Company registration number 07584959 (England and Wales)
QUAI ADMINISTRATION SERVICES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
QUAI ADMINISTRATION SERVICES LIMITED
COMPANY INFORMATION
Directors
A E Webb
G Beschizza
R M Graham
I Willis
M Power
(Appointed 4 April 2023)
K Stimson
(Appointed 1 May 2023)
Company number
07584959
Registered office
16 Tesla Court
Innovation Way
Lynch Wood
Peterborough
PE2 6FL
Auditor
Price Bailey LLP
36 Tyndall Court
Commerce Road
Lynchwood
Peterborough
PE2 6LR
Business address
16 Tesla Court
Innovation Way
Lynch Wood
Peterborough
PE2 6FL
QUAI ADMINISTRATION SERVICES LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Profit and loss account
9
Group statement of comprehensive income
10
Group balance sheet
11
Company balance sheet
12
Group statement of changes in equity
13
Company statement of changes in equity
14
Group statement of cash flows
15
Company statement of cash flows
16
Notes to the financial statements
17 - 34
QUAI ADMINISTRATION SERVICES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 1 -

The directors present the strategic report for the year ended 31 October 2022.

Fair review of the business

The results for the year ended 31 October 2022 are set out in the profit and loss account on page 8.

Quai Administration and it's Subsidiaries ("the group") continued to make good progress during the year with ongoing regular administration fees increasing to £1.8m. Assets under Administration (“AUA") increased to £640m which together with a strong pipeline of new business provides a solid platform for further growth in year on year fee income.

The group continues to make significant investment in developing its proprietary technology platform extending the range of products and services it supports and automating process flows whilst making integration with customers and their investors simpler, more cost effective and secure. At 31 October 2022 almost 188,000 investor accounts were supported by the platform.

Principal risks and uncertainties

The board and senior executive management team regularly reviews risks and uncertainties facing the business and maintains a risk register outlining the nature of the analysed risk, categorised by impact (inherent risk) and in each case setting out risk mitigation activities and residual risk.

The principal risks faced by the business are considered below.

Liquidity Risk – there is a risk that cashflow is insufficient to meet ongoing overheads. The board review cash forecasts on a monthly basis and considers action that might need to be taken in order to improve cash flow and make available additional working capital. The group has been able to raise additional capital when necessary and as revenue grows (underpinned by a stable cost base) and new clients from an already strong pipeline launch their products on the platform, the Board are confident that when necessary further capital could be raised

Regulatory Risk – the group operates in a highly regulated environment, providing services to customers who undertake activities as regulated financial service businesses. There is risk associated with the activities undertaken in the provision of savings and investment products, in the governance of the products and documentation supporting the products. The outsourced administration services involve provision of services designed to support customers’ ability to comply with FCA rules. To mitigate this risk the group employs suitably qualified senior managers with wide-ranging financial sector expertise in other regulated businesses. In addition third party systems and third party consulting expertise is utilised as and when required. Regulatory change is routinely monitored and planned for where it impacts the business.

Operational Risk – This risk arises from processes undertaken within and transactions flowing through the firms’ technology platform. The risks associated with technological and operational process failure is carefully reviewed by the senior management team and where necessary discussed with the board. The group continues to invest in improving its internal controls around data processing; ensuring that issues when they arise are logged, analysed and remedial action taken.

Development and performance

The parent company result for the year ended 31 October 2022 includes revenue of £1.88m and administrative expenses of £2.32m leading to a reported operating loss for the year of £697k. Cash resources were strengthened in the year as a result of raising £1.13m of additional capital (a combination of debt and equity). The subsidiary result for the subsidiary includes administrative expenses of £11k leading to a reported operating loss for the year of £11k.

Key performance indicators

The key financial performance indicators used by the business are revenue, gross margin, forecast cash resources and EBITDA. These are complemented by KPI’s associated with AUA growth, number of investor accounts supported and target operational performance linked to customer Service Level Agreements. Turnover increased by £146k from the previous financial year and Operating Loss increased by £282k as the Company continues to develop its business post Covid-19. Other KPIs  have increased within the financial year, customer numbers have grown by 40k and customer AUA by £40m.

QUAI ADMINISTRATION SERVICES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 2 -

Research & development activities

The group has several innovative projects underway this year which will again be recognised for Research & Development specifically around functionality for customers to take income from their pension schemes, alongside a new transactional cash movement based app.

 

Future developments

The group continues to develop new products in the financial space and will continue to improve these products with different features and efficiency projects to ensure that its clients get best of breed services and system efficiencies to service the underlying customer. Further IT development will add simpler integration for clients as well as providing more scalability as the company continues to grow. Further partnerships will also continue to help grow the business.

 

Important events occurring since the year end

The group has undergone 2 further rounds of investment since the year end, raising additional working capital in March 23 totalling £790,000 and £665,000 between August 2023 and October 2023 in the form of both equity investment and loan funding. The directors have also been engaged in positive ongoing correspondence with both funders to secure loan extensions in respect of the two loans which are repayable during 2024.

 

Streamlined Energy and Carbon Reporting

As an online and paperless group with a workforce of 36 employees and a small office footprint, the group falls under the definition of a low energy user and is therefore exempt from the reporting requirement under SECR.

QUAI ADMINISTRATION SERVICES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 3 -

Section 172 (1) Statement and statement of engagement with other stakeholders

 

The directors provide the following statement pursuant to the Companies Act 2006 (as amended by Companies (Miscellaneous Reporting) Regulations 2018) (the “Act”) to describe how they have acted in accordance with their duty under Section 172 of the Act (“Section 172”) to promote the success of the Company for the benefit of its member(s) as a whole, and in so doing, how they have had regard to those factors set out in Section 172, (1) (a) to (f) during the financial year.

 

Furthermore, in compliance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended by the Companies (Miscellaneous Reporting) Regulations 2018), the directors provide the statement which follows to describe how they have engaged with employees, and how they have had regard to employee interests and the need to foster the Company’s business relationships with suppliers, customers and others, and in each case, the effect of that regard, including on the principal decisions taken by the Company during the financial year

 

Section 172 requires a director to have regard to the following matters, among others, when discharging their duty;

 

 

The board directors of the Company (“the Board”) is collectively responsible for managing the affairs of the Company to achieve its long-term prosperity by making important decisions, monitoring the underlying performance of the Company, as well as being a means for establishing ethical standards. Understanding the interests of key stakeholders is an important part of the Company’s strategy and helps inform the directors’ decision making throughout the year.

 

Board meetings are held monthly where the directors will consider the Company’s principal activities and make decisions. Board and Ad-hoc Meetings are scheduled to provide adequate time for consideration and discussion by the directors of the interests of stakeholders, and for the directors to seek further information from management, as required. As a part of those meetings, the directors receive information in a range of different formats to assist them in discharging their responsibilities under Section 172 when making relevant decisions. This information may include, among other things, reports and presentations on financial and operational performance, business updates, budget planning and forecasts, HR matters, as well as specific areas of engagement, such as employee opinion surveys. When making decisions, the Board seeks to understand the impact on each of its stakeholders, including the likely consequences of a decision in the long term, whilst acknowledging that a decision will not necessarily be favourable for all stakeholders, as there may be competing interests between them.

 

The Company follows a range of policies in place to protect employees and provide a safe working environment, to ensure compliance with all regulatory requirements and adherence to the highest professional and ethical standards in dealing with customers, suppliers and colleagues. In doing so, and by balancing the interests of the Company’s stakeholders when making decisions, the Board seeks to maintain a reputation for high standards of business conduct. The directors seek to engage directly with stakeholders wherever possible on certain issues.

On behalf of the board

A E Webb
Director
31 October 2023
QUAI ADMINISTRATION SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 4 -

The directors present their annual report and financial statements for the year ended 31 October 2022.

Principal activities

The Company’s principal activities are the provision of outsourced administration of investment products, including Pensions, Individual Savings Accounts (“ISA’s”), Lifetime ISA’s and General Investment Accounts. The range of activities has been extended during the year to include provision of tax wrapped investment and savings products where these are required by the Group’s customers.

Results and dividends

The results for the year are set out on page 9.

No ordinary dividends were paid. 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:

A E Webb
G Beschizza
R M Graham
P J Dixon
(Resigned 27 April 2023)
I Willis
M Power
(Appointed 4 April 2023)
K Stimson
(Appointed 1 May 2023)
Auditor

Price Bailey LLP were appointed auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
A E Webb
Director
31 October 2023
QUAI ADMINISTRATION SERVICES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 5 -

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 group and company, and of the profit or loss of the group 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 group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

QUAI ADMINISTRATION SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF QUAI ADMINISTRATION SERVICES LIMITED
- 6 -
Opinion

We have audited the financial statements of Quai Administration Services Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2022 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows 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 group and parent 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 your attention to note 1.4 to the financial statements which indicates a material uncertainty which may cast doubt over the group’s ability to continue as a going concern. 

 

The financial statements do not include the adjustments that would result if the group were unable to continue as a going concern.

 

At the balance sheet date, the group is in a net liability position and day to day working capital requirements are met through existing cash and banking facilities, bank loans and investor financing.

 

The board have assessed the adequacy of the financial facilities available to the group using management information, including a recent review of forecasts which extend beyond one year from the date of approval of these financial statements.

 

The funding requirement for the group is uncertain and depends upon significant uncertainties relating to:

 

This creates a material uncertainty which may cast doubt over the group’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.

QUAI ADMINISTRATION SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF QUAI ADMINISTRATION SERVICES LIMITED
- 7 -

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:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their 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 parent 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 parent 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.

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.

QUAI ADMINISTRATION SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF QUAI ADMINISTRATION SERVICES LIMITED
- 8 -

We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations. The primary responsibility for the prevention and detection of fraud rests with those charged with the governance of the company and management.

 

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.

 

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.

Kerry Hilliard ACA FCCA CTA (Senior Statutory Auditor)
For and on behalf of Price Bailey LLP
31 October 2023
Chartered Accountants
Statutory Auditor
36 Tyndall Court
Commerce Road
Lynchwood
Peterborough
PE2 6LR
QUAI ADMINISTRATION SERVICES LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 9 -
2022
2021
Notes
£
£
Turnover
3
1,882,427
1,735,951
Cost of sales
(569,686)
(390,293)
Gross profit
1,312,741
1,345,658
Administrative expenses
(2,331,962)
(2,082,506)
Operating loss
4
(1,019,221)
(736,848)
Interest receivable and similar income
8
32,712
3,326
Interest payable and similar expenses
9
(68,227)
(28,082)
Loss before taxation
(1,054,736)
(761,604)
Tax on loss
10
179,055
216,903
Loss for the financial year
23
(875,681)
(544,701)
Loss for the financial year is all attributable to the owners of the parent company.
QUAI ADMINISTRATION SERVICES LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2022
- 10 -
2022
2021
£
£
Loss for the year
(875,681)
(544,701)
Other comprehensive income
-
-
Total comprehensive income for the year
(875,681)
(544,701)
Total comprehensive income for the year is all attributable to the owners of the parent company.
QUAI ADMINISTRATION SERVICES LIMITED
GROUP BALANCE SHEET
AS AT 31 OCTOBER 2022
31 October 2022
- 11 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
11
25,630
9,366
Current assets
Debtors
14
465,426
322,779
Cash at bank and in hand
153,019
105,472
618,445
428,251
Creditors: amounts falling due within one year
15
(847,115)
(957,401)
Net current liabilities
(228,670)
(529,150)
Total assets less current liabilities
(203,040)
(519,784)
Creditors: amounts falling due after more than one year
16
(990,294)
(195,370)
Net liabilities
(1,193,334)
(715,154)
Capital and reserves
Called up share capital
21
8,247
7,849
Share premium account
22
10,810,523
10,413,420
Profit and loss reserves
23
(12,012,104)
(11,136,423)
Total equity
(1,193,334)
(715,154)
The financial statements were approved by the board of directors and authorised for issue on 31 October 2023 and are signed on its behalf by:
31 October 2023
A E Webb
Director
QUAI ADMINISTRATION SERVICES LIMITED
COMPANY BALANCE SHEET
AS AT 31 OCTOBER 2022
31 October 2022
- 12 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
11
25,630
9,366
Investments
12
220,002
180,002
245,632
189,368
Current assets
Debtors
14
464,333
322,779
Cash at bank and in hand
50,227
35,471
514,560
358,250
Creditors: amounts falling due within one year
15
(912,681)
(1,027,402)
Net current liabilities
(398,121)
(669,152)
Total assets less current liabilities
(152,489)
(479,784)
Creditors: amounts falling due after more than one year
16
(990,294)
(195,370)
Net liabilities
(1,142,783)
(675,154)
Capital and reserves
Called up share capital
21
8,247
7,849
Share premium account
22
10,810,523
10,413,420
Profit and loss reserves
23
(11,961,553)
(11,096,423)
Total equity
(1,142,783)
(675,154)

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £865,129 (2021 - £504,701 loss).

The financial statements were approved by the board of directors and authorised for issue on 31 October 2023 and are signed on its behalf by:
31 October 2023
A E Webb
Director
Company Registration No. 07584959
QUAI ADMINISTRATION SERVICES LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2022
- 13 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 November 2020
7,129
9,694,140
(10,591,722)
(890,453)
Year ended 31 October 2021:
Loss and total comprehensive income for the year
-
-
(544,701)
(544,701)
Issue of share capital
21
720
719,280
-
720,000
Balance at 31 October 2021
7,849
10,413,420
(11,136,423)
(715,154)
Year ended 31 October 2022:
Loss and total comprehensive income for the year
-
-
(875,681)
(875,681)
Issue of share capital
21
398
397,103
-
397,501
Balance at 31 October 2022
8,247
10,810,523
(12,012,104)
(1,193,334)
QUAI ADMINISTRATION SERVICES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2022
- 14 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 November 2020
7,129
9,694,140
(10,591,722)
(890,453)
Year ended 31 October 2021:
Loss and total comprehensive income for the year
-
-
(504,701)
(504,701)
Issue of share capital
21
720
719,280
-
720,000
Balance at 31 October 2021
7,849
10,413,420
(11,096,423)
(675,154)
Year ended 31 October 2022:
Loss and total comprehensive income for the year
-
-
(865,130)
(865,130)
Issue of share capital
21
398
397,103
-
397,501
Balance at 31 October 2022
8,247
10,810,523
(11,961,553)
(1,142,783)
QUAI ADMINISTRATION SERVICES LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2022
- 15 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
27
(1,213,759)
(842,046)
Interest paid
(17,737)
(28,084)
Income taxes refunded
128,565
216,903
Net cash outflow from operating activities
(1,102,931)
(653,227)
Investing activities
Purchase of tangible fixed assets
(25,495)
(6,380)
Interest received
32,712
3,326
Net cash generated from/(used in) investing activities
7,217
(3,054)
Financing activities
Proceeds from issue of shares
397,501
720,000
Issue of convertible loans
750,000
-
Repayment of bank loans
(4,240)
-
Net cash generated from financing activities
1,143,261
720,000
Net increase in cash and cash equivalents
47,547
63,719
Cash and cash equivalents at beginning of year
105,472
41,753
Cash and cash equivalents at end of year
153,019
105,472
QUAI ADMINISTRATION SERVICES LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2022
- 16 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
28
(1,257,040)
(732,046)
Interest paid
(17,737)
(28,084)
Income taxes refunded
179,055
216,903
Net cash outflow from operating activities
(1,095,722)
(543,227)
Investing activities
Purchase of tangible fixed assets
(25,495)
(6,380)
Investment in subsidiaries
(40,000)
(180,000)
Interest received
32,712
3,326
Net cash used in investing activities
(32,783)
(183,054)
Financing activities
Proceeds from issue of shares
397,501
720,000
Issue of convertible loans
750,000
-
Repayment of bank loans
(4,240)
-
Net cash generated from financing activities
1,143,261
720,000
Net increase/(decrease) in cash and cash equivalents
14,756
(6,281)
Cash and cash equivalents at beginning of year
35,471
41,752
Cash and cash equivalents at end of year
50,227
35,471
QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
- 17 -
1
Accounting policies
Company information

Quai Administration Services Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 16 Tesla Court, Innovation Way, Lynch Wood, Peterborough, PE2 6LF.

 

The group consists of Quai Administration Services Ltd and all of its subsidiaries.

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.

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Quai Administration Services Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 October 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 18 -

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

 

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

 

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

1.4
Going concern

The directors continue to assess going concern and the company's ability to service working capital caused by both historical and current trading losses and the cashflow impact thereon. However the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and on that basis the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

 

As at 31 October 2022 net current liabilities have reduced to £229k (2021: £529k).

 

Since the year end the directors have successfully raised additional working capital in March 2023 of £790,000 in respect of additional loans and equity funding and have also raised a further £665,000 between August 2023 and October 2023 to further support the company's working capital requirement.

 

The directors are confident that the trading forecasts for the coming 12 months to October 2024 adequately reflect the good progress made during the year ended 31 October 2022 in terms of ongoing regular administration fees and also Assets under Administration and are regularly updated to reflect the current trading expectations.

 

The forecasts are dependent upon key assumptions around the level of activity and income generated in addition to the minimum entitlements, under existing contracts.

 

As detailed in note 16, the parent undertaking issued secured loan notes in March 2022 which are redeemable in March 2024.  At the date of approval of these financial statements, the noteholder has indicated that they remain supportive of the company and has proposed terms for an extension of the loan notes for a further two years from 23 March 2024, although formal agreement to do so has not yet been entered into by the company. Until a contractual extension is agreed, the offer is not legally binding.

 

The funding requirement for the group is uncertain and depends upon significant uncertainties relating to:

 

The board acknowledges the existence of material uncertainties which may cast significant doubt over the group’s ability to continue as a going concern.

 

On the basis of the information available at the current time, the board believes that there is a reasonable expectation that the group will have adequate resources to continue in operational existence for the foreseeable future.  Accordingly they continue to adopt the going concern basis of preparation in the accounts.

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 19 -
1.5
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.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

1.6
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation 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:

Leasehold improvements
Remaining life of lease
Fixtures and fittings
25% of cost
Computers
33% of cost

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 recognised in the profit and loss account.

1.7
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.8
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible 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). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 20 -

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.9
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.10
Financial instruments

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Basic financial assets

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses.

 

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.

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 21 -
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.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal 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 group 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.

1.11
Convertible loan notes

The proceeds received from the issue of the convertible loan notes are allocated between their financial liability and equity components. The financial liability is initially recognised at fair value (being the discounted cash flows using a market rate of interest that would be payable on a similar instrument that does not include an option to convert). The equity component is assigned to the residual amount after deducting this fair value liability from the fair value of the financial instrument as a whole. It is recognised in the ‘Equity reserve’ within shareholders’ equity. More information is provided in note 12.

 

The financial liability is subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the balance sheet. The difference between the interest expense and the coupon payable is added to the carrying amount of the liability in the balance sheet. Issue costs are apportioned between the liability and equity components of the convertible loan notes based upon their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.

 

Upon conversion of the financial liability to shares, the amortised cost carrying value of the liability is derecognised in the balance sheet and an amount equal to this value is recognised within equity. The original equity component recognised at inception is reclassified from equity reserve to share premium. Upon redemption of the financial liability for cash consideration, the consideration is allocated to the amortised cost carrying value of liability and equity components at the date of the redemption. To the extent that the amount of the consideration allocated to the liability differs from the amortised cost carrying amount of the liability, the difference is recognised in the statement of comprehensive income.

1.12
Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

1.13
Taxation

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

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 22 -
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 group’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.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.14
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.15
Retirement benefits

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

1.16
Share-based payments

The company has taken the exemption relating to share-based payments on transition to FRS102 and has not applied FRS102 to equity instruments that were granted before the date of the transition.

 

In the case of options granted after the transition date, fair value is measured by reference to the Black-Scholes pricing model.

1.17
Leases

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 leased asset are consumed.

1.18
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 23 -
1.19

Research and development

Research and development expenditure is written off to the profit and loss account in the year in which it is incurred.

 

Associated tax credit claims are only included in the profit and loss account when they are certain and have been agreed by and received from H M Revenue and Customs.

2
Judgements and key sources of estimation uncertainty

In the application of the group’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.

3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Fees and charges
1,756,727
1,653,432
Set up & IT development fees
122,500
77,917
Other fees
3,200
4,602
1,882,427
1,735,951
2022
2021
£
£
Other revenue
Interest income
32,712
3,326
4
Operating loss
2022
2021
£
£
Operating loss for the year is stated after charging:
Depreciation of owned tangible fixed assets
9,230
6,192
Operating lease charges
42,871
42,622
QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 24 -
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
12,850
15,178
Audit of the financial statements of the company's subsidiaries
6,250
-
19,100
15,178
For other services
Non-audit services
5,082
4,562
6
Employees

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

Group
Company
2022
2021
2022
2021
Number
Number
Number
Number
36
31
36
31

Their aggregate remuneration comprised:

Group
Company
2022
2021
2022
2021
£
£
£
£
Wages and salaries
1,390,091
1,290,091
1,390,091
1,290,091
Social security costs
157,105
140,431
157,105
140,431
Pension costs
94,048
82,543
94,048
82,543
1,641,244
1,513,065
1,641,244
1,513,065
7
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
264,550
252,375
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
152,625
146,833
QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 25 -
8
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
32,712
3,326

Investment income includes the following:

Interest on financial assets not measured at fair value through profit or loss
32,712
3,326
9
Interest payable and similar expenses
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
1,731
-
Interest on convertible loan notes
50,490
-
0
Other interest on financial liabilities
16,006
28,082
68,227
28,082
10
Taxation
2022
2021
£
£
Current tax
Adjustments in respect of prior periods
(179,055)
(216,903)

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

2022
2021
£
£
Loss before taxation
(1,054,736)
(761,604)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(200,400)
(144,705)
Tax effect of expenses that are not deductible in determining taxable profit
22,576
436
Unutilised tax losses carried forward
182,368
144,667
Adjustments in respect of prior years
(179,055)
(216,903)
Permanent capital allowances in excess of depreciation
(6,297)
(1,575)
Depreciation on assets not qualifying for tax allowances
1,753
1,177
Taxation credit
(179,055)
(216,903)

At 31 October 2022 the group had accumulated trading losses totalling £6,588,915 (2021: £6,144,978).

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 26 -
11
Tangible fixed assets
Group
Leasehold improvements
Fixtures and fittings
Computers
Total
£
£
£
£
Cost
At 1 November 2021
7,732
61,380
72,497
141,609
Additions
-
0
5,064
20,431
25,495
At 31 October 2022
7,732
66,444
92,928
167,104
Depreciation and impairment
At 1 November 2021
6,443
59,584
66,216
132,243
Depreciation charged in the year
1,289
1,592
6,350
9,231
At 31 October 2022
7,732
61,176
72,566
141,474
Carrying amount
At 31 October 2022
-
0
5,268
20,362
25,630
At 31 October 2021
1,289
1,795
6,282
9,366
Company
Leasehold improvements
Fixtures and fittings
Computers
Total
£
£
£
£
Cost
At 1 November 2021
7,732
61,380
72,497
141,609
Additions
-
0
5,064
20,431
25,495
At 31 October 2022
7,732
66,444
92,928
167,104
Depreciation and impairment
At 1 November 2021
6,443
59,584
66,216
132,243
Depreciation charged in the year
1,289
1,592
6,350
9,231
At 31 October 2022
7,732
61,176
72,566
141,474
Carrying amount
At 31 October 2022
-
0
5,268
20,362
25,630
At 31 October 2021
1,289
1,795
6,282
9,366
QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 27 -
12
Fixed asset investments
Group
Company
2022
2021
2022
2021
Notes
£
£
£
£
Investments in subsidiaries
13
-
0
-
0
220,002
180,002
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 November 2021
180,002
Additions
40,000
At 31 October 2022
220,002
Carrying amount
At 31 October 2022
220,002
At 31 October 2021
180,002
13
Subsidiaries

Details of the company's subsidiaries at 31 October 2022 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Quai Investment Services Ltd
16 Tesla Court, Peterborough, UK
Ordinary
100.00
Quai Trustees Ltd
16 Tesla Court, Peterborough, UK
Ordinary
100.00
14
Debtors
Group
Company
2022
2021
2022
2021
Amounts falling due within one year:
£
£
£
£
Trade debtors
230,230
253,872
230,230
253,872
Other debtors
30,126
16,950
30,126
16,950
Prepayments and accrued income
205,070
51,957
203,977
51,957
465,426
322,779
464,333
322,779
QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 28 -
15
Creditors: amounts falling due within one year
Group
Company
2022
2021
2022
2021
Notes
£
£
£
£
Bank loans
17
5,956
4,630
5,956
4,630
Trade creditors
197,656
337,008
197,522
337,008
Other taxation and social security
107,925
177,667
107,925
177,667
Other creditors
58,193
141,709
127,893
211,710
Accruals and deferred income
477,385
296,387
473,385
296,387
847,115
957,401
912,681
1,027,402
16
Creditors: amounts falling due after more than one year
Group
Company
2022
2021
2022
2021
Notes
£
£
£
£
Convertible loans
18
750,000
-
0
750,000
-
0
Bank loans and overdrafts
17
39,804
45,370
39,804
45,370
Other creditors
150,000
150,000
150,000
150,000
Accruals and deferred income
50,490
-
0
50,490
-
0
990,294
195,370
990,294
195,370

Bounce back loan

The parent company holds a bounce back loan. This loan is due for repayment by 1 June 2030. Interest is charged at a fixed rate of 2.5% per annum.

 

Convertible loan notes

The 2 year convertible loan notes were issued by the parent company in March 2022. Effective interest accrues on the debt at 10% per annum. The loan is repayable on the second anniversary of the loan note, dated 22 March 2022.

 

The debt is convertible into 75,000 £0.01 ordinary shares before the 10th anniversary of the option agreement, dated 22 March 2022, at the lower price of £13.01 per £0,01 ordinary share or the lowest price paid per share after the date of the agreement. The loan notes are secured by a fixed and floating charge over all the property or undertaking of the company.

 

Further details on the convertible loan notes are in note 18.

 

Loan notes

The 5 year loan notes were issued by the parent company in July 2019. Interest accrues on the principal amount of £150,000 at 10% per annum, payable quarterly in arrears.

Amounts included above which fall due after five years are as follows:
Payable by instalments
14,760
21,212
14,760
21,212
QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 29 -
17
Loans and overdrafts
Group
Company
2022
2021
2022
2021
£
£
£
£
Bank loans
45,760
50,000
45,760
50,000
Payable within one year
5,956
4,630
5,956
4,630
Payable after one year
39,804
45,370
39,804
45,370
18
Convertible loan notes
Group
Company
2022
2021
2022
2021
£
£
£
£
Liability component of convertible loan notes
750,000
-
750,000
-

Net proceeds received from the issue of the convertible loan notes are split between the financial liability element and an equity component, representing the fair value of the embedded option to convert the financial liability into equity. At 31 October 2022 the fair value of the equity component is considered to be negligible and is not separately recognised.

The liability component is measured at amortised cost, and the difference between the carrying amount of the liability at the date of issue and the amount reported in the Balance Sheet represents the effective interest rate less interest paid to that date.

The effective rate of interest is 10%.

19
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
94,048
82,543

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 30 -
20
Share-based payment transactions
Group
Number of share options
Weighted average exercise price
2022
2021
2022
2021
Number
Number
£
£
Share options issued at 1 November 2021
76
34,493
0.01
0.01
Granted
152,375
-
10.00
-
Exercised
(76)
(34,417)
0.01
0.01
Outstanding at 31 October 2022
152,375
76
10.00
0.01
Exercisable at 31 October 2022
152,375
76
10.00
0.01

Since the 31 October 2022 a further 32,500 £0.01 ordinary shares options have been granted, with an exercise option price of £10 per share.

 

Of the 152,375 £0.01 ordinary share options issued during the financial year ended 31 October 2022, 25,125 £0.01 ordinary share options have since been forfeited. No equity settled share-based payment expense has been recognised on the basis that the fair value of the option is negligible.

 

The outstanding options issued during 2022 have a 10 year option period.

Company
Number of share options
Weighted average exercise price
2022
2021
2022
2021
Number
Number
£
£
Outstanding at 1 November 2021
76
34,493
0.01
0.01
Granted
152,375
-
10.00
-
Exercised
(76)
(34,417)
0.01
0.01
Outstanding at 31 October 2022
152,375
76
10.00
0.01
Exercisable at 31 October 2022
152,375
76
10.00
0.01

Since the 31 October 2022 a further 32,500 £0.01 ordinary shares options have been granted, with an exercise option price of £10 per share.

 

Of the 135,032 £0.01 ordinary share options issued during the financial year ended 31 October 2022, 25,125 £0.01 ordinary share options have since been forfeited.

 

The outstanding options issued during 2022 have a 10 year option period.

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 31 -
21
Share capital
Group and company
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of 1p each
398,971
359,145
3,989
3,591
A Ordinary of 1p each
348,232
348,232
3,482
3,482
Deferred of 1p each
77,614
77,614
776
776
824,817
784,991
8,247
7,849

During the year the company issued 39,750 £0.01 ordinary shares for £397,500, including share premium of £397,103.

 

As recorded in note 17, the remaining share options in respect of 76 £0.01 ordinary shares were exercised during the year, at par value.

A Ordinary shares and Ordinary shares carry no restrictions on voting rights and the distribution of dividends. A Ordinary shares have enhanced priority rights to the return of capital and distribution on exit. Deferred shares carry no voting rights, no rights to dividends or rights to participate in a return of assets on disposal or a capital reduction.

22
Share premium account
Group
Company
2022
2021
2022
2021
£
£
£
£
At the beginning of the year
10,413,420
9,694,140
10,413,420
9,694,140
Issue of new shares
397,103
719,280
397,103
719,280
At the end of the year
10,810,523
10,413,420
10,810,523
10,413,420
23
Profit and loss reserves
Group
Company
2022
2021
2022
2021
£
£
£
£
At the beginning of the year
(11,136,423)
(10,591,722)
(11,096,423)
(10,591,722)
Loss for the year
(875,681)
(544,701)
(865,130)
(504,701)
At the end of the year
(12,012,104)
(11,136,423)
(11,961,553)
(11,096,423)
QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 32 -
24
Operating lease commitments
Lessee

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

Group
Company
2022
2021
2022
2021
£
£
£
£
Within one year
125,682
89,520
125,682
89,520
Between two and five years
245,719
333,110
245,719
333,110
371,401
422,630
371,401
422,630
25
Events after the reporting date

Since the year end the directors have successfully raised additional working capital in March 2023 of £790,000 in respect of additional loans and equity funding and have also raised a further £665,000 between August 2023 and October 2023 to further support the company's working capital requirement.

26
Related party transactions

The following amounts were outstanding at the reporting end date:

Amounts due to related parties
2022
2021
£
£
Group
Other related parties
176,270
274,527
Company
Other related parties
176,270
274,527
Other information

Between December 2018 and January 2019 £150,000 was received from a company in which one of the minority shareholders is connected. Under the terms of the loan agreement the loan was repayable on 30 April 2019, however should the loan remain unpaid after a period of 7 days the company has complete discretion to convert the amount of loan into fully paid ordinary shares in the company. Interest is payable at 4% above the Bank of England base rate. At the year end £25,000 remained outstanding (2021: £83,953).

 

On 3 July 2019, £150,000 fixed rate unsecured loan notes with a maturity date of July 2024 were issued to a venture capital trust linked to the A ordinary shareholders. Interest is at the rate of 10% per calendar year, payable quarterly. The accrued interest at the year end is £1,270 (2021: £1,270).

QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 33 -
27
Cash absorbed by group operations
2022
2021
£
£
Loss for the year after tax
(875,681)
(544,701)
Adjustments for:
Taxation credited
(179,055)
(216,903)
Finance costs
68,227
28,082
Investment income
(32,712)
(3,326)
Depreciation and impairment of tangible fixed assets
9,231
6,193
Movements in working capital:
Increase in debtors
(142,647)
(93,372)
Decrease in creditors
(61,122)
(18,019)
Cash absorbed by operations
(1,213,759)
(842,046)
28
Cash absorbed by operations - company
2022
2021
£
£
Loss for the year after tax
(865,130)
(504,701)
Adjustments for:
Taxation credited
(179,055)
(216,903)
Finance costs
68,227
28,082
Investment income
(32,712)
(3,326)
Depreciation and impairment of tangible fixed assets
9,231
6,193
Movements in working capital:
Increase in debtors
(141,554)
(93,373)
(Decrease)/increase in creditors
(116,047)
51,982
Cash absorbed by operations
(1,257,040)
(732,046)
29
Analysis of changes in net funds/(debt) - group
1 November 2021
Cash flows
31 October 2022
£
£
£
Cash at bank and in hand
105,472
47,547
153,019
Borrowings excluding overdrafts
(50,000)
4,240
(45,760)
Convertible loan notes
-
(750,000)
(750,000)
55,472
(698,213)
(642,741)
QUAI ADMINISTRATION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 34 -
30
Analysis of changes in net debt - company
1 November 2021
Cash flows
31 October 2022
£
£
£
Cash at bank and in hand
35,471
14,756
50,227
Borrowings excluding overdrafts
(50,000)
4,240
(45,760)
Convertible loan notes
-
(750,000)
(750,000)
(14,529)
(731,004)
(745,533)
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