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M SQUARED TECHNOLOGIES GROUP LIMITED






ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

COMPANY INFORMATION


Directors
Dr Graeme Malcolm 
Dr Gareth Maker 
Angus Morrison 
Stuart Malcolm 




Company secretary
Stuart Malcolm



Registered number
SC675779



Registered office
Venture Building
1 Kelvin Campus

West Of Scotland Science Park

Maryhill Road

Glasgow

G20 0SP




Independent auditor
Anderson Anderson & Brown Audit LLP

81 George Street

Edinburgh

EH2 3ES





 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

CONTENTS



Page
Group strategic report
1 - 5
Directors' report
6 - 7
Directors' responsibilities statement
8
Independent auditor's report
9 - 12
Consolidated statement of comprehensive income
13
Consolidated balance sheet
14
Company balance sheet
15
Consolidated statement of changes in equity
16
Company statement of changes in equity
17
Consolidated statement of cash flows
18 - 19
Consolidated analysis of net debt
20
Notes to the financial statements
21 - 46


 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 28 FEBRUARY 2023

Introduction
 
M Squared Technologies Group Limited and subsidiaries (“Group”) are private companies limited by shares incorporated in the United Kingdom (registered in Scotland), United States of America and Germany. The directors, in preparing this strategic report, have complied with s414C of the Companies Act 2006. This strategic report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to M Squared Technologies Group Limited and its subsidiary undertakings (see Note 15) when viewed as a whole.
Principal Activities
The Group focuses on the development and production of photonics and quantum technologies and it is on a mission to harness the power of light to change the world. The Group is innovation led and by harnessing its ability to produce the world’s purest light it seeks to produce technology which will result in society leading innovation and address some of society’s greatest challenges. The Group’s technology has transformative, real world applications that can help global approaches to the climate emergency, greatly improve biomedical imaging, realise the next generation of semiconductors, and practically unlock the coming quantum age. 
The Group continues to export in excess of 90% of its products and services overseas, including North America, Europe, China and Japan. The Group had an average of 68 employees in the financial year 2022/23 ("FY23"), and 100 employees in the prior 15 month period ("PP22"). The Group has its headquarters in Glasgow, Scotland, alongside offices in England, the USA and Germany.
Business Review
The Group’s turnover for FY23 was £17.8m. In PP22 the Group recorded turnover of £22.9m. This was a very positive achievement given the continued challenges in global markets due to COVID, particularly its impact in China, and the indirect impact of the ongoing war in Ukraine on the Group’s operational activities.
In Scotland, all Covid-19 related legal restrictions, including the wearing of face coverings, were removed in March 2022 and the majority of international travel restrictions were gradually lifted over the remainder of the calendar year. The Group experienced some recovery in customer activities, particularly in new order placement, however, the continued COVID restrictions in China, which applied until January 2023, had a negative impact on sales into that market and impacted our ability to source certain components. 
The conflict in Ukraine, which began on 24 February 2022, when Russian military forces entered the country, has had a significant indirect negative impact on the Group’s trading performance. In particular, the resultant increased activity in the defence sector restricted our ability to source certain components and required us to seek out alternative sources and to strategically increase inventory levels to safeguard production. The resurgence in defence sector activity caused by the conflict also resulted in the Group experiencing higher than normal staff attrition in certain areas and a general tightening in the labour market for certain skills extended the time taken to hire replacements. 
The issues created by the extended Covid restrictions in China and the impacts of the Ukraine war contributed to a net £3.3m reduction in turnover generated from our core sales activities (e.g. to sectors other than the space sector), on an annualised basis. In part as a strategic response to these challenges, but also recognising the opportunities created by the timing of various satellite programmes, the Group successfully expanded the level of its commercial activities in the space sector during FY23 and experienced strong growth in that sector. During FY23, the Group generated almost £5m of turnover from the space sector which was a more than three-fold increase by comparison to the previous year. Our activities in this sector are further discussed later in this review. 
The Group experienced a £3.6m increase in the level of accrued income recorded on the 28 February 2023 balance sheet compared with the previous year end position, which was largely due to production backlogs caused by workforce gaps during the period. 
 
Page 1

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 FEBRUARY 2023

Business Review (continued)
In FY23, the Group's order book expanded across all business segments, establishing a favourable opening position in our core areas for FY24 and beyond. This growth positions us strategically to capitalise on developing markets such as semiconductors, metrology, life sciences, and notably in the groundbreaking field of quantum technology.
The Group's long-standing strategy of identifying and commercialising research and development (R&D) is well recognised. We maintain strong partnerships with key global technology companies and government entities, addressing significant technological and scientific challenges. A substantial portion of group resources is dedicated to R&D, both in existing and new product domains. This effort is spearheaded by our Innovation business unit, which not only bolsters the business but also generates cash flow through customer partnerships, engineering services, end-user support, and grant funding.
As a global leader in frontier science and deep technology, the Group continues to advance significantly in various core growth areas and further expands and develops its broad Intellectual Property (IP) portfolio.
Our current focus and growth areas include: 
Advancements in Quantum Technology:
The Group has made notable progress in making quantum technology a practical reality. This advancement is supported by partnerships, such as with the UK and Scottish governments and the University of Strathclyde (Square project), to enhance quantum computing capabilities. Our efforts in 'ultra-cold matter' sensing, timekeeping, and quantum computing have positioned us as both a supplier and integrator in key global programmes. We continue to develop our expertise in quantum accelerometers, quantum gravimeters, and the optical lattice clock.
The Square project has advanced to state-of-the-art levels in neutral atom quantum computing, whilst our internal engineering and product development programme culminated in the launch of the Maxwell Neutral Atom Quantum Computing platform at the UK National Quantum Technologies Showcase in November 2022.
At the Showcase, we also demonstrated our Atom Interferometer Accelerometer system which was deployed in field trials during the year. The Group successfully secured orders for various 'Quantum Modules' and OEM subassemblies for commercial cold matter quantum computers, as emerging start-up companies in this field are increasingly adopting our laser platforms.
Earth Observation for Climate Change, Pollution and Global Food Security missions in the Space Industry: 
The Group has solidified its role in supporting the crucial Earth observation segment of the space industry. The current year’s activities focused on calibration systems to enable global CO2 emission measurement and sustainable agriculture. Our precision light sources, covering an unprecedented spectral range, are instrumental in mapping atmospheric pollution and climate change gases. These sources have also been expanded to other missions, with significant deliveries and developments achieved with leading customers in FY23 and PP22 now moving forward in the end user missions.
Powering Advanced Manufacturing for Industry:
FY23 witnessed the expansion of our precision light laser products into new manufacturing domains, including strong uptake in semiconductors and novel metrology applications. This expansion has enhanced the precision of manufacturing processes, improved yields, increased uptime, and reduced ownership costs, while also significantly lowering energy consumption and CO2 emissions often by many hundred-fold against previous generations of technology.
 
Page 2

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 FEBRUARY 2023

Advancements in Biological Imaging & Healthcare:
Our advanced imaging product lines have evolved to offer standard products to solve some of biological imaging's hardest problems and at higher resolution imaging performance, pushing the boundaries in life sciences, including neuroscience, cancer biology, organoid biology, human reproductive IVF processes and plant biology.
Investment in Strategic Partnerships:
The Group's investment in strategic partnerships is pivotal in this high-barrier field. Our track record in forming multifaceted partnerships, aligned with common objectives, has made us a preferred partner for numerous global 'blue chip' corporations as they prepare for a 'quantum-ready' future, or develop precision optical systems for advanced manufacturing processes or metrology. During the year the company was successful in achieving UK funding for Innovation Acceleration to allow more Quantum end-user activities in FY24 especially in the application of novel Quantum Computing use-cases.
Financial Key Performance Indicators 
The Group tracks EBITDA as a primary financial KPI. EBITDA performance for FY23 was £4.9m (PP22 £5.9m), representing a 28% Return on Revenue (PP22 26%) which is calculated by dividing EBITDA by Turnover. The Loss before before tax in FY23 was £6.3m, compared with a Loss of £7.8m in the prior period of 15 months.  
EBITDA was calculated as follows:
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Research and Development: The Group’s Innovation business unit continues to develop a number of new laser based photonic solutions, aimed at addressing global issues in the fields of physical, biological and chemical sciences. The progress made in development of certain innovation programs was such that the directors, in line with previous reporting periods, consider it appropriate to capitalise £1,411,828 (PP22: £3,295,518) of related expenditure as an intangible asset with amortisation in the year of £2,296,592 (FY22: £2,524,162). 

Page 3

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 FEBRUARY 2023

Principal Risks and Uncertainties
 
COVID-19
The directors have given due consideration to the impact of the worldwide COVID-19 pandemic on future operations and the impact this has had since March 2020. 
Financial Exposure
The Group’s principal financial assets are cash balances, trade and other debtors. The Group’s credit risk is primarily attributable to its trade debtors. The directors are of the opinion that the Group has no concentration of credit risk, with exposure spread over a large number of customers, many of whom are long established research institutions, government bodies and ‘blue chip’ organisations. 
The directors retain overall responsibility for the Group’s system of internal financial control, which is designed to give reasonable assurance against material financial misstatement or loss. Financial controls have been established which the directors believe enable them to meet their responsibility for the integrity and accuracy of the Group’s accounting records. 
The directors consider that the current global economic conditions create uncertainty, particularly over movements in exchange rates between GBP (the Group’s reporting currency) and the principal currencies in which the Group trades globally, and the impact that could have on financial and trading performance.
Interest Rate Risk
The Group has a mix of borrowings (with interest rates which can be fixed or floating), providing a certain degree of interest rate risk mitigation. The directors regularly reviewed interest rates throughout the year to determine the optimum risk mitigation strategy.
Credit Risk
The Group monitors credit risk closely and considers that its current policies of credit checks meets its objectives of managing exposure to credit risk. All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are reviewed on a regular basis and provision is made for doubtful debts when necessary, although this is considered a rare occurrence.
Liquidity Risk
The Group manages its cash and borrowing requirements in order to minimise interest expense, whilst ensuring the Group has sufficient liquid resources to meet the operating needs of the business.
Currency Risk
The Group is exposed in its trading operations to the risk of changes in foreign currency exchange rates. The main currencies in which the Group operates are GBP, Euro and the US dollar. The Group considers that it has a natural hedge in that many of its key suppliers’ invoice in the same currency as its main customers. However, this is reviewed on a regular basis and the use of foreign currency hedging would be considered if the directors concluded that foreign currency fluctuations could have a material impact.

Page 4

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 FEBRUARY 2023

Future Developments
 
The directors are satisfied with the Group’s position at the end of the period and remain confident in the Group’s continuing ability to generate growth and to access financial support from its shareholders. 
The end-markets for the Group’s products, particularly in the field of quantum technology, continue to be well funded by many national governments and the directors expect there to be scope for further growth in the business. 
The Group intends to maintain its investments within the valuable R&D projects that have underpinned its growth so far.
The directors would like to record their thanks and appreciation to all members of staff for their ongoing support and commitment provided during the reporting period.


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



Dr Graeme P A Malcolm OBE FREng FRSE FInstP
Director

Date: 27 November 2023

Page 5

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
DIRECTORS' REPORT
FOR THE PERIOD ENDED 28 FEBRUARY 2023

The directors present their report and the financial statements for the period ended 28 February 2023.

Results and dividends

The loss for the period, after taxation, amounted to £6,262,997 (2022 - loss £7,826,936).

Existence of branches outside the UK 

The Company has no branches, as defined in section 1046(3) of the Companies Act 2006, outside the UK other than its subsidiaries listed in Note 15. 

Post balance sheet events 

In September 2023, the Group raised additional equity amounting to £8,005,035, which is further described in Note 2.3 to the Financial Statements.

Going concern

The directors, having made due and careful enquiry, are of the opinion that the Group has adequate working capital to execute its operations over the next 12 months. The directors, therefore, have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.

The Group is funded by its shareholders, bank term loans, working capital facility and cash flow arising from its trading activities. 
 
The directors have prepared detailed forecasts of Group profitability and cash flow incorporating appropriate downside sensitivities. These forecasts have been used to assess the adequacy of funding resources available within the Company’s parent group. These forecasts show that there can be reasonable certainty that the Company and Group will have sufficient funding resources available to them throughout the assessment period and beyond. The following events are reflected in these forecasts and are relevant to the going concern assessment.
 
Subsequent to the year end, the Directors entered discussions with the Company’s largest institutional shareholder, the Scottish National Investment Bank (‘SNIB’) to agree terms for subscription for additional equity investment in the Group. In consideration of a £7,720,576 investment made by SNIB received in two tranches on 4 September 2023 and 28 September 2023, M Squared Technologies Group Limited (‘the Company’) issued shares to SNIB under a new class of A Preferred Ordinary Shares.

Concurrent with receipt of the first tranche, BGF Investments LP (‘BGF’) paid the Company an amount of £284,459 in consideration for subscription of BGF Warrant Shares in accordance with the BGF Warrant Instrument which was issued on 13 November 2020.

Note 21 to the financial statements discloses the amendments agreed between the company and its senior lenders to reprofile the term loan facilities. This amendment was agreed on 28 February 2023 and the amended repayment profile of the term loan is reflected in these financial statements. 

Taking the above factors into account, the directors have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. As a result, the directors have continued to adopt the going concern basis of accounting in preparing the annual financial statements.

Page 6

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 FEBRUARY 2023


Directors

The directors who served during the period were:

Dr Graeme Malcolm 
Dr Gareth Maker 
Angus Morrison 
Stuart Malcolm 

Directors' indemnities

The Group has made qualifying third-party indemnity provisions for the benefit of its directors which were made during the period and remain in force at the date of this report.  

Disclosure of information to auditor

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

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

Auditor

Under section 487(2) of the Companies Act 2006Anderson Anderson & Brown Audit LLP will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

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



Dr Graeme P A Malcolm OBE FREng FRSE FInstP
Director

Date: 27 November 2023

Page 7

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 28 FEBRUARY 2023

The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.

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

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

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

make 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 Group will continue in business.

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

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' reports may differ from legislation in other jurisdictions.

Page 8

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF M SQUARED TECHNOLOGIES GROUP LIMITED
 

Opinion


We have audited the financial statements of M Squared Technologies Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 28 February 2023, which comprise the Consolidated statement of comprehensive income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company 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 Group's and of the parent Company's affairs as at 28 February 2023 and of the Group's loss for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group 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 Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.


Page 9

 
M SQUARED TECHNOLOGIES GROUP LIMITED

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF M SQUARED TECHNOLOGIES GROUP LIMITED (CONTINUED)

Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


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 Group strategic report and the Directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the Group 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 Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent Company 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 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


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


Page 10

 
M SQUARED TECHNOLOGIES GROUP LIMITED

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF M SQUARED TECHNOLOGIES GROUP LIMITED (CONTINUED)

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 Group 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:

We obtained an understanding of the legal and regulatory frameworks within which the company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. 

The laws and regulations we considered in this context were the Companies Act 2006 and Taxation legislation.

We identified the greatest risk of material impact on the financial statements from irregularities including fraud to be:
Management override of controls to manipulate the company’s key performance indicators to meet targets;
Timing and completeness of revenue recognition;
Management judgement applied in calculating provisions; and
Compliance with relevant laws and regulations which directly impact the financial statements and those that the company needs to comply with for the purpose of trading.

Our audit procedures to respond to these risks included:
Reviewed internal documentation and correspondence with regulators for evidence or irregularities;
Testing the timing and completeness of revenue;
Consideration of the assumptions applied whether the calculation of provision were appropriate;
Testing of journal entries and other adjustments for appropriateness;
Evaluating the business rationale of significant transactions outside the normal course of business;
Enquiries of management about litigation and claims and inspection of relevant correspondence; and
Reviewing legal and professional fees to identify indications of actual or potential litigation, claims and any non-compliance with laws and regulations.

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


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


Page 11

 
M SQUARED TECHNOLOGIES GROUP LIMITED

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF M SQUARED TECHNOLOGIES GROUP LIMITED (CONTINUED)

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 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.



Stuart Rose (Senior statutory auditor)
  
for and on behalf of
Anderson Anderson & Brown Audit LLP
 
81 George Street
Edinburgh
EH2 3ES

27 November 2023
Page 12

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 28 FEBRUARY 2023

28 February
15 month period ended
28 February
2023
2022
Note
£
£

  

Turnover
 4 
17,835,465
22,946,033

Cost of sales
  
(7,978,566)
(8,940,137)

Gross profit
  
9,856,899
14,005,896

Administrative expenses
  
(15,091,670)
(19,917,873)

Other operating income
 5 
1,878,049
1,757,365

Operating loss
 6 
(3,356,722)
(4,154,612)

Interest receivable and similar income
 10 
-
164

Interest payable and similar expenses
 11 
(2,191,252)
(2,514,400)

Loss before taxation
  
(5,547,974)
(6,668,848)

Tax on loss
 12 
(715,023)
(1,158,088)

Loss for the financial period
  
(6,262,997)
(7,826,936)

  

Other comprehensive income
  
578
(21,804)

Other comprehensive income for the period
  
578
(21,804)

Total comprehensive income for the period
  
(6,262,419)
(7,848,740)

(Loss) for the period attributable to:
  

Owners of the parent Company
  
(6,262,997)
(7,826,936)

  
(6,262,997)
(7,826,936)

The notes on pages 21 to 46 form part of these financial statements.

Page 13

 
M SQUARED TECHNOLOGIES GROUP LIMITED

REGISTERED NUMBER:SC675779

CONSOLIDATED BALANCE SHEET
AS AT 28 FEBRUARY 2023

2023
2022
Note
£
£

Fixed assets
  

Intangible assets
 13 
51,150,341
57,184,740

Tangible assets
 14 
195,824
357,969

  
51,346,165
57,542,709

Current assets
  

Stocks
 16 
3,256,060
4,931,492

Debtors: amounts falling due within one year
 17 
12,593,973
9,860,046

Cash at bank and in hand
 18 
181,675
2,424,533

  
16,031,708
17,216,071

Creditors: amounts falling due within one year
 19 
(11,478,794)
(12,118,776)

Net current assets
  
 
 
4,552,914
 
 
5,097,295

Total assets less current liabilities
  
55,899,079
62,640,004

Creditors: amounts falling due after more than one year
 20 
(21,375,216)
(22,571,593)

Provisions for liabilities
  

Deferred taxation
 23 
(2,087,269)
(1,369,398)

  
 
 
(2,087,269)
 
 
(1,369,398)

Net assets
  
32,436,594
38,699,013


Capital and reserves
  

Called up share capital 
  
3,694,266
3,694,266

Share premium account
  
42,853,487
42,853,487

Foreign exchange reserve
  
(21,226)
(21,804)

Profit and loss account
  
(14,089,933)
(7,826,936)

  
32,436,594
38,699,013


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


Dr Graeme P A Malcolm OBE FREng FRSE FInstP
Director

Date: 27 November 2023

The notes on pages 21 to 46 form part of these financial statements.

Page 14

 
M SQUARED TECHNOLOGIES GROUP LIMITED

REGISTERED NUMBER:SC675779

COMPANY BALANCE SHEET
AS AT 28 FEBRUARY 2023

2023
2022
Note
£
£

Fixed assets
  

Investments
 15 
54,313,454
54,313,454

  
54,313,454
54,313,454

Current assets
  

Debtors: amounts falling due within one year
 17 
9,040,730
10,145,340

Cash at bank and in hand
 18 
-
2,300,000

  
9,040,730
12,445,340

Creditors: amounts falling due within one year
 19 
(1,500,100)
(2,515,880)

Net current assets
  
 
 
7,540,630
 
 
9,929,460

Total assets less current liabilities
  
61,854,084
64,242,914

  

Creditors: amounts falling due after more than one year
 20 
(20,006,336)
(20,176,045)

  

Net assets
  
41,847,748
44,066,869


Capital and reserves
  

Called up share capital 
  
3,694,266
3,694,266

Share premium account
  
42,853,487
42,853,487

Profit and loss account brought forward
  
(2,480,884)
-

Loss for the period
  
(2,219,121)
(2,480,884)

Profit and loss account carried forward
  
(4,700,005)
(2,480,884)

  
41,847,748
44,066,869


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


Dr Graeme P A Malcolm OBE FREng FRSE FInstP
Director

Date: 27 November 2023

The notes on pages 21 to 46 form part of these financial statements.

Page 15

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 28 FEBRUARY 2023


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

£
£
£
£
£


Comprehensive income for the period

Loss for the period
-
-
-
(7,826,936)
(7,826,936)

Exchange differences on retranslation of subsidiary undertakings
-
-
(21,804)
-
(21,804)

Shares issued during the period
3,694,266
42,853,487
-
-
46,547,753



At 1 March 2022
3,694,266
42,853,487
(21,804)
(7,826,936)
38,699,013


Comprehensive income for the period

Loss for the period
-
-
-
(6,262,997)
(6,262,997)

Exchange differences on retranslation of subsidiary undertakings
-
-
578
-
578


At 28 February 2023
3,694,266
42,853,487
(21,226)
(14,089,933)
32,436,594


The notes on pages 21 to 46 form part of these financial statements.

Page 16

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 28 FEBRUARY 2023


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

£
£
£
£


Comprehensive income for the period

Loss for the period
-
-
(2,480,884)
(2,480,884)

Shares issued during the period
3,694,266
42,853,487
-
46,547,753



At 1 March 2022
3,694,266
42,853,487
(2,480,884)
44,066,869


Comprehensive income for the period

Loss for the period
-
-
(2,219,121)
(2,219,121)


At 28 February 2023
3,694,266
42,853,487
(4,700,005)
41,847,748


The notes on pages 21 to 46 form part of these financial statements.

Page 17

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

Year ended 28 February 2023
15 month period ended 28 February 2022
£
£

Cash flows from operating activities

Loss for the financial period
(6,262,997)
(7,826,936)

Adjustments for:

Amortisation of intangible assets
8,104,292
9,837,684

Depreciation of tangible assets
163,710
231,156

Government grants
(1,878,049)
(1,757,365)

Interest paid
2,191,252
2,514,400

Interest received
-
(164)

Taxation charge
715,023
1,158,088

Decrease/(increase) in stocks
1,675,432
(755,858)

(Increase) in debtors
(2,759,406)
(4,273,761)

(Decrease)/increase in creditors
(666,650)
760,786

Corporation tax received
28,327
439,546

Foreign exchange
578
(21,468)

Foreign exchange movement on fixed assets
(1,565)
-

Net cash generated from operating activities

1,309,947
306,108


Cash flows from investing activities

Purchase of intangible fixed assets
(2,069,893)
(5,094,586)

Purchase of tangible fixed assets
-
(227,467)

Government grants received
1,878,049
1,757,365

Purchase of fixed asset investments
-
(15,265,701)

Interest received
-
164

Net cash from investing activities

(191,844)
(18,830,225)

Cash flows from financing activities

Issue of ordinary shares
-
7,500,000

New secured loans
-
22,475,000

Repayment of loans
(1,875,000)
(7,312,995)

Interest paid
(1,485,961)
(1,713,355)

Net cash used in financing activities

(3,360,961)
20,948,650
Page 18

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD ENDED 28 FEBRUARY 2023


2023
2022

£
£



Net (decrease)/increase in cash and cash equivalents
(2,242,858)
2,424,533

Cash and cash equivalents at beginning of period
2,424,533
-

Cash and cash equivalents at the end of period
181,675
2,424,533


Cash and cash equivalents at the end of period comprise:

Cash at bank and in hand
181,675
2,424,533

181,675
2,424,533


The notes on pages 21 to 46 form part of these financial statements.

Page 19

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE PERIOD ENDED 28 FEBRUARY 2023





At 1 March 2022
Cash flows
Other non-cash changes
At 28 February 2023
£

£

£

£

Cash at bank and in hand

2,424,533

(2,242,858)

-

181,675

Debt due after 1 year

(20,647,000)

(875,000)

(672,000)

(22,194,000)

Debt due within 1 year

2,500,000

(1,000,000)

672,000

2,172,000


(15,722,467)
(4,117,858)
-
(19,840,325)

The notes on pages 21 to 46 form part of these financial statements.

Page 20

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

1.


General information

M Squared Technologies Limited is a limited liability company incorporated in Scotland. The registered office is Venture Building, 1 Kelvin Campus, West of Scotland Science Park, Maryhill Road, Glasgow, G20 0SP.                                      

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 Group management to exercise judgement in applying the Group's accounting policies (see note 3).

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.

The following principal accounting policies have been applied:

  
2.2

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.

Page 21

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

2.Accounting policies (continued)

 
2.3

Going concern

The directors, having made due and careful enquiry, are of the opinion that the Group has adequate working capital to execute its operations over the next 12 months. The directors, therefore, have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.
The Group is funded by its shareholders, bank term loans, working capital facility and cash flow arising from its trading activities. 
 
The directors have prepared detailed forecasts of Group profitability and cash flow incorporating appropriate downside sensitivities. These forecasts have been used to assess the adequacy of funding resources available within the Company’s parent group. These forecasts show that there can be reasonable certainty that the Company and Group will have sufficient funding resources available to them throughout the assessment period and beyond. The following events are reflected in these forecasts and are relevant to the going concern assessment.
 
Subsequent to the year end, the Directors entered discussions with the Company’s largest institutional shareholder, the Scottish National Investment Bank (‘SNIB’) to agree terms for subscription for additional equity investment in the Group. In consideration of a £7,720,576 investment made by SNIB received in two tranches on 4 September 2023 and 28 September 2023, M Squared Technologies Group Limited (‘the Company’) issued shares to SNIB under a new class of A Preferred Ordinary Shares.
Concurrent with receipt of the first tranche, BGF Investments LP (‘BGF’) paid the Company an amount of £284,459 in consideration for subscription of BGF Warrant Shares in accordance with the BGF Warrant Instrument which was issued on 13 November 2020.
Note 21 to the financial statements discloses the amendments agreed between the company and its senior lenders to reprofile the term loan facilities. This amendment was agreed on 28 February 2023 and the amended repayment profile of the term loan is reflected in these financial statements. 
Taking the above factors into account, the directors have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. As a result, the directors have continued to adopt the going concern basis of accounting in preparing the annual financial statements.

Page 22

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

2.Accounting policies (continued)

 
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.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

Page 23

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 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 Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the Group has transferred the significant risks and rewards of ownership to the buyer;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Group will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Group will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

In the ordinary course of business, the Company receives payments on account from certain customers throughout the progress of a contract.

 
2.6

Operating leases: the Group 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

Research and development

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which is deemed as 7 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.

Page 24

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

2.Accounting policies (continued)

 
2.8

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.

 
2.9

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.

 
2.10

Borrowing costs

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

 
2.11

Pensions

Defined contribution pension scheme

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

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

 
2.12

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.

Page 25

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

2.Accounting policies (continued)

 
2.13

Current and deferred taxation

The tax expense for the period 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 and the Group operate and generate income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the 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;
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Page 26

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

2.Accounting policies (continued)

  
2.14

Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Research and Development
Research expenditure is written off as incurred. Development expenditure is also written off, except where the directors are satisfied as to the technical, commercial and financial viability of individual projects. In such cases, the identifiable expenditure is capitalised as an intangible asset and amortised over the period during which the Group is expected to benefit. This period is over 7 years on a straight line basis. Provision is made for any impairment.
Patents and Trademarks
Separately acquired patents and trademarks are included at cost and amortised in equal annual instalments over a period of 5 years and 10 years respectively which is their estimated useful economic life. Provision is made for any impairment.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Consolidated statement of comprehensive income over its useful economic life.

 
2.15

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
-
Over period of lease (up to 4 years)
Office equipment
-
25% per annum
Computer equipment
-
25% per annum

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 27

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

2.Accounting policies (continued)

 
2.16

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated statement of comprehensive income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.

Investments in listed company shares are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in profit or loss for the period.

 
2.17

Stocks

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

At each 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.

 
2.18

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.

 
2.19

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.

 
2.20

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.

Page 28

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

2.Accounting policies (continued)

 
2.21

Provisions for liabilities

Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the 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.

The Company offers warranties on certain products. A provision for warranty costs is recognised only where the costs can be identified and are considered material.

Page 29

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

2.Accounting policies (continued)

 
2.22

Financial instruments

The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.

Financial instruments are recognised in the Group's Balance sheet when the Group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally 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.

Basic financial assets

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Other financial assets

Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting date. 

Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.

If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.

Financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.

Page 30

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

2.Accounting policies (continued)


2.22
Financial instruments (continued)

Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

Other financial instruments

Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.

Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.

Derecognition of financial instruments

Derecognition of financial assets

Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.

Derecognition of financial liabilities

Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.

 
2.23

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting. 

Page 31

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

Judgements made by the directors, in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed below: 
Capitalisation of development expenditure
During the period £1,411,828 (2022 - £3,295,518) of development expenditure was capitalised. The directors had to assess the technical, commercial and financial viability of individual projects. The directors prepared market research reports and technical feasibility project proposals in order to satisfy themselves that these projects had reached the required development stage and requirements for capitalisation. The assets are amortised over 7 years on a straight line basis.
Key source of estimation uncertainty - impairment of intangible assets
Determining whether intangible assets are impaired requires an estimation of the future cash generation relative to carrying value of the intangible assets. Based on current market knowledge, the directors consider there was no impairment during the year (2022 - £NIL). The carrying amount of intangible assets (excluding development costs and goodwill) at the balance sheet date was £2,019,757 (2022 - £1,974,292). 


4.


Turnover

The whole of the turnover is attributable to the Group's principal activity and represents the sale of goods and related services. A geographical analysis of turnover is not included as the directors believe it would be prejudicial to the Group's interests.


5.


Other operating income

28 February
15 month period ended
28 February
2023
2022
£
£

Government grants receivable
1,878,049
1,757,365


Page 32

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

6.


Operating loss

The operating loss is stated after charging:

28 February
15 month period ended
28 February
2023
2022
£
£

Research & development charged as an expense
171,352
174,475

Exchange differences
(190,160)
628,666

Operating lease rentals
1,366,305
1,522,799

Depreciation of tangible fixed assets
163,710
231,156

Amortisation of goodwill
5,195,100
6,655,836

Amortisation of other intangible fixed assets
2,909,192
3,156,668


7.


Auditor's remuneration

During the period, the Group obtained the following services from the Company's auditor:


28 February
15 month period ended
28 February
2023
2022
£
£

Fees payable to the Company's auditor for the audit of the consolidated and parent Company's financial statements
51,450
45,500

Page 33

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

8.


Employees

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


Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£


Wages and salaries
6,073,818
8,974,387
-
-

Social security costs
704,411
962,703
-
-

Cost of defined contribution scheme
111,023
204,799
-
-

6,889,252
10,141,889
-
-


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


2023
2022
No.
No.



Production and Installation
27
43

Research and development
22
30

Sales and marketing
9
12

Administration
10
15

68
100

The Company has no employees other than the directors, who did not receive any remuneration.



9.


Directors' remuneration

28 February
15 month period ended
28 February
2023
2022
£
£

Directors' emoluments
2,364,532
2,764,065

Group contributions to defined contribution pension schemes
23,550
131,978

2,388,082
2,896,043


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

The highest paid director received remuneration of £914,539 (2022 - £1,023,423).

The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £4,000 (2022 - £54,567).

Page 34

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

10.


Interest receivable

28 February
15 month period ended
28 February
2023
2022
£
£


Other interest receivable
-
164


11.


Interest payable and similar expenses

28 February
15 month period ended
28 February
2023
2022
£
£


Other loan interest payable
2,191,252
2,514,400


12.


Taxation


28 February
15 month period ended
28 February
2023
2022
£
£

Corporation tax


Current tax on profits for the period
44
119,276

Adjustments in respect of previous periods
(2,892)
-

Foreign tax


Foreign tax on income for the period
-
35,323

Total current tax
(2,848)
154,599

Deferred tax


Origination and reversal of timing differences
522,646
573,161

Changes to tax rates
165,046
430,328

Adjustment in respect of prior periods
30,179
-

Total deferred tax
717,871
1,003,489


Taxation on profit on ordinary activities
715,023
1,158,088
Page 35

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023
 
12.Taxation (continued)


Factors affecting tax charge for the period

The tax assessed for the period is higher than (2022 - higher than) the standard rate of corporation tax in the UK of19% (2022 - 19%). The differences are explained below:

28 February
15 month period ended
28 February
2023
2022
£
£


Loss on ordinary activities before tax
(5,547,974)
(6,668,848)


Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022 - 19%)
(1,054,115)
(1,267,081)

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
1,043,158
1,411,062

Overseas taxes suffered
-
35,323

Non-taxable income less expenses not deductible for tax purposes, other than goodwill and impairment
-
179,256

Research and development expenditure
18,052
(30,736)

Tax rate changes
165,046
182,603

Unrelieved tax losses carried forward
542,882
641,602

Other differences leading to an increase (decrease) in the tax charge
-
6,059

Total tax charge for the period
715,023
1,158,088


Factors that may affect future tax charges

Deferred tax balances have been calculated based on the expected future tax rate substantively enacted at the balance sheet date. On 3 March 2021 it was announced by the UK Government that the corporation tax rate in the UK will increase to 25% effective from 1 April 2023. Deferred tax has been provided for at 25% as this is the rate that was substantively enacted at the balance sheet date.

Page 36

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

13.


Intangible assets

Group





Patents
Development expenditure
Trademarks
Goodwill
Total

£
£
£
£
£



Cost


At 1 March 2022
4,308,230
15,358,350
154,501
51,947,283
71,768,364


Additions
658,065
1,411,828
-
-
2,069,893



At 28 February 2023

4,966,295
16,770,178
154,501
51,947,283
73,838,257



Amortisation


At 1 March 2022
2,434,247
5,414,169
54,192
6,681,016
14,583,624


Charge for the period on owned assets
589,378
2,296,592
23,222
5,195,100
8,104,292



At 28 February 2023

3,023,625
7,710,761
77,414
11,876,116
22,687,916



Net book value



At 28 February 2023
1,942,670
9,059,417
77,087
40,071,167
51,150,341



At 28 February 2022
1,873,983
9,944,181
100,309
45,266,267
57,184,740



Page 37

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

14.


Tangible fixed assets

Group






Long-term leasehold property
Office equipment
Computer equipment
Total

£
£
£
£



Cost or valuation


At 1 March 2022
322,151
1,102,175
368,583
1,792,909


Exchange adjustments
-
448
(200)
248



At 28 February 2023

322,151
1,102,623
368,383
1,793,157



Depreciation


At 1 March 2022
129,940
1,012,477
292,523
1,434,940


Charge for the period on owned assets
74,357
52,819
36,534
163,710


Exchange adjustments
-
33
(1,350)
(1,317)



At 28 February 2023

204,297
1,065,329
327,707
1,597,333



Net book value



At 28 February 2023
117,854
37,294
40,676
195,824



At 28 February 2022
192,211
89,698
76,060
357,969


15.


Fixed asset investments

Company





Investments in subsidiary companies

£



Cost or valuation


At 1 March 2022
54,313,454



At 28 February 2023
54,313,454




Page 38

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

           15.Fixed asset investments (continued)


Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Registered office

Holding

M Squared Lasers Limited (directly held)
Venture Building, 1 Kelvin Campus, Maryhill Road, Glasgow, United Kingdom
100%
M Squared Lasers, Inc.
160 Greentree Drive, Suite 1919 Dover
100%
Solus Technologies Limited
Venture Building, 1 Kelvin Campus, Maryhill Road, Glasgow, United Kingdom
100%
M Squared Lasers GmbH
Rudower Chaussee 29 (IGZ), 12489 Berlin, Germany
100%
M Squared Life Limited
Venture Building, 1 Kelvin Campus, Maryhill Road, Glasgow, United Kingdom
100%

The Company owns 100% of M Squared Lasers Limited, which in turn owns the other subsidiary undertakings listed above.

The aggregate of the share capital and reserves as at 28 February 2023 and the profit or loss for the period ended on that date for the subsidiary undertakings were as follows:

Name
Aggregate of share capital and reserves
Profit/(Loss)
£
£

M Squared Lasers Limited (directly held)
7,539,326
2,310,942

M Squared Lasers, Inc.
(463,298)
(245,464)

Solus Technologies Limited
(157,702)
-

M Squared Lasers GmbH
262,540
98,308

M Squared Life Limited
(2,509,459)
(1,020,242)

Page 39

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

16.


Stocks

Group
Group
2023
2022
£
£

Raw materials and consumables
1,192,481
1,739,080

Finished goods and goods for resale
2,063,579
3,192,412

3,256,060
4,931,492


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


17.


Debtors

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£


Trade debtors
2,236,709
3,243,807
-
-

Amounts owed by group undertakings
-
-
8,567,397
9,532,007

Other debtors
479,513
245,150
-
-

Prepayments and accrued income
9,544,134
6,011,993
473,333
613,333

Tax recoverable
333,617
359,096
-
-

12,593,973
9,860,046
9,040,730
10,145,340



18.


Cash and cash equivalents

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Cash at bank and in hand
181,675
2,424,533
-
2,300,000


Page 40

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

19.


Creditors: Amounts falling due within one year

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Bank loans
1,500,000
2,500,000
1,500,000
2,500,000

Other loans
672,000
-
-
-

Trade creditors
3,487,892
3,071,299
100
-

Other taxation and social security
693,574
1,066,857
-
-

Other creditors
2,536,698
2,510,531
-
-

Accruals and deferred income
2,588,630
2,970,089
-
15,880

11,478,794
12,118,776
1,500,100
2,515,880



20.


Creditors: Amounts falling due after more than one year

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Bank loans
13,500,000
14,375,000
13,500,000
14,375,000

Other loans
600,000
1,272,000
-
-

Fixed rate loan note
5,000,000
5,000,000
5,000,000
5,000,000

Accruals and deferred income
2,275,216
1,924,593
1,506,336
801,045

21,375,216
22,571,593
20,006,336
20,176,045


Please provide details of the terms of payment or repayment and the rates of any interest payable on the amounts repayable more than five years after the balance sheet date.

Page 41

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

21.


Loans


Analysis of the maturity of loans is given below:


Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Amounts falling due within one year

Bank loans
1,500,000
2,500,000
1,500,000
2,500,000

Loan notes
672,000
-
-
-


2,172,000
2,500,000
1,500,000
2,500,000

Amounts falling due 1-2 years

Bank loans
2,000,000
2,187,500
2,000,000
2,187,500

Loan notes
-
672,000
-
-


2,000,000
2,859,500
2,000,000
2,187,500

Amounts falling due 2-5 years

Bank loans
11,500,000
12,187,500
11,500,000
12,187,500

Loan notes
600,000
600,000
-
-

Fixed rate loan note
1,848,753
1,131,095
1,848,753
1,131,095


13,948,753
13,918,595
13,348,753
13,318,595

Amounts falling due after more than 5 years

Fixed rate loan note
3,151,247
3,868,905
3,151,247
3,868,905

3,151,247
3,868,905
3,151,247
3,868,905

21,272,000
23,147,000
20,000,000
21,875,000


Page 42

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023
 
21.Loans (continued)

Bank loans consist of a £5M term loan, and a £10M Revolving Credit Facility (“RCF”) from Santander UK plc (‘Santander’).
The term loan is repayable in quarterly instalments with final repayment in November 2025. Interest is payable at LIBOR + 7%. An amendment to the Original Facility Agreement was agreed on 28 February 2023. Under the terms of the amendment, Santander agreed to a deferral of the repayments which were due on 28 February 2023 and 31 May 2023, with the remaining quarterly repayments being reprofiled to the original 31 August 2025 termination date. On 1 September 2023 the Group agreed revised covenant tests, including the introduction of a covenanted minimum liquidity requirement.
The company has issued fixed rate loan notes for £5M repayable over 5 to 10 years. Interest is rolled up and payable at redemption, at LIBOR + 11%. 
The Revolving Credit Facility is repayable on 13 November 2025 and interest is payable quarterly at LIBOR + 7%.
Bank facilities and loan notes issued by the Company are secured by a bond and floating charge over the assets of the Group.


22.


Financial instruments

Group
Group
Company
Company
2023
2022
2023
2022
£
£
£
£

Financial assets

Financial assets measured at fair value through profit or loss
181,675
2,424,533
-
2,300,000

Financial assets that are debt instruments measured at amortised cost
181,675
9,883,057
-
10,145,340

363,350
12,307,590
-
12,445,340


Financial liabilities

Financial liabilities measured at amortised cost
-
34,690,369
-
22,691,925


Financial assets measured at fair value through profit or loss comprise cash at bank.
Financial assets measured at amortised cost comprise trade debtors, amounts owed to group, prepayments and other debtors.
Financial liabilities measured at amortised cost comprise trade creditors, accruals, deferred income and loans.

Page 43

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

23.


Deferred taxation


Group



2023


£






At beginning of period
1,369,398


Charged to profit or loss
(717,871)



At end of period
2,087,269

Group
2023
£

Accelerated capital allowances
2,165,611

Tax losses carried forward
(50,175)

Short term timing differences - trading
(28,167)

2,087,269


24.


Share capital

2023
2022
£
£

Allotted, called up and fully paid


3,099,028 Ordinary shares of £1 each
3,099,028
3,099,028

595,238 Preferred Ordinary shares of £1 each
595,238
595,238

3,694,266
3,694,266

Page 44

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

25.


Share-based payments

Equity-settled share option schemes
The Group has a share option scheme for some of its employees over shares in the Company. In connection with the refinancing and reorganisation of the Group, holders of options in a pre-existing scheme over shares in the Company’s subsidiary, M Squared Lasers Limited, waived their rights under that scheme and those options were replaced by a commensurate holding of options at a value agreed by HMRC in the Company’s scheme in March 2021. 
 
Options are exercisable at a price equal to the estimated fair value as agreed with HMRC of the Company's shares on the date of grant. The options are generally exercisable on an exit only. The maximum vesting period is 10 years after which the options lapse. Options are forfeited if the employee leaves the Group before the options vest, and any vested options become immediately un-exercisable, and lapse on the expiration of 30 days.
Details of the share options outstanding during the period are as follows:

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

Outstanding at the beginning of the period

236

183,492

0
 
-
 
Replacement options issued during the period

0

-

2
 
66,222
 
Lapsed during the period

(288)

(10,000)

3
 
(32,889)
 
Granted during the period

147

120,935

288
 
150,159
 
Outstanding at the end of the year
217

294,427

236
 
183,492
 





26.


Pension commitments

The Group contributes to a defined contribution pension scheme for its employees. At the balance sheet date the Group had outstanding pension contributions of £61,615 (2022 - £70,669).


27.


Commitments under operating leases

At 28 February 2023 the Group had future minimum lease payments due under non-cancellable operating leases for each of the following periods:


Group
Group
2023
2022
£
£

Not later than 1 year
829,841
789,570

Later than 1 year and not later than 5 years
297,920
321,900

1,127,761
1,111,470
Page 45

 
M SQUARED TECHNOLOGIES GROUP LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 FEBRUARY 2023

28.Other financial commitments

At the Balance Sheet date, the trading subsidiary had guarantees in place with customers of £1,111,293.


29.


Related party transactions

Included within current liabilities are amounts payable to the directors of £464,374 (2022 - £NIL). These amounts have no fixed terms of repayment and no interest is payable.


30.


Post balance sheet events

Recognising the significance of the combined effects of the impact of the Ukraine war and the extended lock down of the China market, coming soon after the Covid pandemic, the Directors entered discussions with the Company’s largest institutional shareholder, the Scottish National Investment Bank (‘SNIB’) to agree terms for subscription for additional equity investment in the Group.  The details of the investment are as disclosed at Note 2.3.


31.


Controlling party

The Company was controlled by the Directors throughout the period.

Page 46