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Registration number: 09242528

Amiosec Ltd

Annual Report and Financial Statements

for the Year Ended 31 March 2023

 

Amiosec Ltd

Contents

Company Information

1

Strategic Report

2 to 3

Directors' Report

4 to 5

Statement of Directors' Responsibilities

6

Independent Auditor's Report

7 to 9

Profit and Loss Account

10

Balance Sheet

11

Statement of Changes in Equity

12

Statement of Cash Flows

13

Notes to the Financial Statements

14 to 24

 

Amiosec Ltd

Company Information

Directors

A M Cunningham

J A B Hendry

J A Pyke

Registered office

Unit 5 Miller Court
Severn Drive
Tewkesbury
Gloucestershire
GL20 8DN

Auditors

Hazlewoods LLP
Staverton Court
Staverton
Cheltenham
GL51 0UX

 

Amiosec Ltd

Strategic Report for the Year Ended 31 March 2023

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

Principal activity

The principal activity of the company is a key research and technology partner for UK defence, government and civil organisations.

Fair review of the business

Amiosec is a specialist in the design, development, build and supply of secure mobile communications, cyber security, high-grade cryptography and advanced network defence products and related services which it supplies to both government and civil organisations. Formed in 2014, the company has become a trusted supplier and partner to its primary government customers to which it supplies a number of products and services within the high-grade communications and crypt-key marketplace, both in the UK and across the 5-eyes community.


Trading results
Amiosec has grown significantly since its inception and has a good record of delivering strong financial performance which underpins its continuing and significant internal investment in new products and services.

Turnover for the year ended 31 March 2022 was £15.6M, a decrease of 4% over the previous year. This slight reduction in turnover is down to customers’ existing product stock holdings and their ongoing transition to procure the companies secure mobility products through a managed service model. This transition is further highlighted in the reduction of product sales to £1.0M (2022: £6.6M) offset by the continued growth in managed services and product support revenues of £14.2M (2022: £9.5M). Despite the slight reduction in turnover, the increase of royalty income and by managing a decrease in administrative expenses of £0.2M (2023: £3.5M, 2022: £3.7M) the company was able to deliver another strong operating profit of £3.9M (2022: £4.9M).

Administrative expenses includes expenditure on internally funded Research and Development which decreased by £0.7M compared to the previous year (2023: £1.4m, 2022: £2.1M). This decrease is due to higher investment in customer funded research and development giving a sales increase of £1.7M (2023: £3.8M, 2022: £2.1M). The Board is committed to ongoing investment in Research and Development in order to ensure the continuing relevance of the company’s product and service offerings. In accordance with FRS 102 recognition criteria the Board has continued to make the accounting policy choice that all such expenditure is expensed to the Profit and Loss Account and no expenditure is capitalised.

Headcount grew significantly during the year and averaged 79 (2022: 61), demonstrating the company’s ability to attract new talent across all disciplines including engineering, information technology and administrative functions. The company considers its employees to be its most valuable asset and fosters an environment that encourages professional development, collaboration and team working. As a result, the company enjoys a low employee attrition rate.

Financial position and cash flow
The company had a net cash balance of £7.1M at 31 March 2023 (2022: £11.8M).

The company finished the year with working capital (being stock and debtors plus cash at bank less creditors due within one year) of £13.0M (2022: £10.4M). Cash lost from operations was negative at £2.8M (2022: cash generated of £4.5M) due to increases to stock of £2.2M which related to advance procurement of components held for future product build and sales, increase in debtors of £0.5M and a reduction in creditors of £4.2M

The Board considers the company to be in a strong financial position with sufficient working capital and cash to facilitate its future plans and continued investment in products and services.

The Board considers the following to be key performance indicators within the business and monitors these on a regular basis:

 

Unit

2023

2022

Revenue

£

15,600,539

16,217,338

Operating profit

£

3,879,099

4,860,590

On Time In Full

%

86

89

On Time In Full (OTIF) monitors the timeliness and completeness of deliverables across the business. OTIF in the year across measured internal and external deliverables was 86% (2022: 89%) with no deliverables being significantly late.

 

Amiosec Ltd

Strategic Report for the Year Ended 31 March 2023

Principal risks and uncertainties

The Board monitors business risks on a regular basis and mitigating actions are put in place wherever possible. The principal risks and mitigating actions are as follows:

Lack of suitably qualified and experienced personnel to facilitate growth - mitigated through the development of strong relationships with specialist recruitment agencies, the implementation of apprenticeship and graduate schemes, relationships with academia and dedicated in-house early careers and recruitment personnel.

Potential impact of sovereign crypt-key industrial strategy on market access - mitigated through close working relationships with key stakeholders to understand and influence the strategy. Exploration of other markets and security classifications where our products could provide significant benefits to UK PLC.

Supply chain issues adversely impacting ability to build and supply product – mitigated through close working relationships with supply chain partners, utilisation of 3rd party Materials Requirement Planning tools and advance procurement to minimise the impact of long-lead components.

Potential impact of a disruptive competitor or new technology entering the marketplace – mitigated through continuing high levels of investment in R&D to identify and develop new technologies and solutions and close working relationships with customers and other relevant stakeholders.

Compromise of critical IT systems - mitigated through implementation of best security practices, monitoring, business continuity planning and continuous improvement activities.

Future developments

The continued growth in electronic communications, constant evolution of cyber threats and changes to working patterns and methods mean that demand for highly secure mobility products and services will continue to increase at pace in the foreseeable future. By leveraging its strong financial position, deep customer relationships, technical partnerships and wealth of experience in secure high-grade cryptography, the Board is confident that the company can continue to execute a business strategy that focuses on innovation, agility and rapid development and deployment of products and services and delivers significant future growth.

Approved by the Board on 10 November 2023 and signed on its behalf by:


A M Cunningham
Director

 

Amiosec Ltd

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 of the company

The directors who held office during the year were as follows:

A M Cunningham

M A Hutchings (ceased 30 August 2023)

J A B Hendry

The following director was appointed after the year end:

J A Pyke (appointed 15 June 2023)

Results and dividends

The profit for the year, after taxation, amounted to £3,368,629 (2022: £4,258,979). The directors did not recommend the payment of a dividend (2022: £nil).

Information included in the Strategic Report

The future developments of the company are covered in the Strategic Report.

Financial instruments

Objectives and policies

The company's financial instruments comprise cash and liquid resources and various other items such as trade debtors, trade creditors, etc that arise directly from its operations. The main purpose of these financial instruments is to finance the operations of the company. The main risks arising from the company's financial instruments are set out below.

Price risk, credit risk, liquidity risk and cash flow risk

Price risk
Price risk is the risk that price changes will cause financial losses for the company. Through careful monitoring of the company's market place and competitors the company's exposure to price risk is kept to a minimum.

Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation. The company trades under agreed payment terms with government bodies and large blue chip organisations and has implemented credit control procedures and reporting to ensure that debts are repaid in a timely manner to mitigate this risk. The company has no significant credit risk.

Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities. The company held cash of £7,124,917 at the year end date and the directors consider the company has sufficient liquid resources to meet its operational requirements.

Cash flow risk
Cash flow risk is the risk that inflows and outflows of cash and cash equivalents will not be sufficient to finance day-to-day operations of the company. The company manages cash flow by active management of working capital and negotiating terms with customers and suppliers to maintain available funds to meet its liabilities as they fall due.

Going concern

Forecasts have been prepared that reflect estimates of future performance that take into account changes in the economic environment. These forecasts indicated that the company will continue to operate within their existing facilities. At 31 March 2023, the company had net assets of £14,035,705 (2022: £10,667,076) and access to cash reserves of £7,124,917 (2022: £11,770,589). Based on forecasts prepared and funds available, the directors believe that there are sufficient resources for the company to conduct business for at least 12 months post signing of the financial statements. As such the directors believe it is appropriate for the financial statements to be prepared on the going concern basis.

 

Amiosec Ltd

Directors' Report for the Year Ended 31 March 2023

Directors' liabilities

The company has indemnified, by means of directors’ and officers’ liability insurance, the directors of the company against liability in respect of proceedings brought by third parties, subject to the conditions set out in section 234 of the Companies Act. Such qualifying third party indemnity provision was in force during the year and is in force at the date of approving the Directors’ Report.

Disclosure of information to the auditors

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.

Reappointment of auditors

The auditor, Hazlewoods LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

Approved by the Board on 10 November 2023 and signed on its behalf by:


A M Cunningham
Director

 

Amiosec Ltd

Statement of Directors' Responsibilities

The directors are responsible for preparing the Strategic Report, 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards has been followed, subject to any material departures disclosed and explained in the financial statements; and

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 enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Amiosec Ltd

Independent Auditor's Report to the Members of Amiosec Ltd

Opinion

We have audited the financial statements of Amiosec Ltd (the 'company') for the year ended 31 March 2023, which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, 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 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's 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 original financial statements were 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. 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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

Opinion on other matter 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

 

Amiosec Ltd

Independent Auditor's Report to the Members of Amiosec Ltd

Matters on which we are required to report by exception

In the light of our 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 and the Directors' Report.

We have nothing to report in respect of the following matters where 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 Statement of Directors' Responsibilities set out on page 6, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Auditor’s responsibilities for the audit of the financial statements

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

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

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:

We considered the nature of the company’s industry and its control environment and reviewed the company’s documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management about their own identification and assessment of the risks of irregularities.

We obtained an understanding of the legal and regulatory framework that the company operates in and identified the key laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements, including the UK Companies Act and tax legislation, and, those that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty.

We discussed among the audit engagement team regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.

 

Amiosec Ltd

Independent Auditor's Report to the Members of Amiosec Ltd

In common with all audits carried out in accordance with ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override of controls. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatements due to fraud;

enquiring of management concerning actual and potential litigation and claims and instances of non-compliance with laws and regulations; and

reading minutes of meetings of those charged with governance.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that 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, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

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

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





Rebecca Copping (Senior Statutory Auditor)
For and on behalf of Hazlewoods LLP, Statutory Auditor

Staverton Court
Staverton
Cheltenham
GL51 0UX

17 November 2023

 

Amiosec Ltd

Profit and Loss Account for the Year Ended 31 March 2023

Note

2023
 £

2022
 £

Turnover

3

15,600,539

16,217,338

Cost of sales

 

(8,277,406)

(7,792,814)

Gross profit

 

7,323,133

8,424,524

Administrative expenses

 

(3,505,414)

(3,673,098)

Other operating income

4

61,380

109,164

Operating profit

5

3,879,099

4,860,590

Other interest receivable and similar income

6

42,900

614

Interest payable and similar charges

7

(2,517)

-

Profit before tax

 

3,919,482

4,861,204

Taxation

11

(550,853)

(602,225)

Profit for the financial year

 

3,368,629

4,258,979

The above results were derived from continuing operations.

The company has no other comprehensive income for the year.

 

Amiosec Ltd

(Registration number: 09242528)
Balance Sheet as at 31 March 2023

Note

2023
 £

2022
 £

Fixed assets

 

Tangible assets

12

1,029,305

477,427

Investments

13

1

1

 

1,029,306

477,428

Current assets

 

Stocks

14

3,449,498

1,233,761

Debtors

15

7,490,914

6,841,914

Cash at bank and in hand

7,124,917

11,770,589

 

18,065,329

19,846,264

Creditors: Amounts falling due within one year

16

(4,769,420)

(9,470,645)

Net current assets

 

13,295,909

10,375,619

Total assets less current liabilities

 

14,325,215

10,853,047

Provisions for liabilities

17, 11

(289,510)

(185,971)

Net assets

 

14,035,705

10,667,076

Capital and reserves

 

Called up share capital

19

160,000

160,000

Profit and loss account

13,875,705

10,507,076

Total equity

 

14,035,705

10,667,076

Approved and authorised by the Board on 10 November 2023 and signed on its behalf by:
 


A M Cunningham
Director

 

Amiosec Ltd

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

Share capital
£

Profit and loss account
£

Total
£

At 1 April 2022

160,000

10,507,076

10,667,076

Profit for the year

-

3,368,629

3,368,629

At 31 March 2023

160,000

13,875,705

14,035,705

Share capital
£

Profit and loss account
£

Total
£

At 1 April 2021

160,000

6,248,097

6,408,097

Profit for the year

-

4,258,979

4,258,979

At 31 March 2022

160,000

10,507,076

10,667,076

 

Amiosec Ltd

Statement of Cash Flows for the Year Ended 31 March 2023

Note

2023
£

2022
£

Cash flows from operating activities

Profit for the year

 

3,368,629

4,258,979

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

5

380,380

259,467

Loss on disposal of tangible assets

2,170

-

Finance income

6

(42,900)

(614)

Finance costs

7

2,517

-

Research and development expenditure credit

 

(123,586)

(42,963)

Income tax expense

11

550,853

602,225

 

4,138,063

5,077,094

Working capital adjustments

 

Increase in stocks

14

(2,215,737)

(979,083)

Increase in debtors

 

(482,977)

(5,262,196)

(Decrease)/increase in creditors

 

(4,175,660)

5,620,501

(Decrease)/increase in provisions

 

(40,200)

6,284

Cash generated from operations

 

(2,776,511)

4,462,600

Income taxes paid

 

(975,116)

(760,440)

Net cash flow from operating activities

 

(3,751,627)

3,702,160

Cash flows from investing activities

 

Interest received

6

42,900

614

Acquisitions of tangible assets

(934,428)

(391,312)

Net cash flows from investing activities

 

(891,528)

(390,698)

Cash flows from financing activities

 

Interest paid

7

(2,517)

-

Net (decrease)/increase in cash and cash equivalents

 

(4,645,672)

3,311,462

Cash and cash equivalents at 1 April

 

11,770,589

8,459,127

Cash and cash equivalents at 31 March

 

7,124,917

11,770,589

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

 

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Unit 5 Miller Court
Severn Drive
Tewkesbury
Gloucestershire
GL20 8DN

 

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except for, where disclosed in these accounting policies, certain items that are shown at fair value.

The presentational currency of the financial statements is Pounds Sterling, being the functional currency of the primary economic environment in which the company operates. Monetary amounts in these financial statements are rounded to the nearest Pound.

Group accounts not prepared

The financial statements present information about the company as an individual undertaking and not its group. Although the Companies Act 2006 required medium sized groups to prepare consolidated accounts, the company has not prepared them on the basis that the results and net assets of the subsidiary undertaking is not material to the group.

Going concern

Forecasts have been prepared that reflect estimates of future performance that take into account changes in the economic environment. These forecasts indicated that the company will continue to operate within their existing facilities. At 31 March 2023, the company had net assets of £14,035,705 (2022: £10,667,076) and access to cash reserves of £7,124,917 (2022: £11,770,589). Based on forecasts prepared and funds available, the directors believe that there are sufficient resources for the company to conduct business for at least 12 months post signing of the financial statements. As such the directors believe it is appropriate for the financial statements to be prepared on the going concern basis.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying 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.

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

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

Judgements

No significant judgements have been made by management in preparing these financial statements.

Key sources of estimation uncertainty

No key sources of estimation uncertainty have been identified by management in preparing these financial statements other than those detailed in these accounting policies.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.

The company recognises revenue from the sale of goods when the entity has transferred to the buyer the significant risk and reward of ownership of goods, and the amount of revenue can be reliably measured.

The company recognises revenue from the rendering of services when the amount of revenue can be reliably measured, it is probable that the economic benefits associated with the transaction will flow to the entity, the stage of completion of the transaction at the end of the reporting period can be measured reliably; and the costs incurred for the transaction and the costs to complete the transaction can be reliably measured. Invoices are deferred and released on a straight line basis over the term of the support contract.

The company recognises revenue from royalties on an accrual basis, following confirmation of the number of sales in each quarter period.

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the initial transaction dates.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

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

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Leasehold improvements

33.3% straight line

Fixtures and fittings

33.3% straight line

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

IT equipment

33.3% - 50% straight line

Office equipment

33.3% straight line

Plant and machinery

33.3% straight line

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

Investments

Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.

Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for goods sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. All trade debtors are repayable within one year and hence are included at the undiscounted cost of cash expected to be received. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the debtors.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are 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.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and all are repayable within one year and hence are included at the undiscounted amount of cash expected to be paid.

Provisions

Provisions are recognised when the company has an obligation at the reporting date as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Dividends

Dividend distribution to the company's shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Financial Instruments

Classification

Financial instruments are classified and accounted for according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability of the company is presented as a liability on the balance sheet. The corresponding dividends relating to the liability component are charged as interest expenses in the profit and loss account.

Recognition and measurement

All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Impairment

Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.

A non financial asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.

The recoverable amount of goodwill is derived from measurement of the present value of the future cash flows of the cash-generating units ('CGUs') of which the goodwill is a part. Any impairment loss in respect of a CGU is allocated first to the goodwill attached to that CGU, and then to other assets within that CGU on a pro-rata basis.

Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. Where a reversal of impairment occurs in respect of a CGU, the reversal is applied first to the assets (other than goodwill) of the CGU on a pro-rata basis and then to any goodwill allocated to that CGU.

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.

Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.
 

 

3

Turnover

The analysis of the company's revenue for the year from continuing operations is as follows:

2023
£

2022
£

Sale of goods

1,020,880

6,550,389

Rendering of services

14,169,480

9,460,920

Royalties received

410,179

206,029

15,600,539

16,217,338

The analysis of the company's turnover for the year by market is as follows:

2023
£

2022
£

UK

14,703,702

15,885,632

Rest of world

896,837

331,706

15,600,539

16,217,338

 

4

Other operating income

The analysis of the company's other operating income for the year is as follows:

2023
£

2022
£

Consultancy income

61,380

109,164

 

5

Operating profit

Arrived at after charging/(crediting):

2023
 £

2022
 £

Depreciation expense

380,380

259,467

Research and development cost

1,358,202

2,050,662

Foreign exchange losses

12,265

8,916

Operating lease expense - property

132,175

170,007

Loss on disposal of property, plant and equipment

3,180

-

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

 

6

Other interest receivable and similar income

2023
£

2022
£

Interest income on director's loan account

8,422

-

Interest income on bank deposits

34,478

614

42,900

614

 

7

Interest payable and similar expenses

2023
£

2022
£

Interest expense on other finance liabilities

2,517

-

 

8

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2023
£

2022
£

Wages and salaries

4,801,171

3,585,320

Social security costs

560,479

422,269

Pension costs, defined contribution scheme

354,730

205,230

5,716,380

4,212,819

The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

2023
No.

2022
No.

Production

54

44

Administration and support

25

17

79

61

 

9

Directors' remuneration

The directors' remuneration for the year was as follows:

2023
£

2022
£

Remuneration

401,231

401,231

Pension costs, defined contribution scheme

16,000

16,000

417,231

417,231

During the year the number of directors who were receiving benefits was as follows:

2023
No.

2022
No.

Accruing benefits under defined contribution pension scheme

2

2

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

In respect of the highest paid director:

2023
£

2022
£

Remuneration

200,695

200,695

Pension costs, defined contribution scheme

8,000

8,000

 

10

Auditor's remuneration

2023
£

2022
£

Audit of the financial statements

18,400

14,000


 

 

11

Taxation

Tax charged/(credited) in the profit and loss account

2023
£

2022
£

Current taxation

UK corporation tax

407,114

559,579

Deferred taxation

Arising from origination and reversal of timing differences

143,739

42,646

Tax expense in the income statement

550,853

602,225

The tax on profit before tax for the year is lower than the standard rate of corporation tax in the UK (2022 - lower than the standard rate of corporation tax in the UK) of 19% (2022 - 19%).

A UK corporation tax rate of 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. This will increase the company’s future current tax charge accordingly. The deferred tax liability as at 31 March 2023 has been calculated at 25% (2022 - 25%).

The differences are reconciled below:

2023
£

2022
£

Profit before tax

3,919,482

4,861,204

Corporation tax at standard rate

744,702

923,629

Effect of expense not deductible in determining taxable profit (tax loss)

794

2,171

Deferred tax expense relating to changes in tax rates or laws

34,498

18,863

Tax decrease from effect of capital allowances and depreciation

(50,211)

(15,853)

Tax decrease from effect of adjustment in research and development tax credit

(178,930)

(326,585)

Total tax charge

550,853

602,225

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

Deferred tax

Deferred tax assets and liabilities

2023

Liability
£

Difference between accumulated amortisation, depreciation and capital allowances

230,556

Short term timing differences

(8,223)

222,333

2022

Liability
£

Difference between accumulated amortisation, depreciation and capital allowances

97,884

Short term timing differences

(19,290)

78,594

 

12

Tangible assets

Leasehold improvements
£

Fixtures and fittings
 £

IT equipment
 £

Office equipment
 £

Plant and machinery
 £

Total
£

Cost

At 1 April 2022

270,144

174,590

440,073

35,795

17,968

938,570

Additions

66,783

62,733

797,711

3,273

3,928

934,428

Disposals

-

-

(5,729)

(5,445)

-

(11,174)

Transfers

36,940

(36,940)

-

-

-

-

At 31 March 2023

373,867

200,383

1,232,055

33,623

21,896

1,861,824

Depreciation

At 1 April 2022

162,762

38,820

222,628

19,650

17,283

461,143

Charge for the year

99,879

64,060

206,012

9,727

702

380,380

Eliminated on disposal

-

-

(4,863)

(4,141)

-

(9,004)

At 31 March 2023

262,641

102,880

423,777

25,236

17,985

832,519

Carrying amount

At 31 March 2023

111,226

97,503

808,278

8,387

3,911

1,029,305

At 31 March 2022

107,382

135,770

217,445

16,145

685

477,427

 

13

Investments

2023
£

2022
£

Investments in subsidiaries

1

1

Subsidiaries

£

Cost

At 1 April 2022

1

Carrying amount

At 31 March 2023

1

At 31 March 2022

1

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

Details of undertakings

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

     

2023

2022

Amiosec Trustee Ltd

England and Wales

Ordinary

100%

100%

Amiosec Trustee Ltd is a trustee of an Employee Share Scheme Trust.

 

14

Stocks

2023
£

2022
£

Raw materials and consumables

2,536,414

594,130

Work in progress

490,913

513,177

Finished goods and goods for resale

422,171

126,454

3,449,498

1,233,761

 

15

Debtors

Note

2023
 £

2022
 £

Trade debtors

 

5,221,094

5,872,383

Other debtors

 

187,056

179,368

Prepayments

 

538,216

276,659

Accrued income

 

872,945

13,504

Director's loan account

21

508,422

500,000

Corporation tax asset

11

163,181

-

 

7,490,914

6,841,914

 

16

Creditors

Note

2023
 £

2022
 £

Due within one year

 

Trade creditors

 

1,021,252

2,020,155

Social security and other taxes

 

886,179

2,040,654

Outstanding defined contribution pension costs

 

61,899

32,462

Other creditors

 

224,254

999,490

Accrued expenses

 

714,842

789,496

Corporation tax liability

11

-

525,565

Deferred income

 

1,860,994

3,062,823

 

4,769,420

9,470,645

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

 

17

Deferred tax and other provisions

Warranties
£

Deferred tax
£

Dilapidations
£

Total
£

At 1 April 2022

62,689

78,594

44,688

185,971

Increase (decrease) in existing provisions

(60,200)

143,739

20,000

103,539

At 31 March 2023

2,489

222,333

64,688

289,510

The dilapidations provision of £64,688 relates to the cost the company expects to incur in restoring the leased premises to their condition prior to occupancy. The provision is management's best estimate of the expected cash outflows.

The company gives warranties on certain products. A provision for warranty is calculated and recognised for each type of such product based on available past historical data on the levels of repairs and returns.

 

18

Pension and other schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £354,730 (2022 - £205,230).

Contributions totalling £61,899 (2022 - £32,462) were payable to the scheme at the end of the year and are included in creditors.

 

19

Share capital

Allotted, called up and fully paid shares

 

2023

2022

 

No.

£

No.

£

Ordinary A £1 of £1 each

48,000

48,000

48,000

48,000

Ordinary B £1 of £1 each

48,000

48,000

48,000

48,000

Ordinary C £1 of £1 each

48,000

48,000

48,000

48,000

Ordinary D £1 of £1 each

16,000

16,000

16,000

16,000

 

160,000

160,000

160,000

160,000

All shares carry full voting rights and are entitled to received dividends and distributions. All share classes rank pari passu.

 

20

Obligations under leases

Operating leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

192,816

195,050

Later than one year and not later than five years

213,988

401,705

406,804

596,755

The amount of non-cancellable operating lease payments recognised as an expense during the year was £177,160 (2022 - £170,007).

 

Amiosec Ltd

Notes to the Financial Statements for the Year Ended 31 March 2023

 

21

Related party transactions

Summary of transactions with key management

Key management personnel are considered to be the directors of the company and key management personnel compensation is disclosed in note 9 to the financial statements.
 

Transactions with directors

Director's loan account

2023

At 1 April 2022
£

Advances to director
£

At 31 March 2023
£

A M Cunningham

500,000

8,422

508,422

       

2022

At 1 April 2021
£

Advances to director
£

At 31 March 2022
£

A M Cunningham

A M Cunningham

-

500,000

500,000

       
     

 

The loan was repayable no later than 1 January 2023. As such, the loan plus interest which accrues at 3% above the Bank of England base rate is immediately repayable on demand by the company.

 

22

Analysis of changes in net debt

At 1 April 2022
£

Cash flow
£

At 31 March 2023
£

Cash and cash equivalents

Cash

11,770,589

(4,645,672)

7,124,917

 

11,770,589

(4,645,672)

7,124,917

 

23

Non adjusting events after the financial period

After the year end date, the company has entered into two new operating leases. The first lease is for a five year term with a three year break clause and carries an annual average rent of £89,326. The second lease is for a ten year term with a three and five year break clause and carries an average annual rent of £112,561.

On 26 July 2023, the company declared a dividend of £1,500,000 that was subsequently paid in August 2023.