The directors present their annual report and financial statements for the year ended 31 March 2023.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Going concern
The company is a member of the Harrow Debtco Limited group (“the group”). The company is reliant upon the wider group’s financing facilities. The group meets its day-to-day working capital requirements through its own cash balances and committed banking / funding facilities. In assessing the appropriateness of adopting the going concern basis in the preparation of these financial statements, the directors have reviewed a number of factors, including information provided to them in relation to the group’s trading results, its available resources, the ability of the group to continue to operate within its financial covenants and the group’s latest forecasts and projections, comprising:
A forecast for the period to 31 March 2026 which has been prepared on a bottom-up basis with realistic assumptions regarding new contract wins, print volumes and likely margin evolution;
A base case forecast, which is the basis upon which the directors are making this going concern statement for the period to 31 March 2025, reflecting more prudent variations in performance including:
a decline in sales volumes through our Enterprise and commercial sectors as a consequence of hardening economic conditions and the consequent impact on buying patterns;
a decline in service value brought about by lower sales throughput.
In June 2023 Harrow Midco Limited, an indirect parent company at that time, refinanced its debt structure through a debt for equity conversion between its existing lenders Pemberton and HIG. Harrow Debtco Limited, an indirect parent of the company, has been purchased by a new company formed for the purpose of refinancing, Aurora UK Topco Ltd. The revised group benefit from serviceable debt facilities with Pemberton reducing from £114.3m to £50.0m with the lenders also extending additional facilities to the company to support future acquisition growth plans. Subsequent to the refinancing, all covenants have been waived and the group’s loan agreements are now only subject to liquidity clauses, until August 2024, whereby the group is required to meet specific liquidity thresholds. The directors have also received a letter of financial support from Pemberton covering the going concern assessment period.
The agreement and subsequent actions demonstrate ardent lender and investor support for incredibly exciting company growth plans. The directors have satisfied themselves that the company will continue operating, with continued support from lenders and investors. For these reasons, the company continues to adopt the going concern basis in preparing its financial statements.
The directors have satisfied themselves that the group and company will continue operating, with continued support from funders and investors up to the point that facilities are satisfactorily restructured, and with more certainty about post Covid-19 trading. For these reasons, the group and company continues to adopt the going-concern basis in preparing its financial statements.
In accordance with the company's articles, a resolution proposing that Grant Thornton UK LLP be reappointed as auditor of the company will be put at a General Meeting.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
Basis for opinion
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the company to cease to continue as a going concern.
In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the company’s business model including effects arising from macro-economic uncertainties such as the cost of living crisis, we assessed and challenged the reasonableness of estimates made by the directors and the related disclosures and analysed how those risks might affect the company’s financial resources or ability to continue operations over the going concern period.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error,
In preparing the financial statements, the directors are responsible for assessing the 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.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. 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 that are applicable to the company and determined the most significant which are directly relevant to specific assertions in the financial statements are those related to the reporting frameworks including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’, the Companies Act 2006, and the relevant tax legislation in the jurisdictions in which the Company operates;
We understood how the company is complying with those legal and regulatory frameworks by making enquiries of management and those charged with governance. We corroborated our enquiries though our review of board minutes and other relevant correspondence received from legal advisors and regulatory bodies;
We also enquired of management and those charged with governance concerning the Company’s policies and procedures relating to the identification, evaluation, detection and response to the risks of fraud and the establishment of internal controls to mitigate risks related to fraud. We enquired as to whether they had any knowledge of actual, suspected or alleged fraud;
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur, by considering management's incentives and opportunities for manipulation of the financial statements. This included the evaluation of the risk of management override of controls. We determined that the principal risks was through management override of controls;
Audit procedures performed by the audit team included:
- identifying and assessing the design and implementation of controls management utilises to prevent and detect fraud;
- using data interrogation software to identify and test large or unusual journal entries which may carry a higher risk of fraud;
- assessing the extent of compliance with the relevant laws and regulations as part of our audit procedures on the related financial statement item; and
- performing audit procedures to conclude on the compliance of disclosures in the financial statements with applicable financial reporting requirements.
These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we would become aware of it.
The assessment of the appropriateness of the collective competence and capabilities of the engagement team included consideration of the engagement team’s:
- understanding of, and practical experience with audit engagements of a similar nature and complexity through appropriate training and participation;
- knowledge of the industry in which the client operates;
- understanding of relevant legal and regulatory frameworks including 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), the Companies Act 2006, and the relevant tax legislation in the jurisdictions in which the Company operates, and the application of the legal and regulatory requirements of these to Corporate Information & Communication Technology Limited.
Communications within the audit team in respect of potential non-compliance with laws and regulations and fraud including through management override of controls in the preparation of the financial statements.
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.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Corporate Information & Communication Technology Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1-2 Castle Lane, London, SW1E 6DR.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Fees for audit and non-audit services have been borne by Aurora Managed Services Limited.
The average monthly number of persons (including directors) employed by the company during the year was nil (2022- nil).
Subsequent to 31 March 2023, the shares of the company’s parent undertaking were sold to Aurora UK Topco Limited. There was also a restructuring of the group debt facilities provided by Pemberton, resulting in a reduction of debt facilities from £114.3m to £50m, full covenant resets and the availability of additional debt facilities to support future M&A growth plans.
The company's ultimate parent undertaking is Harrow Topco Limited. Harrow Debtco Limited is an intermediate parent company which prepares consolidated financial statements for the smallest and largest group of which the company is a member. The registered office of both Harrow Topco Limited and Harrow Debtco Limited is 1-2 Castle Lane, London SW1E 6DR.
At the year end, the company's ultimate parent undertaking was H.I.G. Europe Capital Partners II,LP, an entity incorporated in the Cayman Islands.
Subsequent to the year end, the company's ultimate parent became of Aurora UK Topco Limited, registered office 1-2 Castle Lane, London SW1E 6DR. There is no ultimate controller of Aurora UK Topco Limited.