over the coming months as a result of the HMRC Time to Pay arrangement, the company will be able to meet its obligations over the coming year and into the future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

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

Revenue represents amounts receivable in relation to long term construction contracts and is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable.

1.4
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

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

Software
3-5 years straight line
1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation.

MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 13 -

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

Land and buildings Leasehold
10% Straight Line
Plant and machinery
20% Straight Line
Fixtures, fittings & equipment
20% Straight Line
Computer equipment
33% Straight Line
Motor vehicles
20% Straight Line

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

1.6
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

1.7
Stocks

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

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

1.8
Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

 

When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.

 

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.

 

See note 2 for further information on the construction contract accounting policy.

1.9
Cash and cash equivalents

Cash at bank and in hand are basic financial assets and include cash in hand.

1.10
Financial instruments

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

 

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

MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial assets

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

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Basic financial liabilities

Basic financial liabilities, including creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

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

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.11
Share capital

Share capital issued by the company is recorded at the proceeds received, net of direct issue costs. Dividends payable on share capital are recognised as liabilities once they are no longer at the discretion of the company.

1.12
Taxation

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

Current tax

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

Deferred tax

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

1.13
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.14
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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

1.15
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 16 -
2
Judgements and key sources of estimation uncertainty

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

 

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

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Stock

Stock is reviewed for obsolescence with reference to the holding quantity, purchases in the year and volume consumed. Stock aged more than one year is provided for in full. Further to this, management review the stock on a line by line basis for those items not fully provided for that we know have become obsolete during the period – e.g. purchased for a specific scheme which has now finished and required specialist stock. Management then review for items recently purchased that may be inappropriately provided for, and for any known orders to reduce the provision accordingly.

Turnover from long term construction contracts

Turnover is generated from long term contracts. The company recognises contract revenue and contract costs associated with each contract using the percentage of completion method. The recognition of revenue and profit therefore rely on estimates in relation to the stage of completion and the forecast total costs of each contract.

At each month end, all contracts are valued by the internal quantity surveyor allocated to the project. The valuation is compared to the expected total turnover on the contract and this forms the basis for the stage of completion.

This method ensures that profit is recognised equally across the life of the project. The calculation of expected outturn is based on the following factors:

- Variations to overall contract value (expected turnover) which have been agreed with the client

- Costs incurred to date allocated to the project

The degree of estimation uncertainty centres around the expected costs to complete the contract which, combined with the contract turnover, are used to calculation the expected margin outturn on each project.

When contract losses are anticipated these are recognised in full at the time of identification in so far as they can be measured reliably.

3
Turnover and other revenue

All of the company's turnover relates to UK sales from its principal activity. Other income consists of:

2023
2022
£
£
Other revenue
Grants received
-
22,418
MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 17 -
4
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Government grants
-
(22,418)
Depreciation of owned tangible fixed assets
51,816
49,630
Depreciation of tangible fixed assets held under finance leases
15,380
29,334
Loss/(profit) on disposal of tangible fixed assets
6,587
(41,333)
Amortisation of intangible assets
409
8,598
Operating lease charges
109,516
107,691
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
15,150
12,750
Audit of the financial statements of the company's subsidiaries
4,120
3,815
19,270
16,565
For other services
Taxation compliance services
3,450
3,200
6
Employees

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

2023
2022
Number
Number
Admin
19
17
Trading
78
101
Total
97
118

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
3,560,075
4,427,622
Social security costs
409,338
488,066
Pension costs
72,861
134,761
4,042,274
5,050,449
MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 18 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
144,838
179,233
Company pension contributions to defined contribution schemes
829
37,470
145,667
216,703
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
57,216
31,722
Non bank interest on loans
13,951
16,868
Hire purchase interest payable
858
3,951
Interest on overdue taxation
12,880
6,049
84,905
58,590
9
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
71,250
(197,250)

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

2023
2022
£
£
Profit/(loss) before taxation
279,709
(187,662)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
53,145
(35,656)
Tax effect of expenses that are not deductible in determining taxable profit
18
8,602
Change in unrecognised deferred tax assets
(145)
(133,135)
Adjustments in respect of prior years
(2,751)
-
0
Permanent capital allowances in excess of depreciation
3,188
(463)
Effect of change in deferred tax rates
17,795
(36,598)
Taxation charge/(credit) for the year
71,250
(197,250)
MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 19 -
10
Dividends
2023
2022
£
£
Final paid
55,000
115,000
Interim paid
-
0
150,000
55,000
265,000
11
Intangible fixed assets
Software
£
Cost
At 1 April 2022 and 31 March 2023
53,531
Amortisation and impairment
At 1 April 2022
53,122
Amortisation charged for the year
409
At 31 March 2023
53,531
Carrying amount
At 31 March 2023
-
0
At 31 March 2022
409
MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 20 -
12
Tangible fixed assets
Land and buildings Leasehold
Plant and machinery
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 April 2022
202,875
1,267
33,460
103,862
161,959
503,423
Additions
-
0
808
-
0
1,941
-
0
2,749
Disposals
-
0
-
0
-
0
(566)
(58,948)
(59,514)
At 31 March 2023
202,875
2,075
33,460
105,237
103,011
446,658
Depreciation and impairment
At 1 April 2022
157,028
92
24,413
51,382
123,687
356,602
Depreciation charged in the year
20,124
35
6,411
25,246
15,380
67,196
Eliminated in respect of disposals
-
0
-
0
-
0
(31)
(44,861)
(44,892)
At 31 March 2023
177,152
127
30,824
76,597
94,206
378,906
Carrying amount
At 31 March 2023
25,723
1,948
2,636
28,640
8,805
67,752
At 31 March 2022
45,847
1,175
9,047
52,480
38,272
146,821

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2023
2022
£
£
Motor vehicles
8,805
38,272
13
Stocks
2023
2022
£
£
Finished goods and goods for resale
134,727
30,000
MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 21 -
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
244,992
192,481
Gross amounts owed by contract customers
1,820,480
2,126,535
Amounts owed by group undertakings
1,983,806
2,122,949
Other debtors
218
1,075
Prepayments and accrued income
157,529
159,417
4,207,025
4,602,457
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
968,268
779,710
Obligations under finance leases
18
10,713
13,048
Other borrowings
17
113,997
117,748
Trade creditors
1,469,279
1,609,492
Taxation and social security
681,541
972,891
Other creditors
44,171
149,788
Accruals and deferred income
271,297
386,709
3,559,266
4,029,386
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
18
-
0
10,802
Other borrowings
17
230,293
344,290
230,293
355,092
17
Loans and overdrafts
2023
2022
£
£
Bank overdrafts
968,268
779,710
Other loans
344,290
462,038
1,312,558
1,241,748
Payable within one year
1,082,265
897,458
Payable after one year
230,293
344,290
MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
17
Loans and overdrafts
(Continued)
- 22 -

The bank overdraft is secured by a fixed and floating charge over the companies assets. Other borrowings, £230,293 included in creditors due > 1 year and £113,997 in creditors due < 1 year, are secured by a guarantee from the Directors.

18
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
10,713
13,048
In two to five years
-
0
10,802
10,713
23,850

Finance lease payments represent rentals payable by the company for certain motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3-5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

19
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
8,200
23,500
Tax losses
(83,500)
(170,000)
Short term timing differences
(5,700)
(5,750)
(81,000)
(152,250)
2023
Movements in the year:
£
Asset at 1 April 2022
(152,250)
Charge to profit or loss
71,250
Asset at 31 March 2023
(81,000)
MWAY COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
72,861
134,761

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
22
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
44,280
92,603
Between two and five years
5,667
49,947
49,947
142,550
23
Related party transactions
Transactions with related parties

As the company is a wholly owned subsidiary of Notul Limited, the company has taken advantage of the exemption allowed with Section 33 of FRS 102 and has not disclosed transactions or balances with the holding company or fellow wholly owned subsidiary undertakings.

Other information

In the year, sales of £4,529 (2022: £nil) were made to Black Plant & Vehicle Hire Limited, a company which is 90% owned by S Crawford and L Day. A debtor balance remained outstanding at the year end of £4,529 (2022: £nil) which is included in trade debtors.

 

24
Ultimate controlling party

Mway Communications Limited is a wholly owned subsidiary of Mway Services Limited. The ultimate parent company is Notul Limited, a company incorporated in England & Wales. Notul Limited prepares group accounts in which Mway Communications Ltd is consolidated. These acounts are available from Companies House.

 

At the year end the ultimate controlling party was Mr L Day by virtue of a 60% shareholding in Notul Limited.

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