Company registration number 14411359 (England and Wales)
CHEMONICS GROUP UK LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
CHEMONICS GROUP UK LTD
COMPANY INFORMATION
Directors
J Butcher
L Quy
G Bhow
M Harrison
S Mudge
Secretary
FieldFisher Secretaries Limited
Company number
14411359
Registered office
1 Benjamin Street
London
UK
EC1M 5QL
Auditor
Crowe UK LLP
55 Ludgate Hill
London
UK
EC4M 7JW
CHEMONICS GROUP UK LTD
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5
Independent auditor's report
6 - 8
Income statement
9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 23
CHEMONICS GROUP UK LTD
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the period ended 31 December 2023.
Principal activities
The principal activity of the company is that of International Development Consultancy.
Review of the business
Chemonics Group UK Ltd (Chemonics) was established in October 2022 as a wholly owned subsidiary of Chemonics International Inc (CII). CII’s history spans almost 50 years, delivering international development projects across 148 countries for the Governments of the United States of America (USA) and the United Kingdom (UK). Founded in 1975, CII is a leading global sustainable development firm with 6,000 people, 90% of whom are working in a community they call home. Chemonics has established a strong and diverse global portfolio including education, health, climate, public sector engagement, research, governance, peacebuilding and stabilisation programmes. Chemonics’ monitoring, evaluation and learning specialists manage programmes for His Majesty’s Government (HMG) and other clients as well as supporting all Chemonics portfolios.
Chemonics’ programmes
Chemonics have a diverse portfolio of programmes across 17 countries that drive health and financial independence outcomes for global citizens. Two of Chemonics flagship programmes are:
The Partnership Fund for a Resilient Ukraine (PFRU), managed by the UK’s FCDO and funded by Canada, Estonia, Finland, Netherlands, Sweden, Switzerland and the USA, is a major programme delivered by Chemonics and governed in collaboration with the Government of Ukraine. The PFRU’s aim is to support improved conditions for the Ukrainian state, in partnership with civil society and the private sector, to lead on inclusive national recovery and revitalisation. The aim of this programme is to facilitate the rebuilding of a more resilient, socially cohesive, inclusive, independent, democratic, sovereign and prosperous Ukraine. The fund provides grants to Ukrainian and international delivery partners and implements projects based on research and evidence.
PFRU was one of the first programmes to be established in the Ukraine. The speed and responsiveness of the Chemonics' team during 2022 was commended by the UK’s Independent Commission for Aid Impact as ‘not just one of the first international programmes to arrive, but also the most responsive, able to tailor its support to local needs’. Since then, Chemonics has worked in over 100 frontline hromadas (local government units) and signed many Memorandums of Understanding with the Ukrainian government institutions and state enterprises. Activities funded by the programme have ranged from rapid responses to the repair of damaged infrastructure and supporting veterans to reintegrate into Ukrainian society.
The Syria Education Programme, known as Manahel, reaches over 625,000 children in Northwest Syria. The programme aims to enhance equitability of education for girls and boys by strengthening the quality and inclusivity of formal primary education in Northwest Syria. Its support focuses on evidence-based and data-driven education programming achieving this at the school level. At the system level it works to strengthen schools’ accountability, effectiveness, and responsiveness. Chemonics partners with schools to help educators deliver more inclusive, gender responsive and quality learning, along with child protection and mental health support.
Manahel exceeded its outcomes by significantly contributing to the personal resilience of children and teachers, allowing education authorities and Non-Governmental Organisations to deliver education independent of armed or proscribed groups. Chemonics achieved these results in a context characterised by frequent conflict and displacement, a deteriorating economic climate, and the Covid-19 pandemic.
CHEMONICS GROUP UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties
Chemonics is committed to effective risk management, which plays a crucial role in shaping programme delivery and business decisions. This approach allows for more efficient use of valuable resources, enhances both strategic and business planning; and strengthens contingency planning. Chemonics consistently identifies, evaluates and analyses risk, supported by a robust reporting system integrated across all its operations and programmes. Starting at board level and cascading throughout Chemonics, it strives to embed a positive risk culture which encourages openness and discusses pressing business issues in a realistic manner. Risks and mitigation strategies are actively tracked.
The Senior Leadership Team (SLT) meets weekly and follow a standing agenda that prioritises safeguarding and delivery risks, whilst other risks are covered throughout the rest of the meeting. Risks are collated from each department and reported to the Chemonics and CII Board of Directors quarterly. Identification, management and reporting of these risks are carried out via:
Chemonics is continuously examining and improving its approach to risk. This is essential in order to deliver high-profile projects effectively and efficiently in some of the world’s most complex and high-risk environments.
Chemonics monitors risks under eight main headings:
(i) Security
Chemonics is constantly alert to the risk that staff are placed in physical danger or that their wellbeing is affected leading to loss of life, physical and psychological injury, or time out of work.
Each programme has defined security procedures and emergency action plans owned by the Team Leader. These are reviewed regularly and updated in response to new threats and changes in the security environment. They contain guidance including contextual and threat analysis, an overview of safety and security teams’ crisis management mechanisms and training for example Hostile Environment Awareness Training. Chemonics security-related standard operating procedures are based on ISO31000 Risk Management process.
All staff have a full Health & Safety induction as part of their onboarding programme, and Safety & Security and Health & Safety policies are available to all staff. All Health & Safety incidents are reported to People & Culture and reviewed for lessons learned.
(ii) Safeguarding
Chemonics treats its safeguarding responsibilities with utmost seriousness. It follows the UN definitions of Sexual Exploitation, Abuse, and Harassment (SEAH): “Sexual exploitation: any actual or attempted abuse of a position of vulnerability, differential power or trust for sexual purposes, including profiting monetarily, socially or politically from the sexual exploitation of another. Sexual abuse: the actual or threatened physical intrusion of a sexual nature whether by force or through unequal or coercive conditions. Sexual harassment: unwelcome sexual advances, including requests for sexual favours or other verbal or physical behaviour of a sexual nature, which may create a hostile or offensive environment.”
Chemonics has a full-time Safeguarding Manager with responsibility for safeguarding oversight across its portfolio. The role also provides support for programme staff tasked with maintaining safeguarding processes and plans, as well as connecting to sector-wide best practice in safeguarding approaches. The Safeguarding Manager also works closely with the Board’s Safeguarding Lead, who is one of its Non-Executive Directors.
CHEMONICS GROUP UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 3 -
(iii) Cybersecurity
Cybersecurity risk covers loss or reputational damage caused by cyber-attacks from actors ranging from lone hackers to nation states.
Chemonics invests significantly at CII group level to monitor risks, protect its data and raise levels of cyber-vigilance among all its staff.
Chemonics has implemented a robust, layered approach with a mix of monitoring, protection and end-user training aligned with the National Institute of Standards and Technology (NIST) Cyber Security Framework.
Zero Trust: Chemonics has implemented a zero-trust solution to verify user identities based on the context (device IP, location, time, device hygiene, behaviour patterns) and provides access to approved resources.
Endpoint Detection and Response: deployed multiple layers of next-generation endpoint detection and response technologies with security automation and orchestration capabilities.
Managed Detection and Response via a third party vendor providing 24x7x365 monitoring and containment, threat hunting and advanced log analysis algorithms.
Dedicated monitoring and alerting for Software-as-a-Service and Cloud-Based solutions including Microsoft 365 including intrusion prevention, detection and containment.
Robust Vulnerability Management programme including industry standard vulnerability scanning and patch management solutions.
Data protection processes and solutions to categorise, encrypt, monitor and track data at-rest and in-transit including data loss detection and prevention technologies.
Advanced email protection solution including an email gateway and AI-based behaviour analysis component to block >99.9% of phishing and malicious email attachments.
Programme Management tools supporting Incident Management, Governance, Risk and Compliance and Vulnerability Management throughout the enterprise.
To address the human behaviour aspect of cybersecurity, Chemonics trains its staff, consultants, and partners in its security policies, best practices, standards, and requirements. Overseen by its parent company’s Chief Information Security Officer, it runs cyberattack simulations with teams to enhance alertness to the risks and analyse the responses.
Chemonics is Cyber Essentials Plus certified and familiar with UK Government cybersecurity and data security and GDPR regulations.
(iv) Cash
Chemonics recognises that the nature of its UK Government contracts means that it often faces significant cash outflows before reimbursement. Chemonics manage its liquidity risk through rigorous weekly cashflow forecasting, credit control and management of aged debtor balances.
Additionally, Chemonics is in the privileged position of being supported by its parent company, CII, removing the need for external funding sources.
(v) Income Pipeline
To ensure revenue growth, Chemonics must secure new income as existing projects come to their end. Chemonics monitors the UK Government aid-funded pipeline on a weekly basis and attends supplier market events to ensure it is aware of opportunities and trends in the sector. Every month Chemonics reviews opportunities to assess future prospects.
Chemonics has a proven track record in delivering projects in over 100 countries and expertise in several technical areas, recognising our gold standard offering to the UK Government departments and other clients. Chemonics is also actively pursuing diversification in its client base, mitigating concentration risk.
CHEMONICS GROUP UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 4 -
(vi) Reputation
Chemonics is proud of its heritage and manages its reputation carefully. Chemonics defines reputational risk as a risk of underperformance in delivery, resulting in a loss of confidence and trust. Chemonics' primary focus is quality in delivery across its whole portfolio, recognising that this is the key driver of a positive market perception. Frequent thought leadership interventions and external events help share its expertise with the international development sector and wider audiences. Many Chemonics staff members are also active on charity boards and technical working groups. Additionally Chemonics monitors national and sector-specific media outlets, government strategies, and have nominated client relationship managers at various levels of the company.
(vii) Recruitment and Resourcing
This is the risk that the correct complement of skills and bandwidth is not available to the company, nor is it able to recruit them successfully. Staff retention and morale are standing agenda items at SLT meetings to ensure the company is best placed to mitigate this risk. Chemonics assesses morale through regular staff surveys, appraisals and interviews and has also convened a group of staff members drawn from across the company who collaborate on issues impacting staff to collate a collegiate staff input from across the business. Regular benchmarking is undertaken, and benefits kept under regular review to ensure staff are being adequately rewarded.
(viii) Finance systems
Chemonics has been working over the past year to implement a new ERP system. This will ensure all project time and materials are captured at a granular level for each project to enable prompt and accurate billing to its clients. It will also provide a suite of informative management information. Teams from across the business have been supporting the project to ensure the system meets the needs of the whole organisation.
Overview of performance
The company’s key performance for the period ended 31 December 2023 were as follows:
£000’s
Turnover 61,387
Cost of Sales 55,765
Gross Profit 5,622
Loss for the financial period before tax 7,886
The results for the year included central overhead recharges and transfer pricing fees paid to CII of £6.4m. This included £2.3m relating to the segmentation from the USA. Chemonics is undertaking a restructure to enable profitability in the coming years.
Growth strategy
Chemonics is committed to a growth strategy serviced by both organic growth though extensions and uplifts to current programmes as well as winning new awards from existing clients. Alongside this Chemonics is actively winning business from new clients and seeking opportunities to expand through acquisitions of companies with international development synergies.
L Quy
Director
18 September 2024
CHEMONICS GROUP UK LTD
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 5 -
The directors present their annual report and financial statements for the period ended 31 December 2023.
Results and dividends
The results for the period are set out on page 9.
Directors
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
J Butcher
L Quy
G Bhow
M Harrison
S Mudge
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and 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 company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
L Quy
Director
18 September 2024
CHEMONICS GROUP UK LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF CHEMONICS GROUP UK LTD
- 6 -
Opinion
We have audited the financial statements of Chemonics Group UK Ltd for the period ended 31 December 2023 which comprise the Income Statement, Statement of Comprehensive Income, Statement of Financial Position and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the ompany’s affairs as at 31 December 2023 and of the company’s affairs and of its loss for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
have been prepared in accordance with the requirements of the Companies Act 2006
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the 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 directors are responsible for the other information contained within the annual report. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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 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.
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 directors' report for the financial period 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.
CHEMONICS GROUP UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF CHEMONICS GROUP UK LTD
- 7 -
Matters on which we are required to report by exception
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.
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 company, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the director's responsibilities statement set out on page 5, 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 intends to liquidate the entity or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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 the override of controls by management. Our audit procedures to respond to these risks included enquiries of management about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals, reviewing accounting estimates for biases and reading minutes of meetings of those charged with governance.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations.
A further description of our responsibilities for the audit of the financial statements is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
CHEMONICS GROUP UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF CHEMONICS GROUP UK LTD
- 8 -
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.
Naziar Hashemi
Senior Statutory Auditor
For and on behalf of Crowe UK LLP
3 October 2024
Statutory Auditor
55 Ludgate Hill
London
UK
EC4M 7JW
CHEMONICS GROUP UK LTD
INCOME STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 9 -
Period
ended
31 December
2023
Notes
£'000
Turnover
3
61,387
Cost of sales
(55,765)
Gross profit
5,622
Administrative expenses
(13,508)
Loss before taxation
(7,886)
Tax on loss
8
(244)
Loss for the financial period
(8,130)
The income statement has been prepared on the basis that all operations are continuing operations.
CHEMONICS GROUP UK LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 10 -
Period
ended
31 December
2023
£'000
Loss for the period
(8,130)
Other comprehensive income
-
Total comprehensive income for the period
(8,130)
CHEMONICS GROUP UK LTD
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 11 -
2023
Notes
£'000
£'000
Fixed assets
Intangible assets
9
404
Tangible assets
10
1,014
1,418
Current assets
Debtors
12
20,035
Cash at bank and in hand
2,145
22,180
Creditors: amounts falling due within one year
13
(29,657)
Net current liabilities
(7,477)
Net liabilities
(6,059)
Capital and reserves
Called up share capital
15
Share premium account
2,071
Profit and loss reserves
(8,130)
Total equity
(6,059)
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved by the board of directors and authorised for issue on 18 September 2024 and are signed on its behalf by:
L Quy
Director
Company registration number 14411359 (England and Wales)
CHEMONICS GROUP UK LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 12 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£'000
£'000
£'000
£'000
Balance at 22 October 2022
-
Period ended 31 December 2023:
Loss and total comprehensive income
-
-
(8,130)
(8,130)
Issue of share capital
15
2,071
-
2,071
Balance at 31 December 2023
2,071
(8,130)
(6,059)
CHEMONICS GROUP UK LTD
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 13 -
2023
Notes
£'000
£'000
Cash flows from operating activities
Cash generated from/(absorbed by) operations
19
1,660
Investing activities
Purchase of intangible assets
(404)
Purchase of tangible fixed assets
(1,182)
Net cash used in investing activities
(1,586)
Financing activities
Proceeds from issue of shares
2,071
Net cash generated from financing activities
2,071
Net increase in cash and cash equivalents
2,145
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
2,145
The notes on pages 14 to 23 form part of these financial statements.
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information
Chemonics Group UK Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 1 Benjamin Street, London, UK, EC1M 5QL.
1.1
Reporting period
The company commenced trading on 22nd October 2022 and reports its first set of accounts for the period ended 31st December 2023. As this is the company's first period of trading, comparative information is not available.
1.2
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
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 £'000.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.3
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Chemonics prepares weekly cash flow forecasts to ensure it manages its working capital. Chemonics International Inc., its parent company, has provided a letter of support for the company.
1.4
Turnover
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.5
Intangible fixed assets other than goodwill
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Computer Software
10 Years Straight Line
1.6
Tangible fixed assets
Assets with a value in excess of £5,000 and with an economic useful life of more than one year are capitalised at the time of purchase.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures and fittings
10 Years Straight Line
Computer & Audio Visual Equipment
3 - 5 Years Straight Line
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
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 £'000.
Basic financial assets
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.
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Basic financial 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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.13
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.14
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Contract Revenue
Contracts are reviewed at the end of the period to confirm that milestones have been met and that it is appropriate to recognise revenue in the relevant period.
Bad Debt Provision
Outstanding debts have been reviewed and the company has determined that a bad debt provision is not required. Bad debts are aged and kept under constant review.
3
Turnover
2023
£'000
Turnover analysed by geographical market
Europe and the Middle East
51,866
Africa
8,775
North America
746
61,387
Income is generated through the provision of services. Turnover is reported based on the country in which the work is delivered.
4
Operating loss
2023
Operating loss for the period is stated after charging/(crediting):
£'000
Exchange gains
(106)
Depreciation of owned tangible fixed assets
168
Operating lease charges
947
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 18 -
5
Auditor's remuneration
2023
Fees payable to the company's auditor and associates:
£'000
For audit services
Audit of the financial statements of the company
42
For other services
Audit-related assurance services
25
6
Employees
The average monthly number of persons (including directors) employed by the company during the period was:
2023
Number
Project management
63
Operations
17
Total
80
Their aggregate remuneration comprised:
2023
£'000
Wages and salaries
4,889
Social security costs
554
Pension costs
170
5,613
Redundancy payments in the period include £2,893 paid to one member of staff.
7
Directors' remuneration
2023
£'000
Remuneration for qualifying services
222
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1.
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
7
Directors' remuneration
(Continued)
- 19 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
£'000
Remuneration for qualifying services
202
Company pension contributions to defined contribution schemes
20
8
Taxation
2023
£'000
Deferred tax
Origination and reversal of timing differences
244
The actual charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
2023
£'000
Loss before taxation
(7,886)
Expected tax credit based on the standard rate of corporation tax in the UK of 22.78%
(1,796)
Unutilised tax losses carried forward
1,937
Other tax adjustments, reliefs and transfers
253
Remeasurement of deferred tax for changes in tax rates
(150)
Taxation charge for the period
244
Chemonics expects to be in a position to commence unwinding the tax losses carried forward during 2025.
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 20 -
9
Intangible fixed assets
Computer Software
£'000
Cost
At 22 October 2022
Additions
404
At 31 December 2023
404
Amortisation and impairment
At 22 October 2022 and 31 December 2023
Carrying amount
At 31 December 2023
404
Intangible assets relate to the development, customisation and implementation of Chemonics' accounting software.
10
Tangible fixed assets
Fixtures and fittings
Computer & Audio Visual Equipment
Total
£'000
£'000
£'000
Cost
At 22 October 2022
Additions
1,104
78
1,182
At 31 December 2023
1,104
78
1,182
Depreciation and impairment
At 22 October 2022
Depreciation charged in the period
163
5
168
At 31 December 2023
163
5
168
Carrying amount
At 31 December 2023
941
73
1,014
11
Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Kimoniks Danismanlik Limited Sirketi
Turkey
Consultancy
Ordinary
100.00
Kimoniks Danışmanlık Limited Şirketi did not trade in 2023.
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 21 -
12
Debtors
2023
Amounts falling due within one year:
£'000
Trade debtors
2,660
Amounts owed by group undertakings
818
Other debtors
1,423
Prepayments and accrued income
15,134
20,035
Accrued income represents the value of work undertaken in the year which was not billed until after the year end.
13
Creditors: amounts falling due within one year
2023
£'000
Trade creditors
1,647
Amounts owed to group undertakings
25,401
Taxation and social security
465
Other creditors
180
Accruals and deferred income
1,964
29,657
Amounts due to group undertakings represents £25,360,672 due to Chemonics International Inc. and £39,844 due to other related parties.
14
Retirement benefit schemes
2023
Defined contribution schemes
£'000
Charge to profit or loss in respect of defined contribution schemes
170
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
15
Share capital
2023
Ordinary shares of £1 each
2
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
(Continued)
- 22 -
16
Operating lease commitments
Lessee
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:
2023
£'000
Within one year
839
Lease commitments relate to the lease of the companies premises.
17
Related party transactions
Transactions with related parties
During the period the company entered into the following transactions with related parties:
Purchases
2023
£'000
Chemonics International Inc.
41,864
Other related parties
352
All transactions were undertaken at an arms length basis.
The following amounts were outstanding at the reporting end date:
2023
£'000
Amounts due to parent undertaking
Chemonics International Inc.
25,361
Amounts due to fellow subsidiaries
Procurement and Logistics Technology Center (PLTC) LLC T/A Connexi
40
25,401
18
Ultimate controlling party
Chemonics Group UK Limited is 100% owned by Chemonics International Inc. an entity incorporated in the USA whose registered office is 1275 New Jersey Avenue SE Ste 200, Washington, DC 20003, USA. The parent company is 100% owned by an employee share trust and there are no shareholders that exceed 5% ownership of the ultimate parent company.
CHEMONICS GROUP UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 23 -
19
Cash generated from/(absorbed by) operations
2023
£'000
Loss for the period after tax
(8,130)
Adjustments for:
Depreciation and impairment of tangible fixed assets
168
Movements in working capital:
Increase in debtors
(20,035)
Increase in creditors
29,657
Cash generated from/(absorbed by) operations
1,660
20
Analysis of changes in net funds
22 October 2022
Cash flows
31 December 2023
£'000
£'000
£'000
Cash at bank and in hand
-
2,145
2,145
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