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Registered number: 04380546









VCG Technology Services Limited









Annual Report and Financial Statements

For the Year Ended 31 March 2023

 
VCG Technology Services Limited
 
 
Company Information


Directors
R Reynolds 
T Bane 
D Preston 
R S Moss (appointed 1 December 2022)
A S Peters-Smith (resigned 30 November 2022)




Registered number
04380546



Registered office
Signal Point Bredbury Park Way
 Bredbury

Stockport

SK6 2SN




Independent auditors
Hurst Accountants Limited
Chartered Accountants & Statutory Auditors

Lancashire Gate

21 Tiviot Dale

Stockport

SK1 1TD





 
VCG Technology Services Limited
 

Contents



Page
Strategic Report
 
1 - 2
Directors' Report
 
3 - 5
Independent Auditors' Report
 
6 - 9
Statement of Comprehensive Income
 
10
Balance Sheet
 
11
Statement of Changes in Equity
 
12
Notes to the Financial Statements
 
13 - 30


 
VCG Technology Services Limited
 
 
Strategic Report
For the Year Ended 31 March 2023

Introduction
 
The Directors present the Strategic Report for the year ended 31 March 2023.
The Company’s principal activity was the provision of business-critical connectivity, managed networks, ICT solutions and related services. 

Business review
 
Like all businesses, the emergence from the global COVID-19 pandemic continued to impose challenges on the Company. The Company continued with it’s safe working arrangements with the majority of employees working from home at the start of the period, with a gradual return being implemented by the Board as restrictions were lifted. 
The Board launched the VCG consolidated brand in the prior financial year, consolidating to a single Trading entity, VCG Technology Services Limited, formally trading as Vodat International Limited (Registered Number 04380546). The Board are confident that the further growth of the fully integrated business can be delivered in the future. 
During the year, a number of changes were made in the Senior Leadership Team, with the appointment of a new CEO, Sales Director and other senior managers being appointed to leadership positions. The Company went through a transitional period to ensure that it was repurposed and had clear targets and objectives to achieve current and deliver future growth.
The Board reinforced the importance of diversification in the customer base. Towards the end of the year, a new business acquisition team was created under the leadership of the new Sales Director. New go to market strategies and materials were created, to drive margin rich, contracted re-occurring revenue streams for the Company.  The creation of this new team, will enable the existing Enterprise team to focus on increasing our interactions with the existing customer base.
The Company and wider Group's debts are secured against fixed rate vehicles and are not exposed to rising interest rates in the wider economic climate.  As with most business’ in the UK, the Company has seen the prices of its products and services increase, and has been forced to pass these on to its customers.  The increasing prices also invite customers to discuss their overarching strategy with the Company where a solution can be found that both improves their technical infrastructure and gives pricing clarity for a period of time. 
For the year ended 31 March 2023 turnover was £24.42m (
2022: £24.37m) which represents an increase of 0.2% during the year. After depreciation, amortisation, exceptional items and the realignment of amortisation, the Company made a pre-tax profit of £165k (2022: loss £304k). 

Page 1

 
VCG Technology Services Limited
 

Strategic Report (continued)
For the Year Ended 31 March 2023

Principal risks and uncertainties
 
Macro-economic factors
With most of the activity within the Company UK based, the Company is dependent on the country's economic performance however the Company is constantly developing new business opportunities in different sectors to better hedge the Company's performance in the future. 
Long term impact of COVID-19 pandemic
The COVID-19 global pandemic presented challenges to the Company, however due to the industry sector this has also presented opportunity. The impact of the pandemic on the Retail and Hospitality customer base resulted in some losses, early termination charges from communications providers and bad debt write-offs. However, the growth of strategic customers has resulted in significant opportunities, especially with the converged ICT propositions. The Company continues to assess new and innovative solutions to partner with customers in providing solutions to support the changing ways they work and do business. 
Supply chain issues
The Board monitored the global chip shortage and worked closely with our distributors and customers to manage the supply chain.  This situation is improved from Q3 in FY23 and lead times began to significantly reduce, improving the ability of the Company to trade.

Financial key performance indicators
 
The company's key performance indicators are revenue and profit before tax, both of which are analysed in the Business Review.


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



................................................
D Preston
Director

Date: 10 November 2023

Page 2

 
VCG Technology Services Limited
 
 
 
Directors' Report
For the Year Ended 31 March 2023

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

Directors' responsibilities statement

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

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


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

make judgements and accounting estimates that are reasonable and prudent;

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

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

Results and dividends

The profit for the year, after taxation, amounted to £225,195 (2022 - loss £243,252).

No dividends (2022: £Nil) were paid during the year. 
The directors do not recommend the payment of a dividend. (
2022: £nil).

Directors

The directors who served during the year were:

R Reynolds 
T Bane 
D Preston 
R S Moss (appointed 1 December 2022)
A S Peters-Smith (resigned 30 November 2022)

Future developments

The Company continues to monitor changes in it’s operating sector and regularly assess which products and services it can to the portfolio to support the growth and future success of the Company.

Page 3

 
VCG Technology Services Limited
 
 
 
Directors' Report (continued)
For the Year Ended 31 March 2023

Financial instruments

Cash flow management and associated liqudity risk is a key factor for the business. 
The company's ultimate parent entity holds a loan with an investor which attracts a fixed rate of interest. Management ensure that sufficient cash is generated by the company (as the active trading entity) to service this loan within its terms. 
The company also has finance agreements in respect of some purchases, these are displayed as other loans and amounts due under hire purchase and finance agreements.
Management closely monitor cash flows and ensure that sufficient working capital is available to allow the business to operate effectively. Customers are required to adhere to credit terms and in normal conditions there are limited bad debts.

Qualifying third party indemnity provisions

Insurance policies are in place that indemnify the directors against liability when acting for VCG Technology Services Limited.

Disclosure of information to auditors

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

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

Post balance sheet events and going concern.

The Board integrated and launched the combined VCG brand, consolidating Axonex Limited and Vodat International Limited to one Trading entity: VCG Technology Services Limited, formally trading as Vodat International Limited, in the prior financial year. All assets, liabilities, customer and supplier contracts were transferred or novated to VCG Technology Services Limited, and the company employees transferred under TUPE.
The directors have prepared forecast scenarios for the combined business, taking key strategic factors into consideration, namely: 
•  insight of customer’s ICT investment strategies
•  market growth opportunities for our converged ICT propositions
•  synergies from consolidating to one business. 
The connectivity and managed services provided to the Company's customers are business critical and did not materially change during the year.  The creation of the business acquisition team is designed to broaden the customer base in this area.
The working capital and cash position has continued to be positive throughout the financial year and is expected to increase in line with the profit growth forecast.
After reviewing the Company's forecasts and projections, the directors are confident that the Company has adequate resources to continue trading for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements.
There have been no significant events affecting the Company since the year end.

Page 4

 
VCG Technology Services Limited
 
 
 
Directors' Report (continued)
For the Year Ended 31 March 2023

Auditors

The auditorsHurst Accountants Limitedwere appointed during the year and will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

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





................................................
D Preston
Director

Date: 10 November 2023

Page 5

 
VCG Technology Services Limited
 
 
 
Independent Auditors' Report to the Members of VCG Technology Services Limited
 

Opinion


We have audited the financial statements of VCG Technology Services Limited (the 'Company') for the year ended 31 March 2023, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 March 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


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


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


We have nothing to report in this regard.


Page 6

 
VCG Technology Services Limited
 
 
 
Independent Auditors' Report to the Members of VCG Technology Services Limited (continued)


Opinion on other matters prescribed by the Companies Act 2006
 

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


the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

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


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


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


Responsibilities of directors
 

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


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


Page 7

 
VCG Technology Services Limited
 
 
 
Independent Auditors' Report to the Members of VCG Technology Services Limited (continued)


Auditors' responsibilities for the audit of the financial statements
 

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


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

Identifying and assessing potential risks related to irregularities
In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

The nature of the industry and sector in which the company operates; the control environment and business performance including key drivers for directors' remuneration, bonus levels and performance targets.
The outcome of enquiries of local management and parent company management, including whether management was aware of any instances of non-compliance with laws and regulations, and whether management had knowledge of any actual, suspected, or alleged fraud. 
Supporting documentation relating to the Company's policies and procedures for:
°Identifying, evaluating, and complying with laws and regulations
°Detecting and responding to the risks of fraud
The internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.
The outcome of discussions amongst the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
The legal and regulatory framework in which the Company operates, particularly those laws and regulations which have a direct effect on the financial statements, such as the Companies Act 2006, pensions and tax legislation, or which had a fundamental effect on the operations of the Company, including General Data Protection requirements, and Anti-bribery and Corruption.
 
Audit response to risks identified
Our procedures to respond to the risks identified included the following:
Reviewing the financial statements disclosures and testing to supporting documentation to assess compliance with the provisions of those relevant laws and regulations which have a direct effect on the financial statements.
Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud.
Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities.
Enquiring of management about any actual and potential litigation and claims.
Performing analytical procedures to identify any unusual or unexpected relationships which may indicate risks of material misstatement due to fraud.
 
Page 8

 
VCG Technology Services Limited
 
 
 
Independent Auditors' Report to the Members of VCG Technology Services Limited (continued)


We have also considered the risk of fraud through management override of controls by:

Testing the appropriateness of journal entries and other adjustments. We have used data analytics software to identify
accounting transactions which may pose a heightened risk of material misstatement, whether due to fraud or error;
Challenging assumptions made by management in their significant accounting estimates, and assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
 
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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 them.  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 collusion.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.





John Glover (Senior Statutory Auditor)
for and on behalf of
Hurst Accountants Limited
Chartered Accountants & Statutory Auditors
Lancashire Gate
21 Tiviot Dale
Stockport
SK1 1TD

16 November 2023
Page 9

 
VCG Technology Services Limited
 
 
Statement of Comprehensive Income
For the Year Ended 31 March 2023

2023
2022
Note
£
£

  

Turnover
 4 
24,417,062
24,369,933

Cost of sales
  
(18,836,976)
(18,783,986)

Gross profit
  
5,580,086
5,585,947

Administrative expenses
  
(5,425,716)
(5,297,822)

Exceptional administrative expenses
 12 
(12,644)
(589,069)

Operating profit/(loss)
 5 
141,726
(300,944)

Interest receivable and similar income
 9 
24,063
-

Interest payable and similar expenses
 10 
(654)
(3,341)

Profit/(loss) before tax
  
165,135
(304,285)

Tax on profit/(loss)
 11 
60,060
61,033

Profit/(loss) for the financial year
  
225,195
(243,252)

There were no recognised gains and losses for 2023 or 2022 other than those included in the statement of comprehensive income.

There was no other comprehensive income for 2023 (2022:£NIL).

The notes on pages 13 to 30 form part of these financial statements.

Page 10

 
VCG Technology Services Limited
Registered number: 04380546

Balance Sheet
As at 31 March 2023

As restated
2023
2022
Note
£
£

Fixed assets
  

Tangible assets
 13 
504,911
310,395

Current assets
  

Stocks
 14 
1,257,009
1,648,751

Debtors: amounts falling due within one year
 15 
7,567,711
6,981,678

Cash at bank and in hand
 16 
3,531,329
1,274,642

  
12,356,049
9,905,071

Creditors: amounts falling due within one year
 17 
(11,051,313)
(8,924,312)

Net current assets
  
 
 
1,304,736
 
 
980,759

Total assets less current liabilities
  
1,809,647
1,291,154

Creditors: amounts falling due after more than one year
 18 
(313,207)
(24,450)

Provisions for liabilities
  

Deferred tax
 20 
(4,541)
-

  
 
 
(4,541)
 
 
-

Net assets
  
1,491,899
1,266,704


Capital and reserves
  

Called up share capital 
 21 
55,531
55,531

Share premium account
 22 
32,261
32,261

Profit and loss account
 22 
1,404,107
1,178,912

  
1,491,899
1,266,704


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




................................................
D Preston
Director

Date: 10 November 2023

The notes on pages 13 to 30 form part of these financial statements.

Page 11

 
VCG Technology Services Limited
 

Statement of Changes in Equity
For the Year Ended 31 March 2023


Called up share capital
Share premium account
Profit and loss account
Total equity

£
£
£
£


At 1 April 2021
55,531
32,261
1,422,164
1,509,956


Comprehensive income for the year

Loss for the year
-
-
(243,252)
(243,252)



At 1 April 2022
55,531
32,261
1,178,912
1,266,704


Comprehensive income for the year

Profit for the year
-
-
225,195
225,195


At 31 March 2023
55,531
32,261
1,404,107
1,491,899


Page 12

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

1.


General information

VCG Technology Services Limited is a private company limited by shares and incorporated in England and Wales. It's registered head office is located at Signal Point, Bredbury Park Way, Bredbury, Stockport, England, SK6 2SN.
The Company’s principal activity was the provision of business-critical connectivity, managed networks, ICT solutions and related services. 

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).

Management have reviewed the prior year financial statements, and have determined that certain items held within debtors and creditors on the comparative balance sheet were incorrectly classified. Therefore an adjustment has been made to the prior year financial statements which has resulted in the following:
  - An increase of £1,018,783 to trade debtors;
  - An increase of £3,926 to other debtors;
  - An increase of £490,642 to trade creditors, and;
  - An increase of £532,067 to accruals and deferred income.
There is no impact on previously reported net assets or net current assets.

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Vodat Communications Group (VCG) Holding Limited as at 31 March 2023 and these financial statements may be obtained from the Registrar.

Page 13

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

2.Accounting policies (continued)

 
2.3

Going concern

The Board integrated and launched the combined VCG brand, consolidating Axonex Limited and Vodat International Limited to one Trading entity: VCG Technology Services Limited, formally trading as Vodat International Limited, in the prior financial year. All assets, liabilities, customer and supplier contracts were transferred or novated to VCG Technology Services Limited, and the company employees transferred under TUPE.
The directors have prepared forecast scenarios for the combined business, taking key strategic factors into consideration, namely: 
•   insight of customer’s ICT investment strategies
•   market growth opportunities for our converged ICT propositions
•   synergies from consolidating to one business. 
The connectivity and managed services provided to the Company's customers are business critical and did not materially change during the year.  The creation of the business acquisition team is designed to broaden the customer base in this area.
The working capital and cash position has continued to be positive throughout the financial year and is expected to increase in line with the profit growth forecast.
After reviewing the Company's forecasts and projections, the directors are confident that the Company has adequate resources to continue trading for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements.

 
2.4

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Page 14

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

2.Accounting policies (continued)

 
2.5

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. 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 Company 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.

More detail is provided below regarding specific revenue streams:
Support contracts and professional services
Revenue is typically billed upfront to a customer and initially deferred in full. It is then recognised based on usually either one of the two criteria:
-  Where the contract relates to amounts billed in advance of the time the service is to be provided,     revenue is released on a straight line basis over the period of the contract;
-  Where the customer has purchased a set amount of time for a support contract, revenue is recognised    based on the number of hours consumed at a point in time.
Licences
Revenue generated from licences is typically a re-selling of a licence from a supplier. Therefore the entire value of the contract relates entirely to the licence itself, and revenue is therefore recognised in full upon the transfer of the licence to the customer.
New installations
Revenue generated from new installations is recognised based upon the completion of agreed stages, as set out in contracts with the customer.
Often for such projects, equipment must be purchsed as part of installation. This equipment is configured for each customer such that it cannot be repurposed for resale elsewhere, and once purchased the customer is obliged to pay the group.
On occasion, the customer requests that the installation of the equipment be delayed, and therefore it is held by the group at their premesis. It is the view of management that even though the equipment has not been installed, that the criteria to recognise a sale under the provisions of UK Accounting Standards have been met, and therefore the equipment is not recognised as stock in the company's balance sheet, but instead a sale and associated cost are recognised in the Statement of Comprehensive Income. 

Page 15

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

2.Accounting policies (continued)

 
2.6

Operating leases: the Company as lessee

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

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

 
2.7

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.8

Finance costs

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.

 
2.9

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.10

Pensions

Defined contribution pension plan

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

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

Page 16

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

2.Accounting policies (continued)

 
2.11

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 balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet 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; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

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 balance sheet date.

 
2.12

Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.

 
2.13

Tangible fixed assets

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

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

Depreciation is provided on the following basis:

Long-term leasehold property
-
Straight-line over the term of the lease
Plant and machinery
-
20-50% straight-line
Office equipment
-
33% straight-line
Computer equipment
-
33-50% straight-line

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.

Page 17

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

2.Accounting policies (continued)

 
2.14

Stocks

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

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

 
2.15

Debtors

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.

 
2.16

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.

 
2.17

Creditors

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.

 
2.18

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company 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 Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet 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 Balance Sheet.

 
2.19

Financial instruments

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

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 Statement of Comprehensive Income.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of
Page 18

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

2.Accounting policies (continued)


2.19
Financial instruments (continued)

the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.

Financial assets and liabilities are offset and the net amount reported in the Balance Sheet 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.


3.


Judgements in applying accounting policies and key sources of estimation uncertainty

In the application of the Company's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts 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.
Judgements - revenue recognition
As part of installation projects, the company purchases equipment such as routers to be installed at customer premises. This equipment is configured for each customer such that it cannot be repurposed for resale elsewhere, and once purchased the customer is obliged to pay the company.
On occasion, the customer requests that the installation of the equipment be delayed, and therefore it is held by the company at their premesis. It is the view of management that even though the equipment has not been installed, that the criteria to recognise a sale under the provisions of UK Accounting Standards have been met, and therefore the equipment is not recognised as stock in the company's balance sheet, but instead a sale and associated cost are recognised in the Statement of Comprehensive Income. 
Judgements - bad debt provision
Management closely monitor debtors and make appropriate provision where the recovery of debts is considered doubtful. At the year end, a bad debt provision of £350,776 (2022: £91,920) was recognised in the Balance sheet.

Page 19

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

4.


Turnover

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


2023
2022
£
£

Support Contracts
9,946,750
8,965,435

Licences
5,400,255
5,646,544

Installations and other sales
7,697,593
8,375,803

Professional Services
1,372,464
1,382,151

24,417,062
24,369,933


Analysis of turnover by country of destination:

2023
2022
£
£

United Kingdom
23,028,763
23,220,634

Rest of Europe
1,313,314
1,051,951

Rest of the world
74,985
97,348

24,417,062
24,369,933



5.


Operating profit/(loss)

The operating profit/(loss) is stated after charging/(crediting):

2023
2022
£
£

Exchange differences
(22,034)
(8,402)

Other operating lease rentals
132,950
138,992


6.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors:


2023
2022
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
48,725
45,000

The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.
Prior year audit fees were paid to the predecessor auditor.

Page 20

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

7.


Employees

Staff costs, including directors' remuneration, were as follows:


2023
2022
£
£

Wages and salaries
5,587,394
5,840,433

Social security costs
655,254
651,598

Cost of defined contribution scheme
168,647
176,434

6,411,295
6,668,465


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


        2023
        2022
            No.
            No.







Employees
113
124


8.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
427,562
578,921

Company contributions to defined contribution pension schemes
9,098
11,746

Compensation for loss of office
-
60,000

436,660
650,667


During the year retirement benefits were accruing to 5 directors (2022 - 4) in respect of defined contribution pension schemes.

The highest paid director received remuneration of £109,211 (2022 - £105,312).

The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £1,321 (2022 - £1,321).

During the year, 1 director (2022: none) received share options under the active share option scheme operated by the parent company. No directors (2022: 1) exercised share options during the year. Neither of the above relate to the highest paid director.

Page 21

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

9.


Interest receivable

2023
2022
£
£


Other interest receivable
24,063
-


10.


Interest payable and similar expenses

2023
2022
£
£


Bank interest payable
-
143

Finance leases and hire purchase contracts
654
3,198

654
3,341


11.


Taxation


2023
2022
£
£

Corporation tax


Adjustments in respect of previous periods
(91,061)
(17,838)


Total current tax
(91,061)
(17,838)

Deferred tax


Origination and reversal of timing differences
31,001
(48,479)

Changes to tax rates
-
5,285

Adjustments in respect to prior periods
-
(1)

Total deferred tax
31,001
(43,195)


Taxation on loss on ordinary activities
(60,060)
(61,033)
Page 22

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023
 
11.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - lower than) the standard rate of corporation tax in the UK of 19% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Profit/(loss) on ordinary activities before tax
165,135
(304,285)


Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022 - 19%)
31,376
(57,814)

Effects of:


Expenses not deductible for tax purposes
65,566
981

Adjustments to tax charge in respect of prior periods
(91,061)
(17,838)

Utilisation of losses previously not recognised in deferred tax
(51,806)
-

Fixed asset differences
(14,135)
(4,221)

Adjustments to tax charge in respect of prior periods - deferred tax
-
(1)

Amounts relating to other comprehensive income otherwise transferred
-
(1,329)

Losses carried back
-
13,020

Other tax adjustments, reliefs and transfers
-
12,520

Remeasurement of deferred tax for changes in tax rates
-
(6,351)

Total tax charge for the year
(60,060)
(61,033)


Factors that may affect future tax charges

The main rate of Corporation tax main was increased to 25% in the tax year commencing 1 April 2023 for companies whose profits exceed £250k. A tapered rate has been introduced for profits above £50k up to the £250k limit.


12.


Exceptional items

2023
2022
£
£


Exceptional items
12,644
589,069

In the prior year, exceptional costs related to professional fees and transformation team wages and salaries associated with the restucturing to consolidate the VCG brand into a single trading entity "VCG Technology Services Ltd".
In the current year exceptional costs relate to professional fees relating to team reorganisation costs and redundancy.

Page 23

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

13.


Tangible fixed assets





Short-term leasehold property
Plant and machinery
Office equipment
Computer equipment
Total

£
£
£
£
£



Cost or valuation


At 1 April 2022
150,272
260,028
675,240
1,302,332
2,387,872


Additions
14,780
-
10,408
422,351
447,539


Disposals
-
(202,363)
(4,790)
(223,026)
(430,179)



At 31 March 2023

165,052
57,665
680,858
1,501,657
2,405,232



Depreciation


At 1 April 2022
103,920
244,373
618,089
1,111,095
2,077,477


Charge for the year
30,633
11,770
40,654
169,415
252,472


Disposals
-
(202,363)
(4,239)
(223,026)
(429,628)



At 31 March 2023

134,553
53,780
654,504
1,057,484
1,900,321



Net book value



At 31 March 2023
30,499
3,885
26,354
444,173
504,911



At 31 March 2022
46,352
15,655
57,151
191,237
310,395

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2023
2022
£
£



Computer equipment
235,328
97,144

Page 24

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

14.


Stocks

2023
2022
£
£

Finished goods and goods for resale
1,257,009
1,648,751








 


15.


Debtors

As restated
2023
2022
£
£


Trade debtors
4,881,667
4,655,415

Amounts owed by group undertakings
1,630,281
1,468,104

Other debtors
109,185
3,926

Prepayments and accrued income
946,578
827,773

Deferred taxation
-
26,460

7,567,711
6,981,678


Total impairments to debtors charged to the Statement of comprehensive income totalled £255,030 (2022: £93,184).
Amounts due from group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.


16.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
3,531,329
1,274,642


Page 25

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

17.


Creditors: Amounts falling due within one year

As restated
2023
2022
£
£

Other loans
118,101
-

Trade creditors
3,603,403
1,929,566

Amounts owed to group undertakings
-
4

Other taxation and social security
487,599
573,935

Obligations under finance lease and hire purchase contracts
75,096
40,201

Other creditors
38,292
-

Accruals and deferred income
6,728,822
6,380,606

11,051,313
8,924,312


Finance lease obligations are secured against the assets to which they relate.
Amounts due from group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.


18.


Creditors: Amounts falling due after more than one year

2023
2022
£
£

Other loans
118,101
-

Net obligations under finance leases and hire purchase contracts
195,106
24,450

313,207
24,450


Finance lease obligations are secured against the assets to which they relate.

Page 26

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

19.


Loans


Analysis of the maturity of loans is given below:


2023
2022
£
£

Amounts falling due within one year

Other loans
118,101
-

Amounts falling due 1-2 years

Other loans
118,101
-



236,202
-


The company obtained a loan from an external financier during the year repayable in three equal instalments over three years. The first repayment was made during the year. The loan is interest free.
The loan is unsecured.


20.


Deferred taxation




2023


£






At beginning of year
26,460


Charged to profit or loss
(31,001)



At end of year
(4,541)

The deferred taxation balance is made up as follows:

2023
2022
£
£


Fixed asset timing differences
(21,554)
(16,436)

Short term timing differences
8,479
2,896

Losses and other deductions
8,534
40,000

(4,541)
26,460


21.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



Page 27

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

21.Share capital (continued)

55,531 (2022 - 55,531) Ordinary shares of £1.00 each
55,531
55,531

There is a single class of ordinary shares. There are no restrictions on dividends and the repayment of capital.



22.


Reserves

Share premium account

Includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.

Profit and loss account

Includes all current and prior period retained profits and losses. 

Page 28

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

23.


Share based payments

The company has granted a number of share options to employees of the company. The options are in the parent entity, Vodat Communications Group (VCG) Holding Limited. 
The movement in options is described below. The share based payment charge is deemed to be immaterial and is therefore not included in these financial statements.
Share options exercised are made out of treasury shares which are held by the parent company.

Weighted average exercise price (pence)
2023
Number
2023
Weighted average exercise price
(pence)
2022
Number
2022

Outstanding at the beginning of the year

0.22

8,338,384

1.14
 
45,064,588
 
Granted during the year

1.70

9,928,260

0
 
-
 
Forfeited during the year

1.70

(1,418,323)

1.48
 
(32,566,026)
 
Exercised during the year

0.11

(2,257,955)

0.32
 
(4,160,178)
 
Outstanding at the end of the year
1.12

14,590,366

0.22
 
8,338,384
 

2023
2022
Option pricing model used


Black Scholes

Black Scholes
 
Weighted average share price (pence)


1.12

0.22
 
Expected volatility


50%

50%
 
Risk-free interest rate


1.9%

1.9%
 

2023
2022
£
£

 
-
 
-


24.


Pension commitments

The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £168,647 (2022: £176,435). Contributions totalling £33,917 (2022: £27,889) were payable to the fund at the balance sheet date and are included in creditors.

Page 29

 
VCG Technology Services Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 31 March 2023

25.


Commitments under operating leases

At 31 March 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£


Not later than 1 year
136,000
140,000

Later than 1 year and not later than 5 years
544,000
35,000

Later than 5 years
34,000
-

714,000
175,000


26.


Related party transactions

The directors have chosen not to disclose transactions entered into with other companies wholly owned within the group as permitted under FRS 102 paragraph 33.1A.
During the year, the company incurred fees from a company related by virtue of common significant influence of £17,500 (
2022: £Nil). This, together with Directors' remuneration, forms the total key management compensation.


27.


Controlling party

The ultimate parent undertaking is Vodat Communications Group (VCG) Holding Limited (Company number 07962206), a company incorporated in England and Wales.
The parent company address is Signal Point, Bredbury Park Way, Bredbury, Stockport, England, SK6 2SN.
The consolidated financial statements of Vodat Communications Group (VCG) Holding Limited are available to the public and may be obtained from Companies House.

 
Page 30