Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2023
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and financial statements for the year ended 31 December 2023.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
During the year the company continued to provide engineering services and develop technological solutions primarily within the automotive sector both here in the UK and overseas.
2023 saw some reorganisation in the automotive sector as OEMs adjust to the change in pace of the EV market and redirection of product portfolio. This saw some projects being put on hold and Q1 saw a drop in YoY performance. However, our team worked hard to open up new opportunities, not least new overseas customers and we have seen these client accounts develop through the rest of 2023 to close the gap and finish the year with a solid result. The current planning reflects the automotive market changes predicted in 2024 and 2025 due to developments in technology, modifications in regulations, and changes in consumer preferences. With ongoing investments in battery technology, infrastructure for charging, and the increase of EV models provided by both established manufacturers and newcomers to the market, electric vehicles (EVs) continue to gain popularity. However, the delay of EV introduction comes with the potential for ICE vehicles to be an option for a while longer, giving changes to certain product cycle planning and therefore engineering support needs. While autonomous driving technology is making smaller strides, societal acceptance and regulatory obstacles remain in the way of its broad use. To advance the development of autonomous vehicles, cooperation between regulators, tech companies, and manufacturers is still essential and as such we have seen an increase in the customer enquiries for this field.
In reaction to regulatory pressures and environmental concerns, automakers step up their efforts to lower emissions and increase fuel efficiency throughout their whole fleet of vehicles. This in turn has seen an increase in discussions, internal research and customer enquiries for lightweight materials, aerodynamic designs, and hybrid powertrains which we foresee turning into revenue streams.
In addition, digitalization is still changing the automobile sector, emphasizing data-driven services, in-car infotainment systems, and connected cars. As cars get more and more connected, automakers are investing in cybersecurity solutions to protect them from cyber threats and this is an area we are developing with the wider Tecosim group. Mobility-as-a-service (MaaS) is becoming more and more popular, with a focus on shared mobility solutions including ride-hailing, car-sharing, and micro-mobility choices. Urbanization, environmental concerns, and the need for practical, affordable transportation options are the main drivers of this movement and Tecosim has been at the forefront of this sector for some years, with expertise and knowledge on hand for customer programs.
2023 was an interesting year for new projects and our team, as always, has been able to capitalise on opportunities and support our customers with valuable engineering delivery.
Our shareholders and directors remain deeply grateful for the unwavering dedication and commitment exhibited by our team throughout the year. They consistently demonstrate efficiency, determination, and a commitment to quality. Moreover, they exhibit remarkable flexibility and foresight in navigating through exceptionally challenging engineering expectations. The capacity to promptly address customer needs and provide agile, adaptable services is paramount to our business success. In 2023, Tecosim had good results with further development of new markets, not least product design, energy and marine. The overall program of work for 2023 remained diverse, split between all aspect of engineering and offering continued CAD, CAE, Engineering, Testing, Prototyping and Project Management. There is a continued development of tools for the integration of AI and Machine Learning along with other
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
internal research projects being conducted for future benefit.
As before, the business has maintained a low administrative cost and flexibility in the business structure to allow for future change/growth and focused in 2023 on continued optimisation of the structure and workflow. The performance of 2023 will give confidence that through challenging times, a solid result is achieved as the business continues to remain debt free and cash positive. The US activity from the new business established there in 2021 continued to show positive results in 2023 in terms of establishing a market presence and opening new doors. This has led to an increase in customer business and the groundwork of the UK and US team in 2023 will lead to some exciting announcements in early 2024.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The management of the business and the nature of the company’s strategy are subject to a number of risks. The directors have set out the principal risks and how these are mitigated below:
Economic climate The UK economy experienced extremely high inflation in 2022-23 compared to previous years which had a definite impact on the automotive sector. However, 2023 saw recovery for the automotive sector where it finished the year as the fastest growing sector on its rebound from previous contractions. The sector was on course in Q4 to break the £100 billion mark for the first time since pre Covid times, marking the return to robust output and OEM confidence. However, global market changes had an influence on customer planning and spend in Q1/Q2 2023, giving some micro level uncertainty and product viability. The labour market improved as companies started operating again and hiring increased, resulting in a decrease in unemployment rates. Nonetheless, there have always been worries about a labour shortage in several industries, most notably construction, hospitality, and healthcare from a result of post Brexit changes. Disruptions in the supply chain, growing energy costs, and a rise in the demand for goods and services all contributed to the persistence of inflationary pressures. The government prioritized infrastructure investment and green initiatives to drive economic growth and transition to a more sustainable future. Initiatives such as the Green Industrial Revolution aimed to create jobs, reduce carbon emissions, and foster innovation in renewable energy and clean technologies. Overall, while the UK economy faced lingering challenges and uncertainties, signs of recovery and resilience were evident in 2023, laying the groundwork for future growth and prosperity. Competition The markets for engineering and automotive development are highly competitive. To satisfy customers and keep ahead of the competition, constant development and change are necessary. The team works hard to continuously develop and improve our tools, processes and know-how because they are still essential to our ability to be our customers' go-to supplier. In order to continue being a dependable partner to our clients, these are combined with outstanding internal quality initiatives and affordable prices. Financial risk The main risks arising from the company’s financial instruments are liquidity risk and credit risk with currency and interest risks being deemed immaterial. Throughout 2023, there was a small but continued risk from delayed customer payments, some of whom were restructuring their finances through the year. The business team worked hard in 2023 to ensure that these risks were minimised and all accounts were settled during the year with no bad debt at the year end. This meant that the business did not need to rely on any external financial support during the crisis. Liquidity The company is part of TECOSIM Group, where liquidity is managed and reviewed at a group level. At all times, the business operates at optimal liquidity.
Credit risk
The principal risk arises from the company’s trade debtors. The company utilises an external credit service to check customer credit performance and has a warning system setup to provide alerts on client credit conditions. In addition, a monitoring and action process is followed for late payments to minimise the exposure.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors use the following key performance indicators to monitor the business: -
2023 2022 £ £ Turnover 17,111,847 17,059,017 Gross Profit 1,715,630 1,324,143 Profit before tax 363,518 47,290
IIn addition to the above the company’s other key performance indicators include the satisfaction and acknowledgement of yearly performance from the holding company, number of employees, cash flow and customer feedback.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £276,558 (2022 -£47,290).
The directors do not recommend the payment of a final dividend.
The directors who served during the year were:
The outlook for 2024 is favourable, with continued projects and customer relationships from 2023. Tecosim will continue to support the clients with their changing plans and needs and to support where there may be delivery gaps for the client engineering programs.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The auditors, Venthams, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TECOSIM LIMITED (FORMERLY KNOWN AS: TECOSIM-TECHNICAL SIMULATION LIMITED)
We have audited the financial statements of Tecosim Limited (Formerly known as: Tecosim-Technical Simulation Limited) (the 'company') for the year ended 31 December 2023, which comprise the Statement of Income and Retained Earnings, the Balance Sheet, the Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TECOSIM LIMITED (FORMERLY KNOWN AS: TECOSIM-TECHNICAL SIMULATION LIMITED) (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TECOSIM LIMITED (FORMERLY KNOWN AS: TECOSIM-TECHNICAL SIMULATION LIMITED) (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity. The following laws and regulations were identified as being of significance to the entity: - Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation, and distributable profits legislation. - Those laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements include health and safety legislation. Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; testing the appropriateness of journal entries; and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud. No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TECOSIM LIMITED (FORMERLY KNOWN AS: TECOSIM-TECHNICAL SIMULATION LIMITED) (CONTINUED)
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 Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditor
Millhouse
32 - 38 East Street
Essex
SS4 1DB
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STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2023
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BALANCE SHEET
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
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ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Tecosim Limited is a private company limited by shares, incorporated in England and Wales. Its registered office is 22 Seax Court, Southfields Industrial Park, Basildon, Essex SS15 6SL.
The principal activity of the company continued to be the provision of engineering design and consultancy services.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The directors have considered in detail and, taking into account a period exceeding 12 months from the date of approval of these financial statements, the directors have a reasonable expectation that it has adequate resources to continue in operational existence for the foreseeable future. These financial statements have therefore been prepared on the going concern basis.
Functional and presentation currency
Transactions and balances
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
All fixed assets with a cost in excess of £1,000 are capitalised.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
The company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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:
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's Balance Sheet when the company 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 company'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 company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans 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
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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 company 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 company 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 company's contractual obligations expire or are discharged or cancelled.
Revenue on construction contracts is recognised based on the percentage of completion method. Included in creditors, shown as payments received on account, is £1,481,759 (2022: £2,082,619) in respect of revenue received in advance on engineering contracts.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Analysis of turnover by country of destination:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
12.Taxation (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
13.Tangible fixed assets (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Profit & loss account
The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounts to £148,325 (2022: £143,391). Contributions totalling £18,132 (2021: £31,628) were payable to the fund at the balance sheet date and are included in creditors.
The immediate parent is Tecosim Group GmbH and the ultimate parent company is Mind Venture AG, a company registered in Germany, with registered office at Gutenbergplatz 1, 65187 Wiesbaden, Germany.
The parent of the largest and smallest group into which the results of this company are consolidated is Mind Venture AG. Copies of the group financial statement can be obtained from its registered office.
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