Company registration number 04884651 (England and Wales)
CTI DIGITAL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 FEBRUARY 2024
CTI DIGITAL LIMITED
COMPANY INFORMATION
Directors
M A Ahmad
(Appointed 2 May 2023)
C P Woodward
(Appointed 2 May 2024)
Company number
04884651
Registered office
Express Networks 2
3 George Leigh Street
Manchester
M4 5DL
Auditor
Sumer Auditco Limited
The Beehive
City Place
Gatwick
RH6 0PA
CTI DIGITAL LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
CTI DIGITAL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 1 -
The directors present the strategic report for the year ended 29 February 2024.
Review of the business
The principal activity of the company is that of a digital agency.
CTI Digital Limited has operated since 2003. Over the years our team has built a reputation within the digital agency sector. We use digital strategy, technical support and integrated marketing to create industry-leading experiences for our clients and their customers.
We provide services across multiple industries including Higher Education, Public Sector, Retail, SME’s, Charities, Memberships and Associations, Leisure, Professional Services, Arts and Culture, Health and Fitness.
Turnover for the year has remained consistent at £10.9m (2023: £10.8m) which the directors are satisfied with, given the challenging economy and market.
During the year a significant investment in staff has been made, employing additional individuals, in addition to strengthened our management team. This is key to growing our business and achieving longer term strategic objectives. These increased costs cant necessarily be passed onto customers immediately, resulting in both the reduced gross margin and the small loss reported for 2024. Management are confident that the investment in people will benefit future years, that with, close and effective monitoring of costs, the company is expected to return to profitability in 2025,
During the year, balances owed to/ from fellow group companies have been considered and management decided to process formal debt waiver and releases. Additionally an exceptional provision for an onerous contract has been recognised. These have been considered exceptional for 2024 on the basis they are one off in nature and given the significance of the balances affected. Further details are provided in note 4.
As the balance sheet date, the company continues to maintain significant net assets of £4.4m (2023: £4.5m), which the directors believe places the company in a strong and stable financial position.
CTI DIGITAL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 2 -
Principal risks and uncertainties
In determining whether the company's accounts can be prepared on a going concern basis, the directors considered the company's business activities together with the factors likely to affect its future development, performance, its financial position including cash flows, liquidity position, borrowing facilities and the risks and uncertainties in relation to its business activities. The directors regularly review these factors to ensure that any risks are recognised and managed effectively.
The company uses various financial instruments including loans, hire purchase, finance leases, trade credit and other creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company’s operations.
The existence of these financial instruments exposes the group to financial risks, which are described in more detail below. The directors review and agree policies for managing these risks.
The principal risks affecting the business are as follows:
Liquidity risk
The company seeks to manage financial risk by ensuring liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
Interest rate risk
The company finances its operations through a combination of retained profits, loans, finance leases and hire purchase contracts. The company exposure to interest rate fluctuations on its borrowings is managed through the use of both fixed and floating facilities.
Foreign currency risk
The company’s principal foreign currency exposures arose from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged to fix the cost in sterling.
Credit risk
The principal credit risk arises from the company's trade debtors.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
CTI DIGITAL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 3 -
Key performance indicators
The company reviews and monitors its performance against a number of key performance indicators both financial and non-financial. The principal measures include revenue growth, improvement of profit margins, management of cash flows and customer and employee satisfaction levels. These are reviewed by the management team and reported monthly to the board.
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EBITDA (excluding exceptional items) | | | |
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As outlined in the review of business, the transition to new management and processes combined with a challenging market environment all contributed to the modest turnover growth, and declines in gross margin and adjusted EBITDA. Turnover growth and project cost management are key drivers of the return to profitability in the forecast period.
The company has strong working capital management practices, maintaining significant net current assets despite the losses in the year.
Similarly, the company has maintained significant net assets, enabling the company to deliver the strategic objective of becoming one of the UK’s fastest growing end-to-end digital agencies.
Future developments
The directors will continue to monitor sales growth, profit margins and cash flow in the forthcoming year. The company's growth strategy is based around strong customer partnerships, improved new customer acquisition, improved utilisation of experienced staff across all service offerings and effective cost monitoring. Management are confident that the investment in people will benefit future years and the company is expected to return to profitability in 2025.
M A Ahmad
Director
24 July 2024
CTI DIGITAL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 4 -
The directors present their annual report and financial statements for the year ended 29 February 2024.
Principal activities
The principal activity of the company continued to be that of a digital agency.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
N Rhind
(Resigned 2 May 2024)
D M Beswick
(Resigned 31 March 2024)
M Stapleton
(Resigned 9 April 2023)
T P Edwards
(Resigned 29 September 2023)
S Gale
(Resigned 24 June 2024)
R Steckles
(Resigned 24 June 2024)
M A Ahmad
(Appointed 2 May 2023)
C P Woodward
(Appointed 2 May 2024)
Research and development
The company continues to utilise its in-house technical expertise to remain at the forefront of world class digital solutions and campaigns for respected brands around the globe. By constantly investing in talented individuals, advancing technology and our clients’ visions, the company crafts innovative and effective technology for all.
Auditor
Sumer Auditco Limited were appointed as auditor to the company and deemed to be reappointed under section 487(2) of the Companies Act 2006.
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.
CTI DIGITAL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 5 -
Strategic report
In accordance with s414(c)(11) of the Companies Act, included in the strategic report is information relating to the future developments of the business which would otherwise be required by schedule 7 of the "Large and Medium Sized Company's (Accounts and Reports) Regulations 2008" to be contained in the directors report.
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
M A Ahmad
Director
24 July 2024
CTI DIGITAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CTI DIGITAL LIMITED
- 6 -
Opinion
We have audited the financial statements of CTI Digital Limited (the 'company') for the year ended 29 February 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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 company's affairs as at 29 February 2024 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual 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.
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 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.
CTI DIGITAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CTI DIGITAL LIMITED (CONTINUED)
- 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, 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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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 identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the directors (as required by auditing standards) and discussed with the directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or the loss of the company's license to operate. We identified the following areas as those most likely to have such an effect: laws related to health and safety, employment law and data protection.
CTI DIGITAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CTI DIGITAL LIMITED (CONTINUED)
- 8 -
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance.
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. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
We design procedures in line with our responsibilities, outlined below to detect material misstatement due to fraud:
Matters are discussed amongst the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud
Identifying and assessing the design and effectiveness of controls that management have in place to prevent and detect fraud
Detecting and responding to the risks of fraud following discussions with management and enquiring as to whether management have knowledge of any actual, suspected or alleged fraud;
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Caroline Snape
Senior Statutory Auditor
For and on behalf of Sumer Auditco Limited
24 July 2024
Statutory Auditor
The Beehive
City Place
Gatwick
RH6 0PA
CTI DIGITAL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 9 -
2024
2023
Notes
£
£
Turnover
3
10,854,034
10,809,594
Cost of sales
(7,910,561)
(5,539,407)
Gross profit
2,943,473
5,270,187
Administrative expenses
(5,316,930)
(4,670,382)
Other operating income
84,080
1,060,959
Exceptional item
4
2,202,747
Operating (loss)/profit
5
(86,630)
1,660,764
Interest payable and similar expenses
8
(12,212)
(9,581)
(Loss)/profit before taxation
(98,842)
1,651,183
Tax on (loss)/profit
9
(18,548)
269,723
(Loss)/profit for the financial year
(117,390)
1,920,906
The profit and loss account has been prepared on the basis that all operations are continuing operations.
CTI DIGITAL LIMITED
BALANCE SHEET
AS AT
29 FEBRUARY 2024
29 February 2024
- 10 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
10
146,042
201,523
Current assets
Debtors
11
7,157,299
7,113,769
Cash at bank and in hand
403,489
1,085,036
7,560,788
8,198,805
Creditors: amounts falling due within one year
12
(3,095,256)
(3,696,485)
Net current assets
4,465,532
4,502,320
Total assets less current liabilities
4,611,574
4,703,843
Creditors: amounts falling due after more than one year
13
(5,074)
(63,942)
Provisions for liabilities
Provisions
15
249,939
165,950
(249,939)
(165,950)
Net assets
4,356,561
4,473,951
Capital and reserves
Called up share capital
18
106
106
Profit and loss reserves
4,356,455
4,473,845
Total equity
4,356,561
4,473,951
The financial statements were approved by the board of directors and authorised for issue on 24 July 2024 and are signed on its behalf by:
M A Ahmad
Director
Company Registration No. 04884651
CTI DIGITAL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 March 2022
106
2,552,939
2,553,045
Year ended 28 February 2023:
Profit and total comprehensive income
-
1,920,906
1,920,906
Balance at 28 February 2023
106
4,473,845
4,473,951
Year ended 29 February 2024:
Loss and total comprehensive income
-
(117,390)
(117,390)
Balance at 29 February 2024
106
4,356,455
4,356,561
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 12 -
1
Accounting policies
Company information
CTI Digital Limited is a private company limited by shares incorporated in England and Wales. The registered office is Express Networks 2, 3 George Leigh Street, Manchester, M4 5DL.
1.1
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 £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The results of CTI Digital Limited are included in the consolidated financial statements of Project Airscope Bidco Limited. These consolidated financial statements are available upon request from the group's registered office: Express Networks 2, 3 George Leigh Street, Manchester, M4 5DL.
1.2
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.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
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.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 13 -
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:
Leasehold improvements
20% p.a straight line basis
Fixtures and fittings
20% p.a straight line basis
Computers
20% - 50% p.a straight line basis
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.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
1.6
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.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ 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.
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 14 -
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.
Other financial assets
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.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
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.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
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.
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 15 -
Other financial liabilities
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 though 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
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.
1.9
Taxation
The tax credit represents the sum of the tax currently receivable following Research and Development tax claims surrendered plus the deferred tax credit/(charge) for the year.
Current tax
The tax currently receivable is based on taxable profit for the year, after deduction of the Research and Development tax claim surrendered for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 profit and loss account, 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.
1.10
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 16 -
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.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to income 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 lease 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
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
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.
Bad debt provision
Trade debtors are recognised to the extent they are judged recoverable. Management reviews are performed to estimate the level of provisions required for irrecoverable debt. Provisions are made specifically against invoices where recoverability is uncertain.
The bad debt provision as at 29 February 2024 was £96,198 (2023: £301,001).
Refer to note 11 for the carrying value of trade debtors impacted by this key accounting estimate.
Revenue recognition
Revenue is recognised on an estimated stage of completion, and any variance to amounts invoiced is accrued or deferred as required. Management reviews are performed to estimate the level of revenue to be recognised.
Accrued income recognised as at 29 February 2024 was £229,645 (2023: £499,179).
Deferred income recognised as at 29 February 2024 was £530,635 (2023: £519,484).
Tangible fixed assets
The useful economic life of tangible fixed assets has to be estimated by the directors of the company to ensure an appropriate depreciation charge is recognised in the year. The value of the assets ultimately depends on the condition of the assets and whether economic income can be derived from the asset. The directors undertake a periodic review of the assets to ensure the value of the assets is fairly stated within the financial statements.
During the year, depreciation of £93,382 (2023: £79,376) has been charged.
Refer to note 10 for the carrying value of tangible fixed assets impacted by this key accounting estimate.
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
Management reviews are performed to estimate the level of provisions required for irrecoverable debt. Provisions are made specifically against invoices where recoverability is uncertain.
The dilapidations provision estimate was based on a professional assessment of the property date at 30 September 2022, and the likely expected costs of repair contractually obligated in accordance with the lease. The directors believe this is a fair assessment of the dilapidations provision at the balance sheet date.
The onerous contract provision has been quantified based on an assessment of total costs to complete in conjunction with the contract for service and the associated adjustment to the percentage the project was complete at the balance sheet date.
Refer to note 15 for the respective provisions made, as per the above key accounting estimates.
3
Turnover
All turnover relates to digital agency services and all arose in the United Kingdom,
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 18 -
4
Exceptional item
2024
2023
£
£
Income
Group debt formally waived
2,202,747
-
2,202,747
-
During the year, certain group debts have been formally waived. This is considered exceptional given the significant balances involved and the one off nature.
5
Operating (loss)/profit
2024
2023
Operating (loss)/profit for the year is stated after charging:
£
£
Exchange losses
20,401
4,144
Fees payable to the company's auditor for the audit of the company's financial statements
16,000
12,000
Depreciation of owned tangible fixed assets
50,573
49,688
Depreciation of tangible fixed assets held under finance leases
42,809
29,986
Amortisation of intangible assets
-
31,745
Operating lease charges
216,723
222,646
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Productive staff
104
87
Administrative staff
35
29
Total
139
116
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
5,807,508
4,204,483
Social security costs
597,865
459,421
Pension costs
213,187
157,157
6,769,914
4,963,342
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 19 -
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
117,763
Company pension contributions to defined contribution schemes
6,000
26,853
6,000
144,616
8
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
198
-
Interest on finance leases and hire purchase contracts
12,014
9,581
12,212
9,581
9
Taxation
2024
2023
£
£
Current tax
Adjustments in respect of prior periods
(270,961)
Deferred tax
Origination and reversal of timing differences
(3,974)
Adjustment in respect of prior periods
18,548
5,212
Total deferred tax
18,548
1,238
Total tax charge/(credit)
18,548
(269,723)
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
9
Taxation
(Continued)
- 20 -
The actual charge/(credit) for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
(Loss)/profit before taxation
(98,842)
1,651,183
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
(24,711)
313,725
Tax effect of expenses that are not deductible in determining taxable profit
2,639
9,930
Tax effect of income not taxable in determining taxable profit
(571,523)
(32,197)
Change in unrecognised deferred tax assets
595,887
Adjustments in respect of prior years
(270,961)
Effect of change in corporation tax rate
297
Group relief
(298,260)
Permanent capital allowances in excess of depreciation
(3)
(2,028)
Depreciation on assets not qualifying for tax allowances
1,089
Other permanent differences
(3,378)
4,559
Deferred tax adjustments in respect of prior years
18,548
5,212
Taxation charge/(credit) for the year
18,548
(269,723)
Deferred tax has been recognised at a rate of 25%. In October 2022, the government announced an increase in the corporation tax main rate from 19% to 25% for companies with profit over £250,000. There is a small company rate of 19% for taxable profits under £50,000 and marginal relief available for profits falling between £50,000 - £250,000 with effect from 1 April 2023.
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 21 -
10
Tangible fixed assets
Leasehold improvements
Fixtures and fittings
Computers
Total
£
£
£
£
Cost
At 1 March 2023
47,500
256,493
118,612
422,605
Additions
8,965
29,336
38,301
Disposals
(1,333)
(1,333)
At 29 February 2024
47,500
265,458
146,615
459,573
Depreciation and impairment
At 1 March 2023
29,292
116,660
75,130
221,082
Depreciation charged in the year
9,500
51,495
32,387
93,382
Eliminated in respect of disposals
(933)
(933)
At 29 February 2024
38,792
168,155
106,584
313,531
Carrying amount
At 29 February 2024
8,708
97,303
40,031
146,042
At 28 February 2023
18,208
139,833
43,482
201,523
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2024
2023
£
£
Fixtures and fittings
47,941
110,434
11
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
1,609,291
1,414,595
Corporation tax recoverable
83,343
Amounts owed by group undertakings
5,022,861
4,933,339
Other debtors
910
15,132
Prepayments and accrued income
440,894
732,155
7,157,299
7,095,221
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
11
Debtors
(Continued)
- 22 -
2024
2023
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 16)
18,548
Total debtors
7,157,299
7,113,769
12
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Obligations under finance leases
14
61,619
55,169
Trade creditors
772,994
222,953
Amounts owed to group undertakings
531,769
1,821,420
Taxation and social security
846,661
378,065
Other creditors
88,673
129,057
Accruals and deferred income
793,540
1,089,821
3,095,256
3,696,485
Obligations under finance leases are secured on the assets to which they relate.
13
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Obligations under finance leases
14
5,074
63,942
Obligations under finance leases are secured on the assets to which they relate.
14
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
61,619
55,169
In two to five years
5,074
63,942
66,693
119,111
Finance lease payments represent rentals payable by the company for certain items of computer equipment and fixtures and fittings. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 23 -
15
Provisions for liabilities
2024
2023
£
£
Dilapidations provision
165,950
165,950
Onerous contract provision
83,989
-
249,939
165,950
Movements on provisions:
Dilapidations provision
Onerous contract provision
Total
£
£
£
At 1 March 2023
165,950
-
165,950
Additional provisions in the year
-
83,989
83,989
At 29 February 2024
165,950
83,989
249,939
During the year a provision of £83,989 in respect of an onerous contract has been recognised based on the director's best estimate of costs to complete.
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2024
2023
Balances:
£
£
Accelerated capital allowances
-
(66,610)
Short term timing differences
-
85,158
-
18,548
2024
Movements in the year:
£
Asset at 1 March 2023
(18,548)
Charge to profit or loss
18,548
Liability at 29 February 2024
-
The deferred tax asset set out above is expected to reverse in future years. The accelerated capital allowances will release over the associated fixed assets useful economic lives, while the retirement benefit obligations will attract tax relief when paid. The short term timing differences relate to RDEC tax relief which will be utilised against future expected profits. relief in the year paid.
CTI DIGITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 24 -
17
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
213,187
157,157
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.
As at the year-end, contributions due to the schemes in respect of the current reporting year were £45,330 (2023: £32,288).
18
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of 1p each
10,559
10,559
105.59
105.59
19
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:
2024
2023
£
£
Within one year
371,809
391,630
Between two and five years
29,426
279,301
401,235
670,931
20
Ultimate controlling party
The immediate parent company is CTI Holdings Limited. The ultimate parent company is Project Airscope Bidco Limited. Both companies are registered in England and Wales.
CTI Digital Limited is consolidated into the Project Airscope Bidco Limited group's financial statements. Copies of these consolidated accounts can be obtained upon request from the group's registered office, Express Networks 2, 3 George Leigh Street, Manchester, M4 5DL.
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