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COMPANY REGISTRATION NUMBER: 05799390
Invosys Limited
Financial Statements
30 November 2023
Invosys Limited
Financial Statements
Period from 1 October 2022 to 30 November 2023
Contents
Page
Officers and professional advisers
1
Strategic report
2
Directors' report
6
Independent auditor's report to the members
8
Statement of comprehensive income
12
Statement of financial position
13
Statement of changes in equity
14
Statement of cash flows
15
Notes to the financial statements
16
Invosys Limited
Officers and Professional Advisers
The board of directors
Mr J Brady
Mrs J I Tuffs
Registered office
New Bridgewater House
Mayfield Avenue
Manchester
M28 3JF
Auditor
Crossley & Davis Chartered Accountants
Chartered accountants & statutory auditor
Ground Floor, Seneca House
Links Point
Amy Johnson Way
Blackpool
Lancashire
FY4 2FF
Bankers
Santander UK plc
Bridle Road
Bootle
Merseyside
L30 4GB
Invosys Limited
Strategic Report
Period from 1 October 2022 to 30 November 2023
Review of the business
The company is a highly respected Smart Telco, a strongly established UK market player with longstanding relationships in the VAR with a track record of nurturing partnerships big and small. The principal activity of the Company and its subsidiary undertakings continues to be the provision of communication services and technology within the UK and beyond. The business conducted is principally within the business-to-business sector, covering services including the provision of Inbound, Hosted and Unified Communication services. Support and Professional Services are now key products within the portfolio since the acquisition of Juniper Bridge and Atrium, adding to our diverse portfolio in the wholesale channel.
Results and performance
The results of the Company for the period, as set out on pages 13 and 14, show a profit on ordinary activities after tax attributable of £465,499 (2022: £461,004) as the company continued to recover from the global pandemic COVID-19. The shareholders' funds of the Company total £2,057,808 (2022: £4,408,642).
Business environment
The UK's communication industry is highly competitive, with a number of companies offering similar and resold products that has given rise to aggressive pricing structures. The impact and pace of innovation of technology within the sector has been enormous and with the support of other group companies and in-house development resources the company is ideally placed to not just keep abreast of advances but lead the way with innovative solutions and best in class platforms that has in the past, and will in the future, enable it to take advantage of the opportunities afforded when changes are an everyday reality.
Strategy
The Company's strategy in action is dedicated to broadening its sales, by providing access to services using our technology and proprietary platforms that, as well as number management and cloud call centres, will include hosted VoIP, smart SIP, hybrid cloud services, customised IT deployments, carrier termination, interconnection services, network and router monitoring and management, as well as industry compliant regulations for IT. Through the provision of these services, the company expects to grow its existing services, whilst entering new markets and offering new product lines, with the combination of both expected to see increased market share and profitability. The directors believe it is important to retain a diversified portfolio of services in order to achieve maximum profitability in this highly competitive marketplace. The Company will continue to consolidate its position and concentrate its efforts on achieving maximum growth in its existing market segments, whilst aiming to improve efficiency in all areas of our operations.
Key performance indicators
The Board monitors the progress of the Company by reference to the following KPIs: 2023 2022 Turnover 8,872,583 7,424,689 Gross Profit Margin 5,906,195 4,816,841 Cash Reserves 309,647 306,062
Principal risks and uncertainties
The process of risk management is addressed through a framework of policies, procedures and internal controls. All policies are subject to Board approval and ongoing review by management, risk management and internal audit. Compliance with regulation, legal and ethical standards is a high priority for the Company and the compliance team and Company finance department take on an important oversight role in this regard. Risks fall into two broad categories, Operational and Financial. Operational Risks Security The company's network infrastructure provides clients with open access to the internet and global voice networks, consequently there is a risk from cyber threat, telephony fraud as well as the failure of the physical infrastructure. A breach of security could have a significant impact on the company's reputation and a chance of significant commercial loss. The company has a proactive approach to identifying any threats and well proven procedures for neutralising such events. Our fraud management procedures identify unusual traffic patterns within a short timeframe and we have the operational capability both in and outside of offices to assess and mitigate any risks. Part of this approach involved the company being both GDPR compliant and ISO27001 certified. Network and Systems Performance Reliable, high quality, voice and data services are the core component of the company's products. Therefore, maintaining very high levels of service availability is central to any service provider's credibility. The company operates a comprehensive level of governance to manage the availability and performance of our services. This includes the design and architecture of our platforms, capacity planning, change management, security, business continuity planning and incident management and monitoring. Customer Service Levels Any service provider is assessed by its ability to process orders and deliver its service as quickly and efficiently as possible, whilst ensuring high quality support is available to facilitate this process and rectify events when something goes wrong. Delivering poor customer service can affect our ability to maintain and grow our client base. The company as part of its monthly management meeting reviews performance in this area, assessing and acting accordingly upon both internal and external feedback. As part of Invosys's wider strategy on delivering a World Class Customer Experience it was imperative for the business to introduce a CRM system. The decision was made and the business implemented 'ConnectWise' as the CRM platform which has helped to: " Enhance Customer Retention and have greater interactions with our customers in a more professional manner. " Improve productivity by automating as many processes as we could and managing time tracking on orders. " Improve our Service Levels, as we can inspect the quality of our work and efficiency on turning around our orders within our Service Level pack. " Introduce accountability loops across interdepartmental teams. " Increase profitability - by tracking Margin on sales as well as Revenue. " Provide high end ticket management - improving the customer experience from sale to delivery. " Provide the business with quality Management Information from Sales, through to Service Requests and Marketing. Increased Competition Existing and new to market entities provide alternative platforms which compete directly with the company, with the threat that this may reduce the level of growth and impact the company's existing client base. The company therefore continues to develop its own platform, adding new features and usability to make it more attractive to both existing and potential clients. Suppliers The company relies upon a number of key suppliers to provide the Network Platform on which its products are placed. Failure of one of these suppliers will adversely affect the company's ability to deliver its products and services. Where practical the company avoids reliance upon a single supplier and ensures that key supplier contracts have appropriate clauses in place to ensure their performance. Key Personnel The retention of key personnel is instrumental in the company's ability to maintain the levels of growth. The loss of key personnel can have a detrimental impact upon the business short term development. The company therefore has initiatives and schemes in place which help to ensure that its reputation as a good employer and to retain key staff. Evolution of Technology and Markets The communications industry is one of the fastest evolving markets, with developments of new technologies, their widespread take up together with heightened client and end user expectations. The company plans its developments of its products to anticipate and match these changes in order to meet future market demand. Health and Safety The company has a formal policy guided by legislation and best practice to ensure the health and safety of both employees and visitors which maintains a safe place of work. Financial Risks Credit Risk Credit risk is the risk of financial loss if a client or a counterparty to a financial instrument fails to meet its contractual obligations. The company's main exposure is in relation to credit sales. It is the policy of the company to assess the credit risk of both new and where applicable existing clients for their creditworthiness, after which an assessment in relation to terms and levels of credit to be offered is made. The company continues to monitor existing clients through analyses of trade receivables on a monthly basis. Fair Value and Cash Flow Interest Rate Risk Historically the company's exposure to fair value and cash flow interest rate risk has been deemed negligible, due to sufficient cash reserves. Market Risk Historically the company's exposure to market risk has been deemed negligible. Liquidity Risk Liquidity risk relates to the company's inability to ensure that it has sufficient funds to manage its working capital, meeting its financial obligations as they fall due. The company has sufficient cash reserves and management will to ensure that it settles all balances as they become due.
Future developments
The directors recognise that much of the company's growth has been the result of its continued development and refinement of the core product of Number Manager. The development of Number Manager has continued in the UK but addition we've seen the expansion into Australia and New Zealand which recently has seen significant growth and we now have large opportunities in the pipeline overseas. Not only that but in addition to the continued development of Number Manager new products and services have been introduced in the UK creating new revenue streams with products such as Hosted Telephony and Connectivity. These products and developments keep the technology the company offers relevant to the market, and push our technology to the fore.
This report was approved by the board of directors on 27 November 2024 and signed on behalf of the board by:
Mrs J I Tuffs
Director
Registered office:
New Bridgewater House
Mayfield Avenue
Manchester
M28 3JF
Invosys Limited
Directors' Report
Period from 1 October 2022 to 30 November 2023
The directors present their report and the financial statements of the company for the period ended 30 November 2023 .
Directors
The directors who served the company during the period were as follows:
Mr P Crooks
Mr R Booth
(Resigned 25 October 2022)
Dividends
Particulars of recommended dividends are detailed in note 12 to the financial statements.
Financial instruments
Credit Risk
Credit risk is the risk of financial loss if a client or a counterparty to a financial instrument fails to meet its contractual obligations. The company's main exposure is in relation to credit sales. It is the policy of the company to assess the credit risk of both new and where applicable existing clients for their creditworthiness, after which an assessment in relation to terms and levels of credit to be offered is made. The company continues to monitor existing clients through analyses of trade receivables on a monthly basis.
Fair Value and Cash Flow Interest Rate Risk
Historically the company's exposure to fair value and cash flow interest rate risk has been deemed negligible, due to sufficient cash reserves.
Market Risk
Historically the company's exposure to market risk has been deemed negligible.
Liquidity Risk
Liquidity risk relates to the company's inability to ensure that it has sufficient funds to manage its working capital, meeting its financial obligations as they fall due. The company has sufficient cash reserves and management will to ensure that it settles all balances as they become due.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial period. 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 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 judgments and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and 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. Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This report was approved by the board of directors on 27 November 2024 and signed on behalf of the board by:
Mrs J I Tuffs
Director
Registered office:
New Bridgewater House
Mayfield Avenue
Manchester
M28 3JF
Invosys Limited
Independent Auditor's Report to the Members of Invosys Limited
Period from 1 October 2022 to 30 November 2023
Opinion
We have audited the financial statements of Invosys Limited (the 'company') for the period ended 30 November 2023 which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 30 November 2023 and of its profit for the period then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
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.
Emphasis of matter
Included in debtors is an amount owed by connected companies totalling £5,924,301. If this was not recoverable, this would have a detrimental impact on the balance sheet, resulting in a negative balance sheet. However, as the company continues to be profitable this does not have an immediate impact on the company's ability to continue in the next twelve months and with this in mind the Directors believe that the going concern basis of accounting is appropriate.
Other information
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. 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. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 the audit:
- the information given in the strategic report and the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the 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: - Review of nominal postings for legal and professional fees ensured we identified any regulatory compliance issues and laws that company must follow in the year and to the date of signing the financial statements - The assessment of fraud was considered as low due to the segregation of duties seen, the low levels of cash handled. - A review of journal entries and consideration of their appropriateness was carried out throughout the audit - During the audit we speak to management, test the systems and speak to various members of the finance function to understand the entity its processes and the nature of trade to assist in determining if the financial statements are true and fair - Due to a number of personnel changes in the year we increased our sample sizes in our system testing - Challenging assumptions made by management in making their significant accounting estimates - Reviewing financial statement disclosure and testing to supporting documentation to assess compliance with applicable laws and regulations - challenging the clients policies in respect of intellectual property and capitalisation of intangibles As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 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.
Peter Swarbrick BSc FCA
(Senior Statutory Auditor)
For and on behalf of
Crossley & Davis Chartered Accountants
Chartered accountants & statutory auditor
Ground Floor, Seneca House
Links Point
Amy Johnson Way
Blackpool
Lancashire
FY4 2FF
27 November 2024
Invosys Limited
Statement of Comprehensive Income
Period from 1 October 2022 to 30 November 2023
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
Note
£
£
Turnover
4
8,872,583
7,424,689
Cost of sales
2,966,388
2,607,848
------------
------------
Gross profit
5,906,195
4,816,841
Administrative expenses
5,095,551
4,212,849
Other operating income
5
41,666
------------
------------
Operating profit
6
852,310
603,992
Other interest receivable and similar income
9
63
373
Interest payable and similar expenses
10
228,415
98,646
------------
------------
Profit before taxation
623,958
505,719
Tax on profit
11
158,459
44,715
---------
---------
Profit for the financial period and total comprehensive income
465,499
461,004
---------
---------
All the activities of the company are from continuing operations.
Invosys Limited
Statement of Financial Position
30 November 2023
30 Nov 23
30 Sep 22
Note
£
£
Fixed assets
Intangible assets
13
107,599
77,894
Tangible assets
14
298,067
326,322
---------
---------
405,666
404,216
Current assets
Debtors
15
8,517,934
11,524,381
Cash at bank and in hand
309,647
306,062
------------
-------------
8,827,581
11,830,443
Creditors: amounts falling due within one year
16
7,101,785
5,190,109
------------
-------------
Net current assets
1,725,796
6,640,334
------------
------------
Total assets less current liabilities
2,131,462
7,044,550
Creditors: amounts falling due after more than one year
17
2,555,190
Provisions
19
73,654
80,718
------------
------------
Net assets
2,057,808
4,408,642
------------
------------
Capital and reserves
Called up share capital
22
11,220
11,220
Share premium account
23
2,038,980
2,038,980
Profit and loss account
23
7,608
2,358,442
------------
------------
Shareholders funds
2,057,808
4,408,642
------------
------------
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the medium companies regime.
These financial statements were approved by the board of directors and authorised for issue on 27 November 2024 , and are signed on behalf of the board by:
Mrs J I Tuffs
Director
Company registration number: 05799390
Invosys Limited
Statement of Changes in Equity
Period from 1 October 2022 to 30 November 2023
Called up share capital
Share premium account
Profit and loss account
Total
£
£
£
£
At 1 October 2021
11,220
2,038,980
2,097,438
4,147,638
Profit for the period
461,004
461,004
--------
------------
------------
------------
Total comprehensive income for the period
461,004
461,004
Dividends paid and payable
12
( 200,000)
( 200,000)
--------
------------
------------
------------
Total investments by and distributions to owners
( 200,000)
( 200,000)
At 30 September 2022
11,220
2,038,980
2,358,442
4,408,642
Profit for the period
465,499
465,499
--------
------------
------------
------------
Total comprehensive income for the period
465,499
465,499
Dividends paid and payable
12
( 2,816,333)
( 2,816,333)
----
----
------------
------------
Total investments by and distributions to owners
( 2,816,333)
( 2,816,333)
--------
------------
------------
------------
At 30 November 2023
11,220
2,038,980
7,608
2,057,808
--------
------------
------------
------------
Invosys Limited
Statement of Cash Flows
Period from 1 October 2022 to 30 November 2023
30 Nov 23
30 Sep 22
£
£
Cash flows from operating activities
Profit for the financial period
465,499
461,004
Adjustments for:
Depreciation of tangible assets
32,546
44,467
Amortisation of intangible assets
20,295
8,292
Other interest receivable and similar income
( 63)
( 373)
Interest payable and similar expenses
228,415
98,646
Tax on profit
158,459
44,715
Accrued expenses
234,400
319,171
Changes in:
Trade and other debtors
2,860,421
914,505
Trade and other creditors
( 668,925)
( 792,580)
------------
------------
Cash generated from operations
3,331,047
1,097,847
Interest paid
( 228,415)
( 98,646)
Interest received
63
373
Tax paid
( 36,298)
( 33,512)
------------
------------
Net cash from operating activities
3,066,397
966,062
------------
------------
Cash flows from investing activities
Purchase of tangible assets
( 4,291)
( 1,416)
Purchase of intangible assets
( 50,001)
------------
------------
Net cash used in investing activities
( 54,292)
( 1,416)
------------
------------
Cash flows from financing activities
Repayments of borrowings
( 70,000)
Proceeds from loans from group undertakings
( 111,391)
Payments of finance lease liabilities
( 10,796)
( 42,254)
Dividends paid
( 2,816,333)
( 200,000)
Payments to other group companies
( 550,887)
------------
------------
Net cash used in financing activities
( 3,008,520)
( 793,141)
------------
------------
Net increase in cash and cash equivalents
3,585
171,505
Cash and cash equivalents at beginning of period
306,062
134,557
---------
---------
Cash and cash equivalents at end of period
309,647
306,062
---------
---------
Invosys Limited
Notes to the Financial Statements
Period from 1 October 2022 to 30 November 2023
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is New Bridgewater House, Mayfield Avenue, Manchester, M28 3JF.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss. The financial statements are prepared in sterling, which is the functional currency of the entity. The financial statements have been rounded to the nearest £1.
Going concern
The Director has considered a period of 12 months from signing date of the accounts, with entrance into new markets the company has seen significant growth and therefore believes it is appropriate to prepare the accounts on a going concern basis.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. 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. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Significant judgements: Useful economic life of tangible fixed assets: the annual depreciation charge is sensitive to changes in estimated economic lives and residual value of tangible fixed assets. Management re-assess these annually and amend them where necessary to reflect current estimates.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably. Revenue from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period provided that the outcome can be reliably estimated. When the outcome cannot be reliably estimated, revenue is recognised only to the extent that it is probable the expenses recognised will be recovered.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.
Intangible assets
Intangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated amortisation and impairment losses. Any intangible assets carried at revalued amounts, are recorded at the fair value at the date of revaluation, as determined by reference to an active market, less any subsequent accumulated amortisation and subsequent accumulated impairment losses. Intangible assets acquired as part of a business combination are only recognised separately from goodwill when they arise from contractual or other legal rights, are separable, the expected future economic benefits are probable and the cost or value can be measured reliably.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Intellectual property
-
20% straight line
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Freehold property
-
2% straight line
Long leasehold property
-
33% straight line
Motor vehicles
-
20% reducing balance
Equipment
-
10% straight line
Computer equipment
-
20% straight line
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.
Finance leases and hire purchase contracts
Assets held under finance leases and hire purchase contracts are recognised in the statement of financial position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are added to the amount recognised as an asset. Lease payments are apportioned between the finance charges and reduction of the outstanding lease liability using the effective interest method. Finance charges are allocated to each period so as to produce a constant rate of interest on the remaining balance of the liability.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
Financial instruments
A financial asset or a financial liability is recognised only when the entity becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Debt instruments are subsequently measured at amortised cost. Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
4. Turnover
Turnover arises from:
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
£
£
Rendering of services
8,872,583
7,424,689
------------
------------
The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
5. Other operating income
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
£
£
Other operating income
41,666
--------
----
6. Operating profit
Operating profit or loss is stated after charging:
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
£
£
Amortisation of intangible assets
20,295
8,292
Depreciation of tangible assets
32,546
44,467
Impairment of trade debtors
317,529
Foreign exchange differences
10,565
4,270
Fees payable for the audit of the financial statements
100
9,010
---------
--------
7. Staff costs
The average number of persons employed by the company during the period, including the directors, amounted to:
30 Nov 23
30 Sep 22
No.
No.
Administrative staff
55
66
Management staff
1
----
----
56
66
----
----
The aggregate payroll costs incurred during the period, relating to the above, were:
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
£
£
Wages and salaries
2,623,094
2,390,878
Social security costs
288,765
265,236
Other pension costs
131,845
118,385
------------
------------
3,043,704
2,774,499
------------
------------
8. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
£
£
Remuneration
20,627
22,028
Company contributions to defined contribution pension plans
18,667
15,999
--------
--------
39,294
38,027
--------
--------
The number of directors who accrued benefits under company pension plans was as follows:
30 Nov 23
30 Sep 22
No.
No.
Defined contribution plans
1
1
----
----
9. Other interest receivable and similar income
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
£
£
Other interest receivable and similar income
63
373
----
----
10. Interest payable and similar expenses
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
£
£
Other interest payable and similar charges
228,415
98,646
---------
--------
11. Tax on profit
Major components of tax expense
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
£
£
Current tax:
UK current tax expense
225,701
57,812
Adjustments in respect of prior periods
( 60,178)
( 24,300)
---------
--------
Total current tax
165,523
33,512
---------
--------
Deferred tax:
Origination and reversal of timing differences
( 7,064)
11,203
---------
--------
Tax on profit
158,459
44,715
---------
--------
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the period is higher than (2022: lower than) the standard rate of corporation tax in the UK of 22.43 % (2022: 19 %).
Period from
1 Oct 22 to
Year to
30 Nov 23
30 Sep 22
£
£
Profit on ordinary activities before taxation
623,958
505,719
---------
---------
Profit on ordinary activities by rate of tax
139,945
96,086
Adjustment to tax charge in respect of prior periods
( 60,178)
( 24,300)
Effect of expenses not deductible for tax purposes
90,601
11,188
Effect of capital allowances and depreciation
( 1,162)
12,825
Utilisation of tax losses
( 10,747)
Unused tax losses
( 51,084)
---------
---------
Tax on profit
158,459
44,715
---------
---------
12. Dividends
30 Nov 23
30 Sep 22
£
£
Dividends paid during the period (excluding those for which a liability existed at the end of the prior period )
2,816,333
200,000
Dividends proposed after the period end and not recognised as a liability
150,000
------------
---------
13. Intangible assets
Intellectual property
£
Cost
At 1 October 2022
686,957
Additions
Additions from internal developments
50,000
---------
At 30 November 2023
736,957
---------
Amortisation
At 1 October 2022
609,063
Charge for the period
20,295
---------
At 30 November 2023
629,358
---------
Carrying amount
At 30 November 2023
107,599
---------
At 30 September 2022
77,894
---------
14. Tangible assets
Freehold property
Long leasehold property
Motor vehicles
Equipment
Computer equipment
Total
£
£
£
£
£
£
Cost
At 1 Oct 2022
249,193
29,828
127,990
45,514
799,029
1,251,554
Additions
4,291
4,291
---------
--------
---------
--------
---------
------------
At 30 Nov 2023
249,193
29,828
127,990
45,514
803,320
1,255,845
---------
--------
---------
--------
---------
------------
Depreciation
At 1 Oct 2022
23,688
29,828
46,076
38,331
787,309
925,232
Charge for the period
3,934
19,114
3,850
5,648
32,546
---------
--------
---------
--------
---------
------------
At 30 Nov 2023
27,622
29,828
65,190
42,181
792,957
957,778
---------
--------
---------
--------
---------
------------
Carrying amount
At 30 Nov 2023
221,571
62,800
3,333
10,363
298,067
---------
--------
---------
--------
---------
------------
At 30 Sep 2022
225,505
81,914
7,183
11,720
326,322
---------
--------
---------
--------
---------
------------
Finance leases and hire purchase contracts
Included within the carrying value of tangible assets are the following amounts relating to assets held under finance leases or hire purchase agreements:
Motor vehicles
£
At 30 November 2023
62,800
--------
At 30 September 2022
81,914
--------
15. Debtors
30 Nov 23
30 Sep 22
£
£
Trade debtors
904,883
769,743
Amounts owed by group undertakings
5,924,301
8,951,812
Prepayments and accrued income
559,007
716,941
Directors loan account
158,265
158,265
Other debtors
971,478
927,620
------------
-------------
8,517,934
11,524,381
------------
-------------
16. Creditors: amounts falling due within one year
30 Nov 23
30 Sep 22
£
£
Bank loans and overdrafts
2,406,147
Trade creditors
946,729
1,634,591
Amounts owed to group undertakings
3,062,185
3,173,576
Accruals and deferred income
281,053
192,679
Social security and other taxes
301,908
172,643
Obligations under finance leases and hire purchase contracts
83,499
15,252
Other creditors
20,264
1,368
------------
------------
7,101,785
5,190,109
------------
------------
17. Creditors: amounts falling due after more than one year
30 Nov 23
30 Sep 22
£
£
Bank loans and overdrafts
2,476,147
Obligations under finance leases and hire purchase contracts
79,043
----
------------
2,555,190
----
------------
18. Finance leases and hire purchase contracts
The total future minimum lease payments under finance leases and hire purchase contracts are as follows:
30 Nov 23
30 Sep 22
£
£
Not later than 1 year
83,499
15,252
Later than 1 year and not later than 5 years
79,043
--------
--------
83,499
94,295
--------
--------
19. Provisions
Deferred tax (note 20)
Other provisions
Total
£
£
£
At 1 October 2022
78,886
1,832
80,718
Charge against provision
( 7,064)
( 7,064)
--------
-------
--------
At 30 November 2023
71,822
1,832
73,654
--------
-------
--------
20. Deferred tax
The deferred tax included in the statement of financial position is as follows:
30 Nov 23
30 Sep 22
£
£
Included in provisions (note 19)
71,822
78,886
--------
--------
The deferred tax account consists of the tax effect of timing differences in respect of:
30 Nov 23
30 Sep 22
£
£
Accelerated capital allowances
71,822
78,886
--------
--------
21. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 131,845 (2022: £ 118,385 ).
22. Called up share capital
Issued, called up and fully paid
30 Nov 23
30 Sep 22
No.
£
No.
£
Ordinary A shares of £ 0.001 each
11,220,000
11,220
11,220,000
11,220
-------------
--------
-------------
--------
23. Reserves
Ordinary Share Capital - This reserve records the amount of nominal shares authorised. Share premium account - This reserve records the amount above the nominal value received for shares sold, less transaction costs. Profit and loss account - This reserve records retained earnings and accumulated losses.
24. Change in reporting period
The financial statements presented are for a period of 14 months, which is longer than the typical 12 month period. This change was due to aligning the period end with the acquisition of the group which completed early December 2023.
Comparative amounts presented in these financial statements, including related notes, are not entirely comparable to the current period due to the change in the reporting period.
The prior year figures are based on a different reporting period.
25. Analysis of changes in net debt
At 1 Oct 2022
Cash flows
At 30 Nov 2023
£
£
£
Cash at bank and in hand
306,062
3,585
309,647
Debt due within one year
(3,188,828)
(2,363,003)
(5,551,831)
Debt due after one year
(2,555,190)
2,555,190
------------
------------
------------
( 5,437,956)
195,772
( 5,242,184)
------------
------------
------------
26. Charges on assets
There is a formal legal charge on New Bridgewater House dated August 2019
There is a fixed and floating charge over the whole assets of the company dated August 2019
There is a charge over the leasehold land known as 12 Bridgewater Road and Car park date August 2019
There is a charge over any patents, trade marks and designs in the company dates August 2017
On 8 January 2021 Santander placed a first fixed charge over the whole assets of the company.
27. Directors' advances, credits and guarantees
During the year, one of the directors ceased his office, therefore their loan was reallocated to other debtors at the year end.
28. Related party transactions
During the year the company made sales to connected companies totalling £848,483 (2022 - £1,050,381). During the year the company paid dividends to its parent company totalling £2,816,333 (2022 - £200,000). Management charges were charged from the connected companies to Invosys Limited in the year totalling £700,000 (2022 - £600,013) Included in debtors are amounts due from group companies of £5,924,301 (2022 - £8,951,812). Included in creditors are amounts due to group companies of £3,062,185 (2022 - £3,173,576).
29. Controlling party
The company's immediate parent is Red Seven Technology Group Limited, a company registered in England and Wales. The ultimate controlling party is Red Seven Holdings Limited, a company registered in Isle of Man. The parent company, Red Seven Technology Group Limited, has prepared consolidated financial statements, its registered office is New Bridgewater House, Mayfield Avenue, Worsley, Manchester, M28 3FJ.