Proximity Data Centres Limited
Registered number: 11665082
Annual report and consolidated
financial statements
For the year ended 28 February 2023
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PROXIMITY DATA CENTRES LIMITED
COMPANY INFORMATION
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Haines Watts (Berkhamsted) Limited
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Chartered Accountants & Statutory Auditor
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PROXIMITY DATA CENTRES LIMITED
CONTENTS
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Independent Auditors' Report
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Consolidated Statement of Comprehensive Income
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Consolidated Statement of Financial Position
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Company Statement of Financial Position
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated statement of cash flows
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Notes to the Financial Statements
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PROXIMITY DATA CENTRES LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
The directors present their Strategic Report for the financial year ended 28 February 2023.
Proximity Data Centres Limited (the “Company”) is wholly owed by Edge Data Centres Holdings Limited (“Holdings”). Holdings, in turn, is wholly owned by the five Directors of Holdings, with four of these Directors taking an active executive role in the running of the Company. The principal activity of Holdings is to own and support the Company and the principal activity of the Company is the provision of colocation data centre services through its portfolio of regional edge data centres throughout the UK.
The Company is the group parent company for the Proximity Data Centres Group (the “Group), a dynamic and fast growing group of data centre operating companies across the UK. During the year, the Group added two new facilities in Bristol and Milton Keynes, expanding the portfolio to ten data centres. Of the two additions, one was an equity acquisition of an established data centre and IT services provider, Nuco Technologies Limited, based in Milton Keynes, whilst the other was an asset acquisition of a substantial data centre in Bristol.
The Directors see additional growth coming from acquiring new sites in the UK, and the modernisation and building out of our existing portfolio of data centres, enabling a continued acceleration of new sales into the portfolio.
During the year the Group was impacted by the rapid and unstable market for power. This created instability in our prospective customer base and slowed down a number of new customer opportunities. With the gradual stabilising of the energy market over the first half of 2023, the expectation is that there will be an improved picture of customer confidence returning to the market.
The first half of the financial year also saw the tail end of the Covid-19 restrictions in the UK, with slower than anticipated customer activity and progress on opportunities. Overall, however, the Group had a 100% record in keeping all our sites active and at full running capability 24x7, for which the operational employees, in particular, must be congratulated. The Group depends on dedicated employees working to keep the facilities in good working order and in an “always-on” state.
Despite the challenges of Covid-19 and the erratic and unstable energy market, overall, FY23 saw a 64% increase in revenues, partially driven by a sharp increase in energy revenues, as well as costs.
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PROXIMITY DATA CENTRES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
The Group retains its twin growth strategies of expanding the portfolio and growing sales revenues within each data centre.
In addition to the energy challenges experienced during the year, the Group’s growth success presented another challenge in the form of an increased interest cost. Recognising this early, the Group has been undertaking an extensive review of its financing from early 2022, resulting in a re-financing exercise initiated in May 2022. This re-financing exercise was targeted at reducing interest charges whilst maintaining growth, through a re-balancing of debt and equity. At the date of this report, the re-financing exercise is nearly complete, and is dealt with in more detail in the Summary section, below.
The Group traded within its existing financial facilities during the year, and plans to continue to do so in the coming year, with the added comfort of new financing arrangements, dealt with in the Summary section, below.
Principal risks and uncertainties
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During the year, the Group saw an expansion of its customer base, spreading risk across a larger revenue profile. Due to the strong covenant of many of our larger customers, business failure and bad debt are not perceived to be substantial risks for the Group.
The residual impacts of Covid-19 are not perceived as a substantial risk to the business, however the unstable and volatile energy market, allied to the effects of Brexit on the UK economy, does pose a challenge for management to address. The steps already highlighted to ensure short and medium term stability for our customers should ameliorate the challenge, and the Group’s continued growth and new financing structure should further strengthen the Group’s position with regard to the general UK economic environment.
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PROXIMITY DATA CENTRES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
Financial key performance indicators
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Power Cost Risk
As set out above, energy provision and cost remain a key area of instability in the UK. The Group has adopted a policy of fixing our energy supply contracts with suppliers for a fixed term of 12 months at each site to provide customer stability and surety of charges. In the medium term, the Group anticipates energy prices will continue to fall slowly, although this is based on the current international energy supply market not experiencing any shocks or instability in the coming months. In the longer term, we believe that the market will continue to see price stabilisation which will be at lower than current price levels, but not back to pre-2022 levels. The Group continues to look at alternative power supply options, and will see the completion of our first solar farm roof installation at our Milton Keynes site during October 2023. Currently, these initiatives will not replace the need for grid-based power supply contracts, but will assist in overall power cost management in the future.
Credit Risk
The Group has now established good credit ratings across all credit agencies and perceives the risk to any operations from the denial of credit as being negligible. The customer base is made up of established clients with a good covenant strength and with the majority of our charges being billed in advance, bad debt is kept to a minimum.
Liquidity and Cash flow
The Group finances its operations through operationally generated cash as well as loans from our long term banking facility provider, for acquisitions and capital projects. Detailed cash flow forecasting coupled with good cash collection rates enable the Group to operate with the investor covenants.
The business has 5 key cost drivers. Power, employment costs, property rates, maintenance support & security costs and financing interest. Annual reviews of all Group supplier contracts are undertaken to ensure that the best value service is being provided, with the Commercial Team being expanded during the year to assist in this process. Power contracts are the largest, and currently the most variable, cost driver in the business. The Group engages the services of an energy broker to access the best long term rates for power, whilst ensuring that the Group continue to use only certified renewable energy in all our sites.
Professionally qualified and experienced employees are responsible for cash flow and debt collection which is monitored and reported on by data centre and customer.
The Group has seen another exciting year of growth and development. FY24 will see us continue this strategy of growth, assisted by a new and enhanced financing structure.
On 25th August 2023, the board of Directors of Holdings accepted an offer from nLighten UK Limited for the acquisition of 100% of the equity of Holdings. This acquisition is due to complete on 1st September 2023 and will see the Group with access to substantial new funding for growth from the nLighten BV Group, as well as becoming part of a pan-European regional edge data centre group. The Group’s existing and original funder (the Intermediate Capital Group) will continue to invest in the Group, through its existing debt facility. The combined resources of ICG and ISquared, channelled through nLighten, will underpin and enable the Group’s growth plans for the coming years.
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PROXIMITY DATA CENTRES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
This report was approved by the board on 31 August 2023 and signed on its behalf.
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PROXIMITY DATA CENTRES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
The directors present their report and the financial statements for the year ended 28 February 2023.
Directors' responsibilities statement
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The directors are responsible for preparing the group strategic report, the directors' report and the consolidated 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments 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 Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £1,739,373 (2022 - loss £2,133,282).
During the year dividends amounting to £Nil were declared (2022 - £Nil).
The directors who served during the year were:
Going concern
These financial statements have been prepare on a going concern basis as the Directors have not identified any material uncertainties or events that may cast doubt about the ability of the Group to continue as a going concern. Further, the Directors will continue to finance the Group's working capital through loans through the Parent Company, as and when required.
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PROXIMITY DATA CENTRES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
Economic impact of global events
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UK businesses are currently facing many uncertainties such as the consequences of Brexit, Covid 19, environmental sustainability and geopolitical events such as the Russian invasion of Ukraine. These uncertainties have contributed to an environment where there exists a range of issues and risks, including inflation, rising interest rates, labour shortages, disrupted supply chains and new ways of working.
The Directors have carried out an assessment of the potential impact of these uncertainties on the business, including the impact of mitigation measures, and have concluded that these are non-adjusting events with the greatest impact on the business expected to be from the economic ripple effect on the global economy. The Directors have taken account of these potential impacts in their going concern assessment.
The Group continues to work with its partners to minimise any impacts of these events and maximise the realisation of any opportunities they may provide to the business.
Disclosure of information to auditors
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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 and the Group'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 and the Group's auditors are aware of that information.
Post balance sheet events
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On 25 August 2023, the Board of Directors of Edge Data Centres Holdings Limited (which is the parent of the Company) accepted an offer for 100% of the equity of Edge Data Centres Holdings Limited. The new owner, as of 1st September 2023, when the equity sale and acquisition is due to complete, is nLighten UK Limited, a wholly owned subsidiary of nLighten BV, a Dutch registered company.
The auditors, Haines Watts (Berkhamsted) Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 31 August 2023 and signed on its behalf.
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PROXIMITY DATA CENTRES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PROXIMITY DATA CENTRES LIMITED
Opinion
We have audited the financial statements of Proximity Data Centres Limited (the ‘Parent Company’) and its subsidiaries (the 'Group') for the year ended 28 February 2023 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statement of Financial Positions, the Consolidated and Company Statement of Changes in Equity, the Consolidated Statement of Cashflows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 Group's and Parent Company’s affairs as at 28 February 2023 and of the Group's loss 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 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.
Conclusions relating to going concern
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.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's and the Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
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PROXIMITY DATA CENTRES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PROXIMITY DATA CENTRES LIMITED
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 the audit:
∙the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in 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.
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PROXIMITY DATA CENTRES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PROXIMITY DATA CENTRES LIMITED
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 5, 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 Group's and 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 intend either to liquidate the Group or 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 a Report of the Auditors 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:
• Identifying and assessing the controls 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 judgments.
• Identifying and testing journal entries, in particular journal entries posted with unusual account combinations; and
• Assessing the extent of compliance with the relevant laws and regulations.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations are from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusions.
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 auditor’s report.
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PROXIMITY DATA CENTRES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PROXIMITY DATA CENTRES LIMITED
Use of the audit report
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company's members as a body for our audit work, for this report, or for the opinions we have formed.
Bianca Permal (FCA) (Senior Statutory Auditor)
for and on behalf of
Haines Watts (Berkhamsted) Limited
Chartered Accountants and Statutory Auditor
Milton House
Gatehouse Road
Buckinghamshire
Aylesbury
HP19 8EA
31 August 2023
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PROXIMITY DATA CENTRES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 28 FEBRUARY 2023
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Interest receivable and similar income
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Interest payable and similar expenses
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Loss for the financial year
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There was no other comprehensive income for 2023 (2022:£NIL).
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The notes on pages 19 to 41 form part of these financial statements.
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PROXIMITY DATA CENTRES LIMITED
REGISTERED NUMBER: 11665082
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 28 FEBRUARY 2023
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Net current (liabilities)/assets
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 31 August 2023.
The notes on pages 19 to 41 form part of these financial statements.
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PROXIMITY DATA CENTRES LIMITED
REGISTERED NUMBER: 11665082
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 28 FEBRUARY 2023
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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PROXIMITY DATA CENTRES LIMITED
REGISTERED NUMBER: 11665082
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 28 FEBRUARY 2023
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the Parent Company for the year was £33,232 (2022: £417,850).
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 31 August 2023.
The notes on pages 19 to 41 form part of these financial statements.
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PROXIMITY DATA CENTRES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2023
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Comprehensive income for the year
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Total comprehensive income for the year
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 19 to 41 form part of these financial statements.
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PROXIMITY DATA CENTRES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2023
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Comprehensive income for the year
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Total comprehensive income for the year
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 19 to 41 form part of these financial statements.
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PROXIMITY DATA CENTRES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 28 FEBRUARY 2023
Cash flows from operating activities
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Loss for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Loss on disposal of tangible assets
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Increase in amounts owed to groups
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Corporation tax received/(paid)
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of tangible fixed assets
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Sale of tangible fixed assets
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Net cash from investing activities
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PROXIMITY DATA CENTRES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
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Cash flows from financing activities
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Net cash used in financing activities
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Net (decrease)/increase in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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The notes on pages 19 to 41 form part of these financial statements.
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PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
Proximity Data Centres Limited ("the Group") is a private limited Company, limited by shares and incorporated in England and Wales, registered number 11665082. The address of the registered office is Proximity House Unit 2, Chester Gates, Dunkirk, Chester, England, CH1 6LT.
The principal activity of the Group is computer facilities management activities. The Group rent server space to the market through data centres that varies in sizes from site to site. Each individual data centre is held in a subsidiary company of the Group. The actual servers are owned by the customers and not by the Group, however, the storage equipment is owned by the Group.
2.Accounting policies
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Basis of preparation of financial statements
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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 Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements.
Parent Company disclosure exemptions
In preparing the separate financial statements of the parent Company, advantage has been taken of the following disclosure exemptions available in FRS 102:
∙No statement of cash flows has been presented for the parent Company;
∙Disclosures in respect of the parent Company's financial instruments have not been presented as equivalent disclosures have been provided in respect of the Company as a whole; and
∙No disclosures have been given for the aggregate remuneration of the key management personnel of the parent Company as their remuneration is included in the totals for the Company as a whole.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
- 19 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
2.Accounting policies (continued)
|
|
Basis of consolidation (continued)
|
In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102.
These financial statements have been prepared on a going concern basis as the Directors have not identified any material uncertainties or events that may cast doubt about the ability of the Group to continue as a going concern. Further, the Directors will continue to finance the Group's working capital through loans through the Parent Company, as and when required.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group 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. The following criteria must also be met before revenue is recognised:
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
- 20 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
2.Accounting policies (continued)
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group 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 Group in independently administered funds.
|
|
Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. 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 and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
- 21 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
2.Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the consolidated statement of comprehensive income over its useful economic life.
Other intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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 following basis.
Depreciation is provided on the following basis:
|
|
|
|
|
|
2% straight line (see note 3)
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|
|
|
|
|
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|
|
|
Assets under construction
|
|
no depreciation until assets are in use
|
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.
Investments in subsidiaries are measured at cost less accumulated impairment.
- 22 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
2.Accounting policies (continued)
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
|
|
Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
|
|
Provisions for liabilities
|
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the statement of financial position.
- 23 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
2.Accounting policies (continued)
The Group 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.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the consolidated statement of comprehensive income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
- 24 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
Judgments in applying accounting policies and key sources of estimation uncertainty
|
Critical judgments in applying the Company's accounting policies
The critical judgments that the directors have made in the process of applying the Company's accounting policies that have the most significant effect on the statutory financial statements are discussed below.
Assessing indicators of impairment
In assessing whether there have been any indicators of impairment assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no indicators of impairments identified during the current financial year.
Key sources of estimation uncertainty
(i) Determining useful economic lives of tangible fixed assets
The Company depreciates tangible fixed assets over their estimated useful lives. The estimation of the useful lives of assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied by management. The actual lives of these assets can vary depending on variety of factors, including technological innovation, product life cycles and maintenance programmes.
The judgment is applied by management when determining the residual values for tangible fixed assets. When determining the residual value management aim to assess the amount that the Company would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful life. Where possible this is done with reference to external market prices.
The directors have estimated the residual value of Freehold property and concluded the residual value is greater than the cost of the Freehold property, therefore no depreciation has been charged.
(ii) Recoverability of debtors
The Company establishes a provision for debtors that are estimated not to be recoverable. When assessing recoverability, the directors have considered factors such as the aging of the debtors, past experience of recoverability, and the credit profile of individual or groups of customers.
The whole of the turnover is attributable to the principal activity of the Group.
|
All turnover arose within the United Kingdom.
|
- 25 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
|
|
The operating profit is stated after charging:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year, the Group obtained the following services from the Company's auditors:
|
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|
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|
|
|
|
|
|
|
|
Fees payable to the Company's auditor for the audit of the consolidated and parent Company's financial statements.
|
|
|
|
|
|
Staff costs were as follows:
|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Cost of defined contribution scheme
|
|
|
|
|
|
|
|
The average monthly number of employees, including the directors, during the year was as follows:
|
- 26 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
Other interest receivable
|
|
|
|
|
|
|
|
Interest payable and similar expenses
|
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|
|
|
|
|
|
|
|
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|
|
Other loan interest payable
|
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|
|
|
|
Adjustments in respect of previous periods
|
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|
|
Origination and reversal of timing differences
|
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|
|
|
|
|
|
|
|
|
|
Taxation on profit on ordinary activities
|
|
|
- 27 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
10.Taxation (continued)
|
Factors affecting tax charge for the year
|
|
The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 19% (2022 - 19%). The differences are explained below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on ordinary activities before tax
|
|
|
|
Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022 - 19%)
|
|
|
|
|
|
|
|
Non-tax deductible amortisation of goodwill and impairment
|
|
|
|
Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
|
|
|
|
|
|
|
|
Adjustments to tax charge in respect of prior periods
|
|
|
|
Remeasurement of deferred tax for changes in tax rates
|
|
|
|
Adjustments to tax charge in respect of previous periods - deferred tax
|
|
|
|
Deferred tax asset not recognised
|
|
|
|
|
|
|
|
Other differences leading to an increase (decrease) in the tax charge
|
|
|
|
Total tax charge for the year
|
|
|
|
Factors that may affect future tax charges
|
The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom will increase from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
- 28 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
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|
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|
|
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|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill additions in the year relate to the acquisition of Nuco Technologies Limited. See Note 23 for further information in relation to this acquisition.
|
- 29 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
|
|
|
|
|
|
Assets under construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 March 2022 (as previously stated)
|
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|
|
|
|
|
|
|
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|
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|
|
At 1 March 2022 (as restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of subsidiary
|
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|
|
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|
|
|
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|
|
Transfers between classes
|
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|
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|
|
|
|
|
|
At 28 February 2022 (as restated)
|
|
|
|
|
|
|
- 30 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
12.Tangible fixed assets (continued)
|
|
|
|
|
|
|
|
|
|
At 1 March 2022 (as previously stated)
|
|
|
|
|
|
At 1 March 2022 (as restated)
|
|
|
|
|
|
Acquisition of subsidiary
|
|
|
|
|
|
Transfers between classes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 28 February 2022 (as restated)
|
|
- 31 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 32 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
|
Investments in subsidiary companies
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
- 33 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
|
|
|
The following were subsidiary undertakings of the Company:
|
|
|
|
|
|
Proximity Data Centres (Bridgend) Limited
|
|
|
|
Proximity Data Centres (Wakefield) Limited
|
|
|
|
Proximity Data Centres (Nottingham) Limited
|
|
|
|
Technical Real Estate Normanton Limited
|
|
|
|
Proximity Data Centres (Liverpool) Limited
|
|
|
|
Proximity Data Centres (Chester) Limited
|
|
|
|
Proximity Data Centres (MK) Limited
|
|
|
|
Proximity Data Centres Operations Limited
|
|
|
|
Proximity Data Centres (Swindon) Limited
|
|
|
|
Proximity Data Centres (Birmingham) Limited
|
|
|
|
|
|
|
|
Proximity Data Centres (Bristol) Limited
|
|
|
|
Nuco Technologies Limited
|
|
|
|
The registered office of all subsidiaries excluding Sentrum (Rugby) Limited is Proximity House, Unit 2, Chester Gates, Chester, England, CH1 6LT.
The registered office of Sentrum (Rugby) Limited is PO BOX 145, Level 6, 10a Prospect Hill, Douglas, Isle Of Man, IM99 1FY.
|
- 34 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
Due after more than one year
|
|
|
|
|
|
Amounts owed by group undertakings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed by group undertakings
|
|
|
|
|
|
|
|
|
|
|
|
Prepayments and accrued income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed by group companies are unsecured and interest free.
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 35 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
Creditors: Amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed to group undertakings
|
|
|
|
|
|
|
|
|
|
|
|
Other taxation and social security
|
|
|
|
|
|
|
|
|
|
|
|
Accruals and deferred income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year items classified as Other creditors were reclassified as Accruals and deferred income. This treatment was applied retrospectively, as such, amount totalling £942,971 in the comparative figure that was recorded in Other creditors was reclassified as Accruals and deferred income.
Amounts owed to group companies are unsecured and interest free.
|
|
Creditors: Amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
On 9 March 2020, ICG - Longbow Investment No. 5 S.A.R.L created a fixed and floating charge over the undertaking of all property and assets present and future of Proximity Data Centres Limited.
|
- 36 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
|
|
|
Analysis of the maturity of loans is given below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
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|
|
Amounts falling due 1-2 years
|
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|
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|
|
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|
|
|
|
|
Charged to profit or loss
|
|
|
|
Arising on business combinations
|
|
|
|
|
|
|
- 37 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
19.Deferred taxation (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
|
|
|
|
|
Accelerated capital allowances
|
|
|
|
|
|
Short term timing difference
|
|
|
|
|
|
|
|
|
|
|
|
|
Allotted, called up and fully paid
|
|
|
|
|
|
|
|
|
|
200 (2022 - 200) Ordinary shares of £1.00 each
|
|
|
Revaluation reserve
This reserve records the gains and losses recognised on revaluation.
Profit & loss account
This reserve represents cumulative profits and losses less dividends declared.
- 38 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
On 12 August 2022, Proximity Data Centres (MK) Limited wholly acquired Nuco Technologies Limited. An analysis of the acqusition is as follows:
|
Acquisition of Nuco Technologies Limited
|
|
Recognised amounts of identifiable assets acquired and liabilities assumed
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
Total Identifiable net assets
|
|
|
|
|
|
|
|
|
|
|
Total purchase consideration
|
|
- 39 -
|
PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
23.Business combinations (continued)
|
Cash outflow on acquisition
|
|
|
|
|
|
|
|
|
|
|
Purchase consideration settled in cash, as above
|
|
|
|
|
|
Less: Cash and cash equivalents acquired
|
|
|
Net cash outflow on acquisition
|
|
|
The goodwill arising on acquisition is attributable to Proximity Data Centres Limited
|
|
The results of Nuco Technologies Limited since acquisition are as follows:
|
|
|
|
|
Current period since acquisition
|
|
|
|
|
|
|
|
|
|
Profit for the period since acquisition
|
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Included in the fixed asset costs in 2022 was a sum of £200,000 treated as acquisition costs, that was actually a refundable deposit which should have been included in other debtors. There is no impact upon reserves, only a reclassification of this item in the statement of financial position. These funds have since been returned to the Company after the reporting date.
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £260,765 (2022: £322,377). Contributions totalling £32,563 (2022: £25,726) were payable to the fund at the Statement of Financial Position date and are included in creditors.
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PROXIMITY DATA CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
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Related party transactions
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The Company has taken advantage of the exemption conferred by FRS102 paragraph 33.1A and has not disclosed transactions and outstanding balances with its fellow subsidiary undertakings on the basis that all the relevant companies are directly or indirectly wholly owned by Edge Data Centres Holdings Limited.
The Company had balances due to Edge Data Centres Holdings Limited that were unsecured and interest free amounting to £1,488,649 (2022: £785,557).
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Post balance sheet events
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On 25 August 2023, the Board of Directors of Edge Data Centres Holdings Limited (which is the parent of the Company) accepted an offer for 100% of the equity of Edge Data Centres Holdings Limited. The new owner, as of 1st September 2023, when the equity sale and acquisition is due to complete, is nLighten UK Limited, a wholly owned subsidiary of nLighten BV, a Dutch registered company.
As at the year end, the immediate and ultimate parent company is Edge Data Centres Holdings Limited, a company registered in England and Wales under company number 12406453 and is the largest group into which the results of this Group are consolidated.
In the opinion of the directors there is no single controlling party.
Please see Note 27 for details of the ultimate controlling party at the date of approval of these financial statements.
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