Caseware UK (AP4) 2022.0.179 2022.0.179 2022-12-312022-12-312022-01-0138falsetruetruetruetruetruefalseNo description of principal activity48true SC394757 2022-01-01 2022-12-31 SC394757 2021-01-01 2021-12-31 SC394757 2022-12-31 SC394757 2021-12-31 SC394757 2021-01-01 SC394757 2 2022-01-01 2022-12-31 SC394757 2 2021-01-01 2021-12-31 SC394757 d:Director1 2022-01-01 2022-12-31 SC394757 d:Director3 2022-01-01 2022-12-31 SC394757 d:Director5 2022-01-01 2022-12-31 SC394757 d:Director5 2022-12-31 SC394757 d:Director6 2022-01-01 2022-12-31 SC394757 d:Director6 2022-12-31 SC394757 d:Director7 2022-01-01 2022-12-31 SC394757 d:Director7 2022-12-31 SC394757 d:RegisteredOffice 2022-01-01 2022-12-31 SC394757 e:MotorVehicles 2022-01-01 2022-12-31 SC394757 e:MotorVehicles 2022-12-31 SC394757 e:MotorVehicles 2021-12-31 SC394757 e:CurrentFinancialInstruments 2022-12-31 SC394757 e:CurrentFinancialInstruments 2021-12-31 SC394757 e:CurrentFinancialInstruments e:WithinOneYear 2022-12-31 SC394757 e:CurrentFinancialInstruments e:WithinOneYear 2021-12-31 SC394757 e:ReportableOperatingSegment1 2022-01-01 2022-12-31 SC394757 e:ReportableOperatingSegment1 2021-01-01 2021-12-31 SC394757 e:ReportableOperatingSegment2 2022-01-01 2022-12-31 SC394757 e:ReportableOperatingSegment2 2021-01-01 2021-12-31 SC394757 e:ReportableOperatingSegment3 2022-01-01 2022-12-31 SC394757 e:ReportableOperatingSegment3 2021-01-01 2021-12-31 SC394757 e:UKTax 2022-01-01 2022-12-31 SC394757 e:UKTax 2021-01-01 2021-12-31 SC394757 e:ShareCapital 2022-01-01 2022-12-31 SC394757 e:ShareCapital 2022-12-31 SC394757 e:ShareCapital 2021-01-01 2021-12-31 SC394757 e:ShareCapital 2021-12-31 SC394757 e:ShareCapital 2021-01-01 SC394757 e:RetainedEarningsAccumulatedLosses 2022-01-01 2022-12-31 SC394757 e:RetainedEarningsAccumulatedLosses 2022-12-31 SC394757 e:RetainedEarningsAccumulatedLosses 2 2022-01-01 2022-12-31 SC394757 e:RetainedEarningsAccumulatedLosses 2021-01-01 2021-12-31 SC394757 e:RetainedEarningsAccumulatedLosses 2021-12-31 SC394757 e:RetainedEarningsAccumulatedLosses 2021-01-01 SC394757 e:RetainedEarningsAccumulatedLosses 2 2021-01-01 2021-12-31 SC394757 d:OrdinaryShareClass1 2022-01-01 2022-12-31 SC394757 d:OrdinaryShareClass1 2022-12-31 SC394757 d:OrdinaryShareClass1 2021-12-31 SC394757 d:FRS102 2022-01-01 2022-12-31 SC394757 d:Audited 2022-01-01 2022-12-31 SC394757 d:FullAccounts 2022-01-01 2022-12-31 SC394757 d:PrivateLimitedCompanyLtd 2022-01-01 2022-12-31 xbrli:shares iso4217:GBP xbrli:pure
Company registration number: SC394757







ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2022


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED






































img51c7.png                        

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
COMPANY INFORMATION


Directors
Mr C J Russell 
Mr R E Burke 
Mr A C Ashton (appointed 27 April 2023)




Registered number
SC394757



Registered office
Lumina Building
40 Ainslie Road

Hillington Park

Glasgow

G52 4RU




Trading Address
68 Queens Road

Aberdeen

Aberdeenshire

AB15 4YE






Auditors
Menzies LLP
Chartered Accountants & Statutory Auditor

Lynton House

7-12 Tavistock Square

London

WC1H 9LT





 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 



CONTENTS



Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditors' report
5 - 8
Statement of comprehensive income
9
Statement of financial position
10
Statement of changes in equity
11
Notes to the financial statements
12 - 19

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

Business review
 
The Company has again made significant progress with substantial increases in sales, EBITDA (profit before interest, tax, depreciation and amortisation) and cash generation. The Company sales revenue track record of sustained growth continued with this financial year recording an increase of +12.6% to £14.5m.  The revenue mix for the year reflects the continued push into the IT managed services, Complex Networking and Cyber Security markets, with growth supported by expansion into more complex Collaboration solutions in addition to existing and long standing Collaboraiton offerings.
With a continued focus on recurring revenue acceleration, the Company has delivered above target recurring revenue levels of 89.0%.  This has been achieved in addition to adding more highly technical consultative capability and professional service offerings into the solution portfolio.
Gross profit margins remained stable at 50.7% (2021: 49.9%) as existing contracts were renewed and extended, tracking general industry trends. 
The overhead structure continues to benefit from synergies from previous acquisitions. Integration intensity has been exceptionally high in the year as the complex mix of solutions offerings is bedded into a unified organisation with common operational applications and purpose.  The Company has invested heavily in new customer experience, sales and marketing and employee experience platforms in the year, all aimed at creating an enhanced end user and employee experience, whilst developing the internal platforms for scalability.
The Company acheived EBITDA of £4.4m.

Subsequent events
 
The "Arrow Group", to which the Company is a part of, is well funded and resourced to continue its growth strategy. The Directors have reviewed detailed business forecasts and scenarios, including for cash flow and borrowing facility headroom for the forthcoming years and have concluded there are no material going concern risks. This review included a worst case forecast and the directors are confident that the business will continue to trade profitably and generate sufficient cash to cover all eventualities.  

Principal risks and uncertainties
 
The key business risks and uncertainties affecting the Company have the potential to be impacted in the longer-term by trends in other markets and the wider economic environment. In order to mitigate the risk of a downturn in one market having a significant impact on the Company, management try to ensure that all of the trading activities in the Company have market diversification where possible. The Company’s customer base is highly diversified across a wide range of sectors, both private and public. Whilst the customer base is predominantly located in the UK an element of the supply chain is globally located and therefore presents procurement risks for timeliness of delivery. Such risks are proactively managed and minimized where at all possible.
Pricing continues to be a risk to the Company, both in terms of regulatory changes and competition. This risk is mitigated by offering new services that offer additional value and by cress selling products supplied via the various acquisitions. The growth strategies provide greater scale and therefore buying economy opportunities

Key performance indicators
 
The Company’s main key performance indicator is earnings before interest, tax, depreciation, and amortisation (EBITDA). The Company achieved an EBITDA of £4.4m. 

Page 1

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 



STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Financial instruments
 
The principal financial instruments of the Company comprise of bank balances, trade debtors and trade creditors.
Working capital requirements are met principally out of trade debtors and trade creditors which arise directly from the Company’s normal operations. The Company’s banking facilities are utilised to fund acquisitions and will be repaid out of operating cash flow. The Company’s finance facilities are held in sterling and the Company does not enter any hedging arrangements.
Trade debtors are managed in respect of credit and there is a policy to minimise any risk by assessing new customer’s credit risk and monitoring existing customer’s creditworthiness. At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.
Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due. Cash flow is closely monitored as part of day to day control procedures and the directors review cash flow projections on a weekly basis and ensure appropriate facilities are available to be drawn upon, as necessary.


This report was approved by the board and signed on its behalf.



Mr R E Burke
Director

Date: 10 October 2023
Page 2

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

The Directors present their report and the financial statements for the year ended 31 December 2022.

Directors' responsibilities statement

The Directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
 
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 In preparing these financial statements, the Directors are required to:


select suitable accounting policies for the Company's financial statements and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £4,330,201 (2021 -£3,904,458).

The directors have not recommended payment of dividends.

Directors

The Directors who served during the year were:

Mr C J Russell 
Mr R E Burke 
Mr D A Lee (resigned 30 April 2023)
Mr S J Wort (resigned 31 March 2023)

Future developments

The directors are planning on further acquisitions in 2023 alongside integration of subsidiaries within the group so as to simplify the corporate structure via corporate hiving-up of the assets and liabilities in advance of commencing strike-off proceedings for those legal entities.

Matters covered in the Strategic Report

The Company has chosen in accordance with Section 414C(II) of the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 to set out within the Company’s Strategic Report, the information required by Schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008. This includes information that would have been included in the business review, details of the principal risks and uncertainties and subsequent events.

Page 3

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Disclosure of information to auditors

Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Auditors

The auditorsMenzies LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.
 





Mr A C Ashton
Director

Date: 10 October 2023
Page 4

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 

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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED

Opinion


We have audited the financial statements of Arrow Business Communications (Scotland) Limited (the 'Company') for the year ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 December 2022 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


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


Emphasis of matter - Financial statements prepared on a basis other than going concern


We draw attention to note 2.3 in the financial statements, which indicates that the Company ceased trade after the end of the year and hived the trade and assets up into a group company. As stated in note 2.3, these events or conditions, along with the other matters as set forth in note 2.3, indicate that a basis other than going concern is suitable for the preparation of the Company's financial statements. No material adjustments arose as a result of ceasing to apply the going concern
basis.  Our opinion is not modified in respect of this matter.


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 Auditors' Report thereon.  The Directors are responsible for the other information contained within the Annual Report.  Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.  If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.  If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Page 5

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ARROW BUSINESS COMMUNICATIONS (SCOTLAND) 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 the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.


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


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 3, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.


Page 6

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED (CONTINUED)

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


Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most significant: 

The Companies Act 2006;
Financial Reporting Standard 102;
UK employment legislation;
UK health and safety legislation;
General Data Protection Regulations; 
UK tax legislation; and,
OFCOM

We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. 

We understood how the Company is complying with those legal and regulatory frameworks by, making inquiries to management, those responsible for legal and compliance procedures and the company secretary.

The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any issues in this area

We assessed the susceptibility of the Company financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:

Identifying and assessing the measures management has in place to prevent and detect fraud;
Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process; 
Challenging assumptions and judgments made by management in its significant accounting estimates; and 
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.

As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:

The use of management override of controls to manipulate results, or to cause the Group to enter into transactions not in its best interests; or
Posting of unusual journals and complex transactions.


Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
Page 7

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED (CONTINUED)



A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.





Robin Hopkins FCA (Senior statutory auditor)
for and on behalf of
Menzies LLP
Chartered Accountants
Statutory Auditor
Lynton House
7-12 Tavistock Square
London
WC1H 9LT

20 October 2023
Page 8

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022

2022
2021
£
£

  

Turnover
 3 
14,464,631
12,843,023

Cost of sales
  
(7,128,003)
(6,438,528)

Gross profit
  
7,336,628
6,404,495

Administrative expenses
  
(2,915,015)
(2,320,906)

Operating profit
 4 
4,421,613
4,083,589

Tax on profit
 7 
(91,412)
(179,131)

Profit for the financial year
  
4,330,201
3,904,458

There was no other comprehensive income for 2022 (2021:£NIL).

The notes on pages 12 to 19 form part of these financial statements.
Page 9

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
REGISTERED NUMBER:SC394757



STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022

2022
2021
Note
£
£

  

Current assets
  

Stocks
 9 
54,152
40,498

Debtors: amounts falling due within one year
 10 
22,565,804
18,774,864

Cash at bank and in hand
 11 
582,829
151,509

  
23,202,785
18,966,871

Creditors: amounts falling due within one year
 12 
(1,683,132)
(1,878,420)

Net current assets
  
 
 
21,519,653
 
 
17,088,451

Total assets less current liabilities
  
21,519,653
17,088,451

  

Net assets
  
21,519,653
17,088,451


Capital and reserves
  

Called up share capital 
 13 
100
100

Profit And Loss Account
 14 
21,519,553
17,088,351

  
21,519,653
17,088,451


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




Mr A C Ashton
Director

Date: 10 October 2023

The notes on pages 12 to 19 form part of these financial statements.
Page 10

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 



STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022


Called up share capital
Profit and loss account
Total equity

£
£
£


At 1 January 2021
100
12,057,816
12,057,916



Profit for the year
-
3,904,458
3,904,458
Total comprehensive income for the year
-
3,904,458
3,904,458

Capital contribution
-
1,126,077
1,126,077


Total transactions with owners
-
1,126,077
1,126,077



At 1 January 2022
100
17,088,351
17,088,451



Profit for the year
-
4,330,201
4,330,201
Total comprehensive income for the year
-
4,330,201
4,330,201


Contributions by and distributions to owners

Capital contribution
-
101,001
101,001


At 31 December 2022
100
21,519,553
21,519,653


Page 11

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

1.


General information

Arrow Business Communications (Scotland) Limited is a private company, limited by shares, incorporated in the England and Wales under the Companies Act 2006. The address of the registered office is given on the Company Information page, which is also the principal trading address. The principal activities of the company and the nature of its operations are set out in the Strategic Report.
The financial statements are prepared in Pound Sterling, which is the functional currency of the entity.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies. The Directors do not consider there to be any significant accounting estimates or judgements.

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Arrow Communications Holdings Limited as at 31 December 2022 and these financial statements may be obtained from Companies House.

 
2.3

Going concern

The directors ceased the trade within the Company after the end of 2022 and hived its trade and assets/liabilities into another group company.  Due to this, it would not be suitable for the Company to prepare its financial statements on a going concern basis. There have not been any adjustments in the financial statements in the year to 31 December 2022 from this change in accounting policy.

Page 12

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.4

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Revenue from one off sale of goods is recognised when the risks and rewards of ownership have been passed to the customer, being once they have been delivered.
Where revenue from services is part of a fixed length contract, the revenue is spread evenly across the length of the contract, along with any associated costs which have been incurred in securing the contract.

 
2.5

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

The estimated useful lives range as follows:

Motor vehicles
-
3
years

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.6

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. 

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.7

Financial instruments

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

Page 13

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.8

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.9

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.

 
2.10

Taxation

Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.


3.


Turnover

An analysis of turnover by class of business is as follows:


2022
2021
£
£

Collaboration
7,764,350
7,867,038

Connectivity
3,293,164
2,972,219

Cloud & Infrastructure
3,407,117
2,003,766

14,464,631
12,843,023


All turnover arose within the United Kingdom.

Page 14

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

4.


Operating profit

The operating profit is stated after charging:

2022
2021
£
£

Other operating lease rentals
67,361
64,739


5.


Auditors' remuneration

2022
2021
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
14,750
12,850


6.


Employees

2022
2021
£
£

Wages and salaries
2,160,249
1,782,453

Social security costs
233,627
177,479

Cost of defined contribution scheme
71,734
58,474

2,465,610
2,018,406


The average monthly number of employees, including the Directors, during the year was as follows:


        2022
        2021
            No.
            No.







Engineering, Technical & Operations
16
14



Finance & Administration
1
1



Sales, Marketing and Customer Service
31
23

48
38

Page 15

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

7.


Taxation


2022
2021
£
£

Corporation tax


Current tax on profits for the year
172,727
374,034

Adjustments in respect of previous periods
(81,315)
(189,245)


91,412
184,789


Total current tax
91,412
184,789

Deferred tax


Origination and reversal of timing differences
-
(5,658)

Total deferred tax
-
(5,658)


Taxation on profit on ordinary activities
91,412
179,131

Factors affecting tax charge for the year

The tax assessed for the year is lower than (2021 -lower than) the standard rate of corporation tax in the UK of 19% (2021 -19%). The differences are explained below:

2022
2021
£
£


Profit on ordinary activities before tax
4,421,613
4,083,589


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 -19%)
840,106
775,882

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
1,100
545

Capital allowances for year in excess of depreciation
231
(5,759)

Adjustments to tax charge in respect of prior periods
(81,315)
(189,245)

Group relief
(668,710)
(402,292)

Total tax charge for the year
91,412
179,131


Factors that may affect future tax charges

Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2021 on 10 June 2021. These include increment of the rate of corporation tax to 25 percent from 19 percent from April 2023.

Page 16

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

8.


Tangible fixed assets





Motor vehicles

£



Cost or valuation


At 1 January 2022
5,311



At 31 December 2022

5,311



Depreciation


At 1 January 2022
5,311



At 31 December 2022

5,311



Net book value



At 31 December 2022
-



At 31 December 2021
-


9.


Stocks

2022
2021
£
£

Finished goods and goods for resale
54,152
40,498

54,152
40,498


The difference between purchase price or production cost of stocks and their replacement cost is not material.


10.


Debtors

2022
2021
£
£


Trade debtors
276,180
295,221

Amounts owed by group undertakings
21,213,649
17,253,710

Prepayments and accrued income
1,075,975
1,225,933

22,565,804
18,774,864


Page 17

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

11.


Cash and cash equivalents

2022
2021
£
£

Cash at bank and in hand
582,829
151,509

582,829
151,509



12.


Creditors: Amounts falling due within one year

2022
2021
£
£

Trade creditors
442,939
393,331

Amounts owed to group undertakings
104
104

Corporation tax
58,742
127,030

Other taxation and social security
487,385
478,356

Other creditors
3,040
3,040

Accruals and deferred income
690,922
876,559

1,683,132
1,878,420



13.


Share capital

2022
2021
£
£
Allotted, called up and fully paid



100 (2021 -100) Ordinary shares of £1.00 each
100
100



14.


Reserves

Profit and loss account

This reserve records retained earnings and accumulated losses.


15.Financial commitments

Loans included within entities of the group that the Company is a part are secured by fixed and floating charges over the assets of the Company and the group.  At the year end the loans amounted to £186,225,036 (2021: £176,242,950).

Page 18

 


ARROW BUSINESS COMMUNICATIONS (SCOTLAND) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

16.


Controlling party

The Company's immediate parent company is Arrow Business Communications Limited.
The ultimate parent entity is Arrow Communications Holdings Limited, to which consolidated accounts include this company. The consolidated accounts are available from Companies House for the year ended 31 December 2022.
The ultimate controlling party of Arrow Communications Holdings Limited is MML Capital Europe VII Equity I S.A., a company based in Luxembourg. MML Capital Europe VII Equity I S.A is a 100% subsidiary of MML Partnership Capital VII SCSp acting by its general partner MML Partnership Capital VII GP S.a.r.l.

 
Page 19