Registered number:

03517197

 

 

 

 

 

 

 

 

 

ECONOCOM LIMITED

 

 

 

 

 

 

ANNUAL REPORT AND FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 31 DECEMBER 2023

ECONOCOM LIMITED

 

COMPANY INFORMATION

 

Directors

Ben Wylie (resigned 30/09/24)

 

Sebastien Cabau

 

Julien De Sousa (appointed 30/09/24)

 

 

Registered number

03517197

 

 

Registered office

33 Queen Street,

 

4th Floor

 

London

 

EC4R1BR

 

 

Independent auditors

Ernst & Young LLP

 

1 More London Place

 

London

 

SE1 2AF

 

 

Bankers

Société Générale

 

London Branch 41, Tower Hill

 

London

 

EC3N 4SA

 

ECONOCOM LIMITED

 

CONTENTS

 

 

Page

Strategic Report

1-2

Directors' Report

3-5

Independent Auditors' Report

6-8

Profit and Loss Account

9

Balance Sheet

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12-28

 

ECONOCOM LIMITED

 

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2023

 

The directors present their strategic report on the company and audited financial statements for the year ended 31 December 2023.

 

Principal activities and review of the business

 

The principal activities of the company remain consistent with last year, namely the provision of financing for IT procurement and digital transformation needs.

 

In 2023, Econocom Limited continued its UK transformation strategy, focusing on broadening the digital financing customer base and solidifying key strategic partnerships. Following the successful acquisition of Trams Limited, a digital reseller, by the Econocom Group in 2021, the Company continues to develop synergies across the two business, enhancing the product offerings and customer base. In addition to this, the Company continued to invest in new staff and focus on developing long-term relationships with customers to deliver effective future growth.

 

The results for the year were adversely impacted by difficult market conditions, increased costs and continued economic uncertainty which meant that customers delayed some key infrastructure investment. As a result, the average deal size has dropped in the year.

 

The Company has sought to solidify its customer base whilst continuing to focus on developing new revenue generating opportunities. This continues the transformational work started last year, and management are committed to delivering long term, sustained performance in the context of the growth aims of the wider Econocom Group.

 

The company continued to invest in new team members to lay a solid foundation for future success. Due to the complexity of the business, the ramp up period is at least 6 months for the new sales talent to be fully up to speed and to deliver results, which had an impact on the bottom-line for this year. An intense training program was implemented to help new sales staff reach their full potential.

 

Principal risks and uncertainties

 

The principal risks and uncertainties facing the company surround economic factors, such as changing markets and loss of customers that may affect Econocom Limited, and ultimately the level of net income generated. This has been exacerbated in recent years due to economic uncertainty caused by the Coronavirus pandemic, higher interest rates and the inflation. The costs and finances of the business are actively managed accordingly.The directors regularly review these risks and take mitigating actions when appropriate.

 

Position of the business

 

The Company’s loss after tax for the financial year amounted to £1,848k (2022: £1,069k loss) and total net assets as at 31 December 2023 amounted to £5,060k (2022: £6,908k). In preparing the Financial Statements, the ability of the Company to continue as a Going Concern has been examined and the Directors consider it appropriate to prepare the accounts on the going concern basis. This assessment is based on a review of the forecasted business and cashflows for the next 12 months, as well as support that would be available from Group if necessary. The Directors do not deem such support to be necessary based on the forecasted cashflows and future obligations.

ECONOCOM LIMITED

 

Key performance indicators

 

The company’s key financial performance indicators during the year were as follows:

 

 

2023

2022

Change

 

£’000

£’000

%

Revenue

18,621

22,523

-17%

Gross profit

2,646

2,414

10%

Operating expenses

3,893

3,617

-8%

Net Assets

5,060

6,908

-26%

 

 

This report was approved by the board and signed on its behalf.

 

 

 

 

 

Julien De Sousa

Director

 

Date: 23rd December 2024

ECONOCOM LIMITED

 

The directors present their report and the audited financial statements for the year ended 31 December 2023.

 

Directors' responsibilities statement

 

The directors are responsible for preparing the Strategic Report, the Directors' Report and the financialstatements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 

In preparing these financial statements, the directors are required to:

 

select suitable accounting policies for the Company's financial statements and then apply them consistently;

 

 

make judgments and accounting estimates that are reasonable and prudent;

 

 

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

 

 

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Directors indemnity

 

As permitted by the Articles of Association, the Directors (excluding any alternate Directors) have the benefit of an indemnity which is a qualifying third-party indemnity provision as defined by Section 234 of the Companies Act 2006. The indemnity was in force throughout the last financial year, and is currently in force. The Company also purchased and maintained throughout the financial year Directors' and Officers' liability insurance in respect of itself and its Directors.

 

Results and dividends

 

The loss for the year after taxation amounted to £1,848k (2022: £1,069k loss)

 

The directors do not recommend a dividend (2022: £nil)

 

Directors

 

The directors who served during the year and up till issue of Financial Statements were:

 

 

 

Ben Wylie

Sebastien Cabau

ECONOCOM LIMITED

 

Charitable and political contributions

 

During the year the company made no payments for political purposes (2022: £nil). The company donated a sum of £nil (2022: £nil) to charitable organisations.

 

Financial risk management

 

The Directors have considered and reviewed the provisions included in the Companies Act 2006 relating to the financial risk management objectives and policies of the Company, including any associated use of financial instruments

 

Residual risk

 

Residual values are established following an assessment of the market value of the equipment at the end of the maturity of the lease based on the value of similar assets at the age that the lease matures. Residual values are assessed on a regular basis and where applicable, adjusted to reflect current market values of these assets.

 

Interest rate risk

 

The Company has current debt financing from Econocom Finance SNC, on a SONIA plus margin interest rate basis.

 

Credit risk

 

The most significant financial risk inherent in the Company is the timely recovery of outstanding debts in the portfolio. The Company has implemented policies that require appropriate credit checks on potential customers before deals are written and the Company also invests significant resources in a credit control department which collects debts that have fallen into arrears.

 

Operational risk

 

The Company is aware that there are many risks of an operational nature both internal and external, which could affect its business. Procedures are in place to identify, monitor, and report upon any incidences which may occur. This is a continuous process which receives an appropriate level of management attention.

 

Liquidity risk

 

The company consistently monitors its liquidity so as to ensure adequate funds are available for ongoing and future operations. A simple test for liquidity risk has been to review future net cash flows on a weekly basis, to ensure the company is able to meet its working capital requirements.

ECONOCOM LIMITED

 

Future developments

 

The directors are confident in the company's ability to return to profitability, targeting annual sales of £100m as achieved previously. To support this goal, the company is actively increasing its sales force and recruiting additional team members to enhance operational capacity and drive growth. The Econocom Group has also confirmed its support by issuing a letter of support, allowing the Directors to take necessary measures to invest in people.

 

We expect synergies to be realized between Econocom Ltd and Econocom Products & Solutions UK Ltd, which will result in co-branded offerings better tailored to meet customer needs, supporting revenue growth. The two teams are collaborating closely, with cross-disciplinary workgroups established to boost productivity and foster innovation.

 

As part of the 5-year Strategic Plan “One Econocom,” launched by Econocom Group, the UK remains a pivotal contributor. This plan emphasizes strengthening synergies and creating customer value, aiming for significant growth by 2028. A detailed roadmap has been implemented to drive progress across the Company and the broader UK operations.

 

Supplier payment policy

 

Our suppliers form a very important part of our business and it is important to recognise their value in ensuring that we meet the terms and conditions of our agreements. This is done by ensuring prompt payment to our suppliers and the rapid resolution of problems if they arise. This approach is also a vital aspect of the strategic partnerships that we have and also add to our business potential. Our policy is to pay all supplier invoices within 30 days of the invoice date (or as otherwise agreed).

 

Disclosure of information to auditors

 

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:

 

so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

 

 

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Post balance sheet events

 

No material post event balance sheet events noted.

 

This report was approved by the board and signed on its behalf.

 

 

 

 

Julien De Sousa

 

Director

 

Date: 23rd December 2024

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ECONOCOM LIMITED

 

Opinion

 

We have audited the financial statements of Econocom Limited for the year ended 31 December 2023 which comprise the Profit and Loss Account, the Balance Sheet, the Statement of Changes in Equity and the related notes 1 to 23, 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 company’s affairs as at 31 December 2023 and of its loss for the year then ended;

 

 

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

 

 

have been prepared in accordance with the requirements of the Companies Act 2006.

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, 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 12 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. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern.

 

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 contained within the annual report.

 

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

 

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material

misstatement of the 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 year for which the financial statements are prepared is consistent with the financial statements; and

 

 

the strategic report and 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 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 set out on page 3 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.

 

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

 

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. 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. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.

 

We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant are those related to the reporting framework (FRS 102 and Companies Act 2006), the relevant direct and indirect tax compliance regulation. In addition, the group has to comply with laws and regulations relating to its operations including health and safety, relevant employee law matters, data protection and anti-bribery and corruption.

We understood how Econocom Limited is complying with those frameworks by making inquiries of management and those responsible for legal and compliance. We corroborated our enquiries through our review of board minutes and papers provided to those charged with governance, as well as consideration of the results of our audit procedures over the company’s financial statements

We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur by obtaining an understanding through discussions with management of fraud risk areas. We considered the programmes and controls that the company has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk which were designed to provide reasonable assurance that the financial statements were free from material misstatement, whether due to fraud or error. We tested specific transactions back to source documentation or independent confirmations as appkropriate.

Based on this understanding we designed our audit procedures to identify noncompliance with such laws and regulations. Our procedures involved reviewing minutes from the Board of Directors, enquiries of management and journal entry testing, with a focus on manual journals and journals indicating significant unusual transactions identified by specific risk criteria based on our understanding of the business.

 

A further description of our responsibilities for the audit of the financial statements is located on theFinancial 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.

 

 

 

 

 

Shabbir Somani (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

 

23rd December 2024

ECONOCOM LIMITED

 

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

 

2023

2022

 

Note

£000

£000

 

 

 

 

Turnover

4

18,621

22,523

 

 

 

 

Cost of sales

5

(15,975)

(20,109)

 

 

 

 

Gross profit

 

2,646

2,414

 

 

 

 

Administrative expenses

 

(3,893)

(3,617)

 

 

 

 

Operating Loss

 

(1,247)

(1,203)

 

 

 

 

Interest receivable and similar income

10

100

57

 

 

 

 

Interest payable and similar expenses

11

(114)

(183)

 

 

 

 

(Loss) before tax

 

(1,261)

(1,329)

 

 

 

 

Tax on profit

12

(587)

260

 

 

 

 

(Loss) for the financial year

 

(1,848)

(1,069)

 

 

 

 

Other comprehensive income

 

-

-

 

 

 

 

Total comprehensive income for the year

 

(1,848)

(1,069)

 

 

The notes on pages 12 to 28 form part of these financial statements.

ECONOCOM LIMITED

 

BALANCE SHEET

AS AT 31 DECEMBER 2023

 

 

 

 

2023

 

2022

 

Note

 

£000

 

£000

 

 

 

 

 

 

Fixed assets

 

 

 

 

 

Tangible assets

13

 

10

 

11

 

 

 

 

 

 

 

 

 

10

 

11

 

 

 

 

 

 

Current assets

 

 

 

 

 

Debtors: amounts falling due within one year

14

14,005

 

22,866

 

Cash at bank and in hand

15

2,644

 

16,219

 

 

 

 

 

 

 

 

 

16,649

 

39,085

 

 

 

 

 

 

 

Creditors: amounts falling due within one year

16

(10,398)

 

(25,831)

 

 

 

 

 

 

 

Net current assets

 

 

6,251

 

13,254

 

 

 

 

 

 

Total assets less current liabilities

 

 

6,261

 

13,265

 

 

 

 

 

 

Creditors: amounts falling due after more than one year

17

 

(1,154)

 

(6,370)

 

 

 

 

 

 

Provisions for liabilities

 

 

 

 

 

 

 

 

 

 

 

Other provisions

19

(47)

 

13

 

 

 

 

 

 

 

 

 

 

(47)

 

13

 

 

 

 

 

 

Net assets

 

 

5,060

 

6,908

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

 

 

 

 

 

Called up share capital

20

 

3,773

 

3,773

Profit and loss account

 

 

1,287

 

3,135

 

 

 

 

 

 

 

 

 

5,060

 

6,908

 

The financial statements were approved and authorised for issue by the board and were signed on its behalf by:

 

 

 

Sebastien Cabau

Director

 

Date: 23rd December 2024

The notes on pages 12 to 28 form part of these financial statements.

ECONOCOM LIMITED

 

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

Called up

Profit and

 

 

share capital

loss account

Total equity

 

 

 

 

 

£000

£000

£000

 

 

 

 

At 1 January 2023

3,773

3,135

6,908

 

 

 

 

Comprehensive income for the year

-

(1,848)

(1,848)

 

 

 

 

At 31 December 2023

3,773

1,287

5,060

 

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

 

 

Called up

Profit and

 

 

share capital

loss account

Total equity

 

 

 

 

 

£000

£000

£000

 

 

 

 

At 1 January 2022

3,773

4,204

7,977

 

 

 

 

Comprehensive income for the year

-

(1,069)

(1,069)

 

 

 

 

At 31 December 2022

3,773

3,135

6,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The notes on pages 12 to 28 form part of these financial statements.

ECONOCOM LIMITED

 

1.     General information

 

Econocom Limited is primarily engaged in the provision of business-to-business IT and telecoms infrastructure management services.

 

The company is a limited liability company incorporated in England and Wales with registered number of 03517197 and is registered at 33 Queen Street, London, EC4R 1BR.

 

2.     Accounting policies

 

2.1     Basis of preparation of financial statements

 

The financial statements have been prepared on the going concern basis under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Companies Act 2006.

 

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

 

The following principal accounting policies have been adopted by the company and applied consistently in the preparation of these financial statements:

 

2.2     Financial reporting standard 102 - reduced disclosure exemptions

 

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

the requirements of Section 7 Statement of Cash Flows;

true

the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);

the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48 (a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);

the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;

the requirements of Section 33 Related Party Disclosures paragraph 33.7.

true

 

This information is included in the consolidated financial statements of Econocom Group SE as at 31 December 2023 and these financial statements may be obtained from Place du Champ de Mars, 5/B14, 1050 Brussels, Belgium.

 

2.3     Going concern

 

The Group’s business activities, together with the factors likely to affect its future development, performance, and position, are set out in the Business Review on page 1. The Company’s forecasts and projections, taking into account reasonably possible changes in trading performance, and the addition of new salespeople demonstrate that the Company should return to profitability in the short term.

 

In preparing the Financial Statements, the ability of the Company to continue as a Going Concern has been carefully assessed. The Directors consider it appropriate to prepare the accounts on a going concern basis. This conclusion is supported by a detailed review of forecasted business activity and cashflows for the next 12 months, as well as the letter of support provided by Econocom Group SE, which underscores its commitment to the Company’s return to growth.

 

This assurance of such support provides an additional layer of confidence in the Company’s ability to navigate any unforeseen challenges as it executes its growth strategy.

true

ECONOCOM LIMITED

 

2.4     Foreign currency translation

 

Functional and presentation currency

 

The Company's functional and presentational currency is GBP.

 

Transactions and balances

 

Monetary assets and liabilities denominated in foreign currencies at the end of the year are translated into sterling at the rate of exchange ruling at the balance sheet date. Transactions during the year are translated at the rate applicable at the date of those transactions. Gains and losses on translation are accounted for in the Profit and Loss account in the year in which they arise.

 

2.5     Revenue

 

The Company's finance leases are mainly refinanced contracts, whereby equipment and related contracts are sold to refinancing institutions at an all-inclusive price representing the present value of future minimum lease payments receivable and the residual value of the equipment. Residual value represents the amount for which the Company undertakes to repurchase the equipment upon expiration of the lease. Lease payments due by lessees are paid directly to the refinancing institutions on a non-recourse basis, which means that the Company transfers the risk of payment default. From a legal standpoint, Econocom Limited relinquishes ownership of the equipment on the date of sale and recovers ownership at the end of the lease term by repurchasing the equipment.

 

Revenue, cost of sales and residual interest are recognised progressively as assets are delivered, pro rata to the amount of each delivery.

 

UK GAAP states that initial recognition of a lease must take place at the commencement of the lease, i.e., the date from which the lessee is entitled to exercise its right to use the leased asset. The Group’s General Sales Conditions defines this date as the date on which the leased asset is delivered.

 

Turnover comprises the value of sales, excluding VAT and similar taxes and trade discounts, of goods and services in the normal course of business.

 

All revenue corresponds to the present value of future minimum lease payments (corresponding to the payments that the lessee is required to make throughout the realization period and the lease term).

 

The revenue on own-book contracts is recognised on lease extensions in line with the initial qualification of the lease, i.e.:

 

If the initial contract qualifies as a finance lease, revenue from the extension of the lease will be recognised on a straight-line basis over the period of the lease extension.

 

 

If the initial contract qualifies as a finance lease, revenue from the extension of the lease will be recognised in full on the last day of the initial lease.

 

2.6     Cost of sales

 

Cost of sales detail is available in note 5. The costs are attributed to the relevant revenues in the period and represent the purchase costs of the assets.

 

2.7     Operating expenses

 

Operating expenses represents an ongoing cost for running the business charged to the relevant period, including costs such as: salaries, rent and facility expenses, office supplies, insurance, advertising, travel and utilities.

ECONOCOM LIMITED

 

2.8     Operating leases: the Company as lessee

 

Rental costs under operating leases for premises and equipment are charged to the Profit and Loss Account in equal amounts over the periods to which they relate.

 

2.9     Lease and hire purchase contracts

 

A certain proportion of the business of the company involves funding the leases between the company and its lessees. Funding may be done by creating a head lease, hire purchase agreement or loan tomatch the lease to the company’s lessee.

 

Funded leases are non-recourse to the company in respect of the end-users’ ability to pay rentals. Any difference between cash received from funding institutions and the cost of equipment supplied by the company as a result of these transactions is recognised in the profit and loss account when realised. Leases in the course of being funded are held in current assets.

 

The company retains an interest in the residual value of leased equipment sold to financial lessors by way of obligations to repurchase the equipment at the end of the primary lease period or earlier termination. The future realisable value of this equipment is reviewed periodically by the directors and a provision is raised for any contracts when the expected net realisable value of the equipment falls below the agreed purchase price.

 

2.10     Own book operating leases

 

Equipment leased out on an own book operating lease is capitalised as a fixed asset and is stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis to write off the cost less any residual value over the primary lease term. Income on operating leases is recognised in the profit and loss account on a straight-line basis over the lease term.

 

As of 31 December 2023, all self-funded leases are finance leases.

 

2.11     Interest income

 

Interest income is recognised in the Profit and Loss Account using the effective interest method.

 

2.12     Finance costs

 

Finance costs are charged to the Profit and Loss Account over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

ECONOCOM LIMITED

 

2.13     Pensions

 

Defined contribution pension plan

 

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

 

The contributions are recognised as an expense in the Profit and Loss Account when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.

 

2.14     Current and deferred taxation

 

The tax expense for the year comprises current and deferred tax. Tax is recognised in the Profit and Loss Account, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

 

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

 

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that:

The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

 

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

 

 

2.15     Tangible fixed assets

 

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

 

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

 

Depreciation is provided on the following basis:

 

Leasehold improvements

-

over three years

Furniture and equipment

-

three to seven years

 

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

 

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Profit and Loss Account.

ECONOCOM LIMITED

 

2.16     Debtors

 

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 

2.17     Cash and cash equivalents

 

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amountsof cash with insignificant risk of change in value.

 

2.18     Creditors

 

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 

2.19     Provisions for liabilities

 

Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.

 

The provision on self-funded leases is a general provision against potential losses on leases which have not been sold or refinanced. The provision is calculated as a fixed percentage of the value of the equipment leased and is expected to be utilised or released over the lease term, generally three to five years.

 

Provisions are charged as an expense to the Profit and Loss Account in the year that the Company becomes aware of the obligation and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet.

ECONOCOM LIMITED

 

2.20     Financial instruments

 

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

 

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.

 

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Profit and Loss Account.

 

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

 

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.

 

Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an 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.

 

2.21     Dividends

 

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

 

2.22     Group financial statements

 

Applying the directive of Companies Act 2006, S400 - exemption from consolidation for subsidiary companies (parent in EEC), Econocom Limited is exempt from the obligation to prepare and deliver group financial statements. It is a wholly-owned subsidiary of Econocom Group SE, a company registered in Belgium.

ECONOCOM LIMITED

 

3.     Judgments in applying accounting policies and key sources of estimation uncertainty

 

The preparation of these financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Judgements and estimates are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The company makes estimates and assumptions concerning the future. The resulting accounting estimates, will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year are discussed below.

 

(a)     Providing for doubtful debts

The company makes an estimate of the recoverable value of trade debtors and other debtors such as leases. The company uses estimates based on historical experience in determining the level of debts, which the company believes will not be collected. These estimates include such factors as the current credit rating of the debtor, the ageing profile of debtors and historical experience. Any significant reduction in the level of customers that default on payments or other significant improvements that resulted in a reduction in the level of bad debts provision would have a positive impact on the operating results. The level of provision required in reviewed on an on-going basis.

 

(b)     Valuation of the leased assets at the end of the lease period

The company makes an estimate of the value of the leased assets at the end of the lease period using a statistical method with reference to the original purchase price of the equipment, the duration and terms of the lease and historical experience. Any variation in the actual amounts realised could have a significant impact on the operating results

 

4.     Turnover

 

An analysis of turnover by class of business is as follows:

 

 

2023

2022

 

£000

£000

 

 

 

Leasing

15,570

20,907

Sale of equipment

2,833

1,289

Intercompany recharge

218

327

 

 

 

 

18,621

22,523

 

All turnover arose within the United Kingdom.

ECONOCOM LIMITED

 

5.     Cost of sales

 

 

2023

2022

 

£000

£000

 

 

 

Purchases

1,198

567

Services

14,708

19,466

Other Costs

69

76

 

 

 

 

15,975

20,109

 

6.     Operating loss

 

The operating loss is stated after charging:

 

 

2023

2022

 

£000

£000

 

 

 

Staff costs

2,019

2,565

Intercompany recharges

447

883

 

ECONOCOM LIMITED

 

7.     Auditors' remuneration

 

 

2023

2022

 

£000

£000

 

 

 

Fees payable to the Company's auditor and its associates for the audit of

 

 

the Company's annual financial statements

55

42

 

Fees payable to the Company's auditor and its associates in respect of:

 

Other services relating to taxation

-

2

 

8.     Employees

 

Staff costs, including directors' remuneration, were as follows:

 

 

2023

2022

 

£000

£000

 

 

 

Wages and salaries

1,735

2,294

Social security costs

227

195

Cost of defined contribution scheme

57

76

 

 

 

 

2,019

2,565

 

The average monthly number of employees, including the directors, during the year was as follows:

 

 

2023

2022

 

No.

No.

 

 

 

Sales

11

9

Administration

14

14

 

 

 

 

25

23

ECONOCOM LIMITED

 

9.     Directors' remuneration

 

 

2023

2022

 

£000

£000

 

 

 

Directors’ emoluments

297

333

Cost of defined contribution scheme

9

2

Compensation for loss of office

-

300

 

 

 

 

306

635

 

During the year retirement benefits were accruing to one director (2022 - NIL) in respect of defined contribution pension schemes.

 

The highest paid director received remuneration of £297K (2022- £333K).

 

The value of the company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £9K (2022 - £2K).

 

During the year NIL directors received shares under the long-term incentive schemes (2022-NIL)

 

The total accrued pension provision of the highest paid director at 31 December 2023 amounted to £NIL (2022 - £NIL).

 

10.     Interest receivable and similar income

 

 

2023

2022

 

£000

£000

 

 

 

Interest receivable from group companies

100

57

 

 

 

 

100

57

 

11.     Interest payable and similar expenses

 

 

2023

2022

 

£000

£000

 

 

 

Bank interest payable

0

4

Loans from group undertakings

114

179

 

 

 

 

114

183

ECONOCOM LIMITED

 

12.     Taxation

 

 

2023

2022

 

£000

£000

 

 

 

Corporation tax

 

 

 

 

 

Current tax on profits for the year

-

-

Adjustments in respect of previous periods

-

-

 

 

 

 

-

-

 

 

 

Group taxation relief

-

-

 

 

 

 

-

-

 

 

 

 

 

 

Total current tax

-

-

 

 

 

Deferred tax

 

 

 

 

 

Origination and reversal of timing differences

587

(260)

 

 

 

Total deferred tax

587

(260)

 

 

 

Taxation on loss on ordinary activities

587

(260)

ECONOCOM LIMITED

 

Factors affecting tax charge for the year

 

The tax assessed for the year is calculated using the standard rate of corporation tax inthe UK of 25% (2022 -19%) as set out below:

 

 

 

2023

2022

 

£000

£000

 

 

 

Loss on ordinary activities before tax

(1,261)

(1,329)

 

 

 

Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2022 - 19%)

-

-

 

 

 

Effects of:

 

 

 

 

 

Movement in provisions

(587)

 

 

 

 

Deferred tax

 

260

 

 

 

Other differences leading to an increase (decrease) in tax change

-

-

 

 

 

Total tax charge for the year

(587)

260

 

Factors that may affect future tax charges

 

The company is carrying an unrecognized deferred tax of £1,011k.

ECONOCOM LIMITED

 

13.     Tangible fixed assets

 

 

Leasehold

Furniture

 

 

improve-

and

 

 

ments

equipment

Total

 

£000

£000

£000

 

 

 

 

Cost or valuation

 

 

 

 

 

 

 

At 1 January 2023

414

1,284

1,698

Additions

46

(1,230)

(1,184)

 

 

 

 

At 31 December 2023

460

54

514

 

 

 

 

Depreciation

 

 

 

 

 

 

 

At 1 January 2023

378

1,309

1,687

Charge for the year on owned assets

82

(1,265)

(1,183)

 

 

 

 

At 31 December 2023

460

44

504

 

 

 

 

Net book value

 

 

 

 

 

 

 

At 31 December 2023

-

10

10

 

 

 

 

At 31 December 2022

36

(25)

11

ECONOCOM LIMITED

 

14.     Debtors

 

 

2023

2022

 

£000

£000

 

 

 

Trade debtors

7,431

6,113

Other taxation and Social Security

1,407

722

Prepayments and accrued income

5,167

15,454

Deferred taxation (note 18)

-

577

 

 

 

 

14,005

22,866

 

Trade debtors include amounts totaling £2,770K (2022: £4,339K) in respect of the estimated value of sales of leased assets at the end of contracts. Of these amounts, £2,715K (2022: £1,822K) fall due after more than one year. The estimated values are based on the Company experience and benchmark on the brokerage market.

 

Trade debtors include amounts which fall due after more than one year in the amount of £Nil (2022: £NIL).

 

The intercompany loan is a rolling one-month cash management with Econocom Finance. The amounts are unsecured at a variable interest rate linked to SONIA.

 

15.     Cash and cash equivalents

 

 

2023

2022

 

£000

£000

 

 

 

Cash at bank and in hand

2,644

16,219

 

ECONOCOM LIMITED

 

16.     Creditors: Amounts falling due within one year

 

 

2023

2022

 

£000

£000

 

 

 

Trade creditors

4,566

12,991

Amounts owed by group undertakings

-

2,616

Accruals and deferred income

5,832

10,224

 

 

 

 

10,398

25,831

 

Accruals and deferred income include amounts totaling £728K (2022: £1,61 OK) in respect of commitments to buy back leased equipment at its residual value at the end of contracts falling due within one year.

 

Details of security provided

The company enters into commercial financing arrangements whereby it sells, without recourse, lease receivables to third party financiers. As these assets are sold on a non-recourse basis, they are not included in the balance sheet of the company. However, as legal title under the lease with the original customer resides with the company, the financiers have taken legal charges of the company's legal interests in the lease receivables, notwithstanding the company has no such assets in its balance sheet.

 

17.     Creditors: Amounts falling due after more than one year

 

 

2023

2022

 

£000

£000

 

 

 

Net obligations under leases with customers

1,154

6,370

 

The long-term creditors consist of amounts totaling £1,154K (2022: £6,370K) in respect of commitments to buy back leased equipment at its residual value at the end of contracts falling due after more than one year.

 

18.     Deferred taxation

 

 

2023

 

£000

 

 

At beginning of year

577

Charged to profit or loss

(577)

 

 

At end of year

-

ECONOCOM LIMITED

 

The deferred tax asset is made up as follows:

 

 

2023

2022

 

£000

£000

 

 

 

Accelerated capital allowances

0

58

Provisions

0

0

Tax losses carried forward

0

519

 

 

 

 

0

577

 

19.     Provisions for liabilities

 

 

Other

 

provisions

 

£000

 

 

At 1 January 2023

(13)

Charged to profit or loss

60

 

 

At 31 December 2023

47

 

20.     Share capital

 

 

2023

2022

 

£000

£000

Allotted, called up and fully paid

 

 

 

 

 

3,773,000 (2022 - 3,773,000) Ordinary shares of £1.00 each

3,773

3,773

 

21.     Commitments under operating leases

 

At 31 December 2023 the Company had future minimum lease payments under non-cancellable operating leases as follows:

 

 

2023

2022

 

£000

£000

 

 

 

Not later than 1 year

395

219

Within 2 to 5 years

573

549

Later than 5 years

-

22

 

 

 

 

968

790

ECONOCOM LIMITED

 

22.     Related party transactions

 

In accordance with Section 33 of FRS 102 - Related Party Disclosures - transactions between group companies which are 100% owned within the group, which are eliminated on consolidation in the group accounts, have not been disclosed.

 

23.     Post balance sheet events

 

There have been no significant events affecting the company since year end.

 

24.     Controlling party

 

The immediate and ultimate parent undertaking and controlling party is Econocom Group SE, a company incorporated in Belgium.

 

Econocom Group SE is the parent undertaking of the largest and smallest group of undertakings to consolidate these financial statements on 31 December 2023. The consolidated financial statements of Econocom Group SE are available from Place du Champ de Mars, 5/B14,1050 Brussels, Belgium.