The director presents the strategic report for the year ended 31 December 2023.
The company achieved satisfactory turnover this year and after incurring overheads has made a profit after taxation of £127,805 (2022: £220,730). The nature of the industry means that income fluctuates depending on the projects ongoing during the year. The company continues to win new work and the director expects the company to remain profitable. There are currently more opportunities arising in 2024 and the director is optimistic about the future. Upcoming prospects for 2024 include multiple transactions that should lead to strong fees for the company.
The balance sheet position is adequate this year and the company continues to meet liabilities as they fall due and to meet capital adequacy requirements.
The principal risks to which the business is exposed include, but may not be limited to, the following:
a) Regulatory Risk
The company is regulated by the Financial Conduct Authority ('FCA') in respect of its business in the United Kingdom. Failure to comply with the regulations set out by the FCA could lead to disciplinary action, financial penalties and reputational damage. The company engages with the FCA by way mandatory regulatory reporting as well as any ad hoc interactions required by changing regulations and requirements. The company is also in regular communication with the firms external compliance consultants.
b) Market Risk
Opportunities in the industry could be tempered in the event of lowered confidence in the European technology M&A market and the risk averse attitude being taken by potential clients, investors and acquirers. The team maintain their levels of work to ensure that the company continues to trade well in a competitive market.
c) Credit risk
Credit risk arises principally from cash and cash equivalents and deposits with banks and financial institutions as well as credit exposure to customers including committed transactions and outstanding receivables. The company reviews its banking arrangements carefully to minimise such risks and has put in place credit control procedures to mitigate against risks arising from customers including the obtaining of references, setting of credit limits and monitoring of limits. Credit risk also arises on loans to connected parties. This risk is mitigated through careful consideration of the underlying investment and future performance of the entities.
The director considers the turnover and cash balance to be the key performance indicators. The turnover achieved is £549,867 (2022: £433,671); a variance of this level is considered satisfactory in the current economic climate. The cash balance of £100,461 (2022: £22,273) at the year end is adequate as a result of the activity of the year.
The director, in line with his duties under s172 of the Companies Act 2006, acts individually in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its member, and in doing so have regard, amongst other matters, to the:
Likely consequences of any decision in the long term;
Need to foster the company's business relationships with suppliers, customers and others;
Impact of the company's operations on the community and the environment;
Desirability of the company maintaining a reputation for high standards of business conduct.
The director's regard to these matters is embedded in the decision-making process, through the company's business strategy, culture, governance framework, management information flows and stakeholder engagement processes. The company's business strategy is focused on achieving success for the company in the long term. In setting this strategy, the director takes into account the impact of relevant factors and stakeholder interests on the company's performance. The director also identifies the principal risks facing the business and sets risk management objectives. The director promotes a culture of upholding the highest standards of business conduct and regulatory conduct. The director ensures these core values are embedded in the company's policies and procedures and its risk control and oversight framework. The director recognises that building strong and lasting relationships with stakeholders will help to deliver the company's strategy in line with the long term values, and operate as a sustainable business.
Stakeholders
The director understands the importance of engagement with all stakeholders and gives appropriate weighting to the outcome of their decisions for the relevant stakeholder in weighing up how best to promote the success of the company. The director regularly considers issues concerning clients, suppliers, community and environment and regulators in their decision-making process. In addition to this, the director seeks to understand the interests and views of the company's stakeholders by engaging with them directly when required. The below summarises the key stakeholders and how the director engages with each:
Clients
Clients are at the centre of the business. The director aims to build lasting relationships with current and potential clients to understand their objectives and requirements. The director is in regular contact with clients in order to meet their needs.
Suppliers
The director works with a wide range of suppliers and remains committed to being fair and transparent in their dealings with all of the company's suppliers. The company has procedures in place requiring due diligence of suppliers as to their internal governance, including for example, their anti-bribery and corruption practices, data protection policies and modern slavery matters. The company has systems and procedures in place to ensure suppliers are paid in a timely manner.
Regulators
Having a positive dialogue with the regulators means the director can help them to understand the company's business model and strategy, culture and focus for doing the right thing for the company's clients. The director aims to achieve a transparent relationship with the regulators, as well as providing an insight into any challenges the company may face.
Community and The Environment
Considering the impact of the company's actions as a business on the wider interests of society is an important part of being a responsible business. The director sees themselves as part of the community in which they live and work, and seek to actively contribute, and actively engaging with them is an important part of who they are.
On behalf of the board
The results for the year are set out on page 11.
During the year the company paid a dividend of £155,612 (2022: £250,000) to its shareholders.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Trade creditors of the company at the year end were equivalent to 1 day's purchases, based on the average daily amount invoiced by suppliers during the year.
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
The company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.
Credit risk arises principally from cash and cash equivalents and deposits with banks and financial institutions as well as credit exposure to customers including committed transactions and outstanding receivables. The company reviews its banking arrangements carefully to minimise such risks and has put in place credit control procedures to mitigate against risks arising from customers including the obtaining of references, setting of credit limits and monitoring of limits. Credit risk also arises on loans to connected parties. This risk is mitigated through careful consideration of the underlying investment and future performance of the entities.
The company has chosen to include this information in the Strategic Report in accordance with section 414C of the Companies Act 2006.
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
Other information
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 Strategic Report and the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Director's Report have been prepared in accordance with applicable legal requirements.
As explained more fully in the Director's Responsibilities Statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude 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 auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and the company’s members as a body, for our work, for this report, or for the opinions we have formed.
The Profit and Loss Account has been prepared on the basis that all operations are continuing operations.
Sardis Capital Limited is a private company limited by shares incorporated in England and Wales. The registered office is 6th Floor, 9 Appold Street, London, EC2A 2AP.
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 £.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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 director is 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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The company holds an investment in an unlisted company. An impairment review was performed at
the year end which required management to assess the company's current position and performance, and the likely future performance of the entity. Based on this review an adjustment was made to write down the investment to the percentage of net assets held by the company based on the most recent management accounts of the business.
The company also holds an investment in a violin. The director assess the asset for impairment by reference to valuations provided by a third party.
The company has made loans to various unlisted companies. An assessment of the recoverability of the loans was made at year end to determine if there were any signs of impairment. The companies' financial positions and performances were reviewed at year end to determine if it was likely the loans could be recovered in full. No signs of material impairment were found.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
At 31 December 2023 the company was owed £2,180 (2022: £2,603) by MFP Youth Limited, a company in which the director M A O Mardin is also a director. This balance is interest free and repayable on demand.
At 31 December 2023 the company was owed £376,718 (2022: £356,780) by Benek Investments Limited, a company in which director M A O Mardin has a material interest. The balance is interest free and repayable on demand.
During the period rental costs of £29,058 (2022: £nil) were incurred by the company in relation to the rental of a property for the use of O Mardin's family.
Dividends totalling £155,612 (2022: £250,000) were paid in the year in respect of shares held by the company's director.
Included in other debtors due within one year is £102,624 owed from the director M A O Mardin (2022: £155,612). This balance included interest charged on the loan of £1,224 (2022: £6,856).
The controlling party is M O A Mardin, by virtue of his 100% shareholding in the company.