The directors present the strategic report for the year ended 31 March 2024.
Collectively, the many improvements in operational efficiencies introduced by the Board through the year to improve 5 key areas: a) Sales performance; b) Service Delivery; c) Management Information; d) Profitability; and e) Retention, had been successful. And they were fundamental to improving our overall financial health.
This outcome was most reassuring to Shareholders and further evidence that our adopted business strategy was on the right course.
Cash flow has remained healthy throughout the year. The Balance Sheet has also remained strong, with Shareholders’ funds of £4.2m at year end.
Headcount at the year end date increased from 100 to 108, including contractors. An uplift in line with the Board’s expectations.
In summary, the Board is very pleased with the way in which the Company has performed over the course of the year in pursuit of our financial and corporate objectives. The Directors are comfortable that Shareholders’ expectations for the year have been realised, and that the Company is on a very sound financial footing to prosper and scale in FY2024-25.
Financial Key Performance Indicators
Description | 2023-24 | 2022-23 |
Revenue | £17.5m | £15.1m |
Gross Profit | £7.07m | £5.9m |
Gross Profit % | 40% | 39% |
Recurring Revenue | £9.2m | £8.2m |
Recurring Revenue % | 52% | 54% |
EBITDA (adjusted) | £1.7m | £1.2m |
Investment Strategy
Our headline investment strategy for FY2023-24 was to ensure that:
1. We protected our existing market share.
2. We positioned the business correctly to support our growth ambitions.
3. We pursued new business effectively, ensuring value for money and measurable ROI.
Specifically, we invested in:
People
Under the auspices of Project Pinnacle, we:
Firmly embedded our new Performance Appraisal regime across the entire workforce, including the introduction of Personal Development Plans (PDPs) which was widely welcomed.
Introduced a new Grading and Banding structure, linked to remuneration, for the many technical and non-technical roles across the Company. This brought further organisational clarity to the business and allowed for a smoother transition between roles as employees’ careers progress.
Laid the groundwork for all employees to have well defined Career Pathways identified, discussed and agreed. This will require more work next year and is high on the Board’s list of priorities.
We researched, qualified, selected and embedded a new enterprise HR platform (Cezanne) to allow us to scale up confidently into the mid-market space from a people management and performance perspective. This was a significant and necessary investment in time and money. The Board is confident it will deliver notable improvements and efficiencies in the way in which all employees’ interests, affairs and careers are now managed.
We relocated our Service Desk operation to new, much better-appointed offices in central Manchester, which was very successful and welcomed by all.
All these foregoing improvements have combined to improve notably our Employee Value Proposition (EVP) over the course of the year. This was one of the Board’s principal objectives.
2. Service Excellence
We invested in new, senior leadership in our Managed Services Division in H2, which has yielded some immediate improvements in the consistency and quality of our service delivery, and in our ITIL Service Management capability.
We continue to embed a ‘Level 4 Service Excellence culture’ across the business. Whilst we have made steady progress with this initiative, more training will be required in FY2024-25 to achieve the progress and the milestones the Board wants in this area.
3. Knowledge Management
Significant progress was made, especially through the course of H2, with improvements to our knowledge management regime. Specifically, Information Dashboards were planned, designed and introduced successfully for:
a) revenue streams
b) client profitability and
c) pipeline forecasting.
Together, these now provided the Board and the Senior Leadership Team (SLT) with more dynamic, accurate and timely management information to support decisions at all levels of the Company. And it has also helped to inform our longer-term resourcing plans for the year ahead. We will continue to build on this success through next year and ensure wide adoption of these most useful dashboards across the business.
Business Model
The OryxAlign business model continues to focus on three core elements which shape day-to-day operations of the Company:
1. Delivering Service Excellence, consistently.
2. Maintaining Client Intimacy to ensure we understand what is wanted and needed; and
3. Ensuring Operational Efficiency in the drumbeat of our services.
The Board’s priority has been and remains to deliver enduring Service Excellence to our clients, which is reflected in the Company’s SLA resolution (92%) and client happiness (94%) scores. The Board was reassured by these statistics at year end, not least because they demonstrated a consistency in our service delivery, and a resilience across the business to weather successfully challenging market conditions.
The Directors continue to place significant emphasis on this mission critical component of service, and they view it as central to Oryx Align’s ongoing success.
Alongside these three core elements, there were four themes the Company embraced to help drive performance and shape employee behaviours in 2023-24:
1. Prioritise
2. Own
3. Perform
4. Embed
We have become more adept across the business in 2023 at prioritising our work streams, and taking greater personal ownership of day-to-day matters, especially when issues arise unexpectedly. Individual performance has consequently improved as processes have become more embedded in routine operations.
Capabilities
OryxAlign’s portfolio of capabilities was steadily strengthened over the course of the year to maintain our competitive advantage and in response to evolving market conditions.
Cyber. We continued to strengthen our portfolio of managed cyber security services, keeping a watchful eye on new and emerging technologies which may have the potential to be market disruptors. Ensuring the protection of our clients’ environments, and the protection of our own infrastructure, remains the Board’s top priority.
PowerBI. We have successfully embraced PowerBI to deliver a suite of enhanced reporting capabilities.
Artificial Intelligence (AI). We have assessed the impact of AI on the MSP sector and put in place plans to help us, and our clients understand the challenges that lie ahead, including not least, the introduction of ‘Microsoft Copilot’.
Extended Detection and Response (XDR) and Experience Level Agreements (XLA). We continued to strengthen and firmly position these components of capability throughout the year. This effort will endure through 2025 to help protect our competitive advantage.
Geography
The Directors do not envisage any changes to the Company’s current deployment in central London (Main Office), Manchester (Service Desk) and Manila (NOC) over the next year. There is an ambition to establish an operational presence in South Africa in FY2024-25.
Environmental, Social and Governance (ESG)
OryxAlign recognises its actions as a business have an impact on the world we live in. A strong ESG strategy commits the Company to look ahead and question how to best ensure a sustainable future for future generations.
Oryx Align’s ESG strategy demonstrates commitment to its workforce, not only regarding fair renumeration, but also ensuring the workplace is inclusive. Attracting new, like-minded talent builds loyalty and a shared ESG responsibility ensures transparency, making OryxAlign accountable for its actions. This further enhances trust and clearly demonstrates Oryx Align’s core values; Caring, Trusting, Striving, Supporting and Enjoying.
Environment
OryxAlign measures its carbon emissions across all three scopes, including water usage, purchased electricity and waste. Our CRP includes a list of current and planned initiatives to reduce our carbon footprint and quantifiable reduction goals.
OryxAlign have partnered with Ecologi and are working towards becoming a ‘Climate Positive Workforce’. Through Ecologi, OryxAlign plants trees to support reforestation and to offset carbon emissions. All employees at OryxAlign are fully enrolled in the partnership with Ecologi, and employee anniversaries, team ‘kudos’ and positive client feedback are all incentivised by planting trees.
As stated in our Environmental Policy and CRP, and in accordance with the Paris Agreement, OryxAlign aims to achieve Net-Zero carbon emissions by 2050. Furthermore, we aim to increase the amount of energy used from renewable sources and we are exploring moving to a ‘green’ energy supplier.
Social
Our continued collective effort and focus on our people delivered a proven return at year end when we secured a 1-star Best Companies accreditation.
We continue to invest in career development and training with all employees being provided with a Udemy Business training subscription, giving them access to thousands of online training courses. Employees are encouraged to undertake training related to their professional development and their own personal development.
We ensure all our team are well rewarded for the work they do. We annually undertake a thorough salary industry benchmarking exercise and benefits review, to ensure we remain competitive in our sector.
Governance
The Board produces an annual Business Plan with Corporate Objectives and meets formally, monthly, to review management accounts and progress towards delivering the Business Plan.
The Senior Leadership Team continues to mature and take on increasing responsibility for day-to-day operational activities.
A Technical Steering Group (TSG) provides strategic, technical direction based on technology trends and innovations, including the research and development of new technologies.
Oryx Align continues to trade successfully with two principal business units: Managed Services and Professional Services.
The Company retained its ISO9000 and ISO27001 and Cyber Essentials Plus accreditations and core vendor certifications.
Principal risks and uncertainties
Credit Risk
OryxAlign’s principal credit risk relates to trade receivables. OryxAlign operates rigorous credit control procedures ensuring the appropriate credit rating of new clients, pre-payments and deposits on large projects and robust management of trade debtors.
Liquidity Risk
Liquidity risk is that the risk the Company will not be able to meet its obligations associated with financial liabilities.
OryxAlign mitigates liquidity risk by carefully monitoring cash generated from its services and operations, managing cash collections from trade debtors and payments to trade creditors. OryxAlign’s cash flow forecasts are monitored monthly, and regularly undated to ensure that sufficient funds are available to meet all financial commitments.
Going Concern
The Directors have prepared the cash flow forecasts for a period of at least 12 months from the date of the approval of the financial statements. Based on the cash flow projections and the projected headroom against the available facilities, the Directors are satisfied that it is appropriate to prepare the financial statements on a going concern basis.
Outlook and Prospects
Market conditions for the coming year remain buoyant, and the demand for managed technology services remains extremely high.
OryxAlign’s growing portfolio, presence and reputation in the Data Centre, Commercial Property and Construction sectors continues to drive strong pipeline growth as the demand for critical infrastructure services in these sectors remains robust. The Directors will continue to consolidate the Company’s competitive advantage in these sectors next year, both in the UK and across the European mainland, ensuring the Company’s recurring revenues generated from a mature portfolio of managed services are both protected and strengthened.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 14.
Ordinary dividends were paid amounting to £269,000 (2023: £236,000). The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, UHY Hacker Young, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of Oryx Align Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows 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).
Basis for 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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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.
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.
Based on our understanding of the Group and the industry in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to the acts by the Group, which were contrary to applicable laws and regulations including fraud, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to revenue and profit.
Audit procedures performed included: review of the financial statement disclosures to underlying supporting documentation, enquiries of management and testing of journals and evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,107,444 (2023 - £788,507 profit).
Oryx Align Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Ground Floor, Bury House, 31 Bury Street, London, EC3A 5AR.
The group consists of Oryx Align Limited and all of its subsidiaries.
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.
The consolidated group financial statements consist of the financial statements of the parent company Oryx Align Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 March 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.
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 the sale of goods is recognised when all the following conditions are satisfied:
- goods have been received at a client's site and there has been a transfer of ownership;
- the configuration of goods is complete, as per the agreed specification details in the scope of works or proposal;
- the final project has been signed off by the client.
Revenue from contracts for the provision of professional services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when the following conditions are satisfied:
- the amount of revenue can be measured reliably
- it is probable that the company will receive the consideration due under the contract
- the stage of completion of the contact can be measure reliably at the end of the reporting date
- the costs incurred and the costs to complete the contract can be measured reliably.
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 recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, 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, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, 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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
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 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 leased asset are consumed.
In the application of the group’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.
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.
The company incurs shared based compensation expense from share options. The company estimates the fair value of options granted to employees using the equity-settled model. The equity-settled model considers several variables and assumptions in estimating the far value of options. These variables include the likelihood of the number of options that will eventually vest.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Transactions with subs
Details of the company's subsidiaries at 31 March 2024 are as follows:
The loan is secured over the trademark of the company.
The loan is repayable in August 2028 and attracts an interest of 5%.
Finance lease payments represent rentals payable by the company for motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
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.
The company has an equity-settled share option scheme whereby participants have the opportunity to exchange options for shares at an exercise price. The exercise price is fixed at grant date. Subject to the participant's continued employment, options vest over a period of 3 years, starting from the grant date.
The options outstanding at 31 March 2024 had an exercise price ranging from £0.42 to £1.40.
During the year, the company issued 1 Ordinary E shares.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the year, total dividends of £269,000 (2023: £236,000) were paid to the directors and their wives.
At 31 March 2024, the group was owed £62,094 from the directors (2023: £15,679). These balances do not attract interest and have no fixed repayment date.
The parent company made a loan of £150,000 (2023: £150,000) to C Henriksen, a director, which is still outstanding at the year end. Interest of £7,500 (2023: £7,500) was charged on the loan.
The parent company made a loan of £30,000 (2023: £nil) to J Rutherford, a director, which is still outstanding at the year end. Interest of £nil (2023: £nil) was charged on this amount.
During the year, sales of £14,095 (2023: £950) were made to Digital Concepts Engineering Limited, a company in which G Robins is also a director. At the year end, amounts of £16,914 (2023: £nil) were owed. The transactions were made at arms length.