The directors present the strategic report for the year ended 31 July 2024.
The financial results for the year are set out on page 15. Company revenues have been adversely impacted by a material corporate reorganisation of Elitetele.com plc implemented in the financial year. The Board of Directors made the decision to discontinue activities pertaining to the IT products and services sold through Elitetele.com plc. Essentially, this corporate reorganisation separated the Communications and IT Services part of the Company into two separate trading companies. As part of this change, Elite refocussed on providing Cloud Communications services including Connectivity, Unified Communications (and UCaaS), Contact Centre (and CCaaS leveraging conversational AI), Voice Services, Mobile and IoT. The Board also re-established a dormant group subsidiary, Netcentrix Limited (an IT company acquired by Elite in 2016) to provide IT Managed Services incorporating Cloud Applications and Infrastructure, Technology Hardware, IT Support and Cyber Security.
This significant change implemented on 1st April 2024 has been driven by customer value, providing greater focus in service delivery for customers, enabling the Company to better develop the people, services, systems and processes specifically required to bring more value and deliver the best Customer Experience (CX) possible. Given the timing of this corporate reorganisation, there are only eight months of IT Services revenues recognised by Elitetele.com plc. All revenues, costs and overheads that were not directly attributed to the Cloud Communications products and services have been removed from Elitetele.com plc as of 1st April 2024, executed through an APA agreement between Elitetele.com plc and Netcentrix Limited. These numbers are shown as discontinued operations on page 15.
In the continued operations for Elitetele.com plc, the 2027 (formerly 2025) PSTN Switch Off and the shift in market forces away from high call volume telco products and services to newer Unified Communications (UC) technology that affords a lower revenue per customer/user spend, has adversely impacted total revenue in the year, albeit in line with expectations. The Company has also been adversely impacted by a major customer going into administration in the year (contributing to an annual reduction in revenue of £240,000).
Revenue for traditional telco Inbound and Outbound Voice Services has fallen by £1,475,691 (16%) which remains in line with wider market trends and trading expectations. In contrast, the Company’s transition to Cloud Communications is making good progress, achieving strong double digit (23%) recurring revenue organic growth for the second consecutive year (2023: 11%) for UCaaS and CCaaS sales. Overall, the Company has delivered strong financials and kept a healthy and robust customer base with revenue from continued operations of £19,488,469 (2023: £20,889,036) and overall EBITDA of £2,540,898 (2023: £2,080,168), representing 22% growth in EBITDA versus the prior year on a like for like basis.
Included in the results for the period was a write off of Goodwill (£2,446,894 loss), a write off of the associated Fixed Asset Investments (£1,950,188 loss) and income from shares in group undertakings (£2,772,205 profit) which are attributed to the historical acquisition of Netcentrix Limited and Micro Computer Workshops Limited, and the corresponding reorganisation that completed on 1st April 2024. This resulted in a net loss of £1,619,031 (prior to fair value movements on the quoted investment portfolio), representing a one off exceptional loss in the year due to the restructuring of the wider Group. There is also an addition on fair value of some listed investments in the year of £195,307 (2023: £254 487 loss) arising from the quoted investment portfolio held by the Company. The largest investment held is in Maintel Holdings plc, a company operating in similar markets to the Company. These movements have contributed to an overall net loss before tax of £1,423,724 (2023: £1,186,041 loss).
The Company remains on a strong financial footing with cash balances of £2,297,156 (2023: £3,392,181). The reduction in cash balances is a result of redistributing working capital cash reserves from Elitetele.com plc into Netcentrix Limited via paying off amounts Elitetele.com plc owed to other Group companies. At the period end, the Company had net current assets of £4,542,702 (2023: £646,672 liabilities). This increase is a result of a reduction in the amount of money Elitetele.com PLC owed to the Group following the corporate reorganisation of the business.
The Company had net assets of £11,670,596 (2023: £13,431,470) which is a reduction on the prior year mainly due to the large amount written off, again, as part of the restructuring implemented in the year. Goodwill held on the balance sheet has also fallen significantly to £3,431,225 (2023: £8,069,859) and the Fixed Asset Investments have fallen to £3,473,931 (2023: £5,578,268), again, all as a result of the corporate reorganisation and the discontinuation of IT services being provided by Elitetele.com plc.
Strategy
For much of the year the year and prior to the corporate reorganisation, the Company continued with its strategy to develop its positioning of trusted advisor across a broad range of IT, Communications and Mobile products and services with a focus on cross-selling to existing customers. Given the appointment of new CEO Adam Turton in February 2023, the transformation programme led by the previous CEO to develop centralised systems and fully integrate previously acquired companies to drive operational efficiencies was shelved, giving way to a full strategic review of the business led by the Board of Directors.
Key Performance Indicators
KPI’s are used to help the Directors monitor the performance of the business. These include:
2024 2023
£m £m
Revenue (Continued Operations) 19.5 20.9
Gross Profit (Continued Operations) 9.4 10.2
Gross Margin (Continued Operations) 48.2% 48.8%
EBITDA* (Overall Company) 2.5 2.1
EBITDA % (Overall Company) 9.5% 6.7%
Employee Numbers (Overall Company) 120 174
*EBITDA is the Company's earnings before interest, tax, depreciation, and amortisation and excludes the fair value movement on financial investments.
The Directors consider the above to be appropriate to the size of the Company and supplement the KPIs with additional information as required.
The Directors continually monitor the Company and its external environment to safeguard against risk and uncertainty they can control. The following risks may have an impact on future performance:
Increased Competition
Competition is healthy for the Company. The Company is investing in new and existing vendor relationships to modernise and strengthen the technology stack facing customers and the market, focusing on bringing greater value and innovation by leveraging new technologies and improved Customer Experience (CX) as the future driver of value to gain competitive advantage.
Supply Chain
The Company partners with Tier 1 Network Providers and this enables the Company to be vendor agnostic and take an independent approach when consulting with customers and providing Cloud Communication solutions. This approach minimises the Company’s dependence on a single supplier. Accordingly, supplier price changes can be mitigated through supplier substitution as appropriate. Due diligence and identification of risk is also fundamental to the Company’s approach to supply chain management. The supply chain is proactively managed by the company ensuring that all contractual agreements are fair, reasonable and commercially viable, mitigating risk in areas of responsibility, information security, service levels and payment terms. The Company also proactively reviews and tests current supplier contracts against ongoing changes in local and national legislation, regulatory changes, anti-slavery and environmental impacts.
Ofcom Regulation
The Company operates in markets regulated by Ofcom, the Office of Communications. The Company mitigates regulatory risk by monitoring and assessing the likelihood and potential impact of regulatory change. Customer contractual terms are written in line with Ofcom regulation and reviewed each time Ofcom regulations change. Ofcom regularly send consultation papers to the network operators and the ICT channel ahead of any potential changes (usually 12-18 months in advance), giving the Company time to consult, understand and plan accordingly. Additionally, the Company are members of the FCS (Federation of Communication Suppliers), an organisation that provides assistance to the Company, ensuring that critical customer policies are Ofcom compliant (as an extra validation step).
Data Protection and GDPR
Like many businesses, the Company pays particular attention to Data Protection and GDPR regulation, with its policies drafted by an expert global consultant and adherence and compliance regularly audited as part of the Company’s ISO accreditations.
Employment Law
The Group now employs more than 150 people and is subject to changes in regulation associated with employment law. The Company benefits from having CIPD qualified employees within the Group alongside its partnerships with external HR expert organisations and leading employment law solicitors, all of which understand the employment regulatory changes under proposal and their potential impact. New and/or amended employment regulation proposals or implementation are reviewed by the Group monthly.
Financing and Banking Covenants
The Company (via the wider Group) has access to a rolling cash flow facility (RCF) and a term loan with Lloyds Bank and is therefore required to make quarterly covenant submissions. The Group has complied with the financial covenants in place and are forecasted to do so going forwards. In order to mitigate the risk of any breach, there are several levers in the Company’s control, including tighter management of cash outflows, increasing the focus on cash collection and deferring discretional spend (e.g. marketing). The business maintains regular discussions with the Relationship Director at the Bank to discuss performance, material business decisions (e.g. M&A), economic impacts as well as legislative changes (LIBOR changes).
Financial Instruments
The Company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities, which are conducted in sterling. The Company does not enter into any formally designated hedging arrangements.
The Directors of the Company have a duty to promote the success of the Company. A director of the Company must act in the way they consider, in good faith, to promote the success of the group for the benefit of its members, and in doing so have regard (amongst other matters) to:
the likely consequences of any decision in the long-term;
the interests of the Company’s employees;
the need to foster the Company's business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community and the environment;
the desirability of the Company to maintain a reputation for high standards of business conduct; and
the need to act fairly between members of the Company.
The directors of the Company consider the key stakeholders of the business to be its employees, customers, suppliers, bank and shareholders.
Quality Management and Accreditations
The Company is externally assessed and audited across a number of quality standards and ISO accreditations. The Company successfully maintains ISO accreditations covering quality management, business continuity management, health and safety and information management for the design, development, supply and installation of business cloud and software solutions and the provision of support and maintenance, as follows:
ISO 9001 Quality Management
ISO 27001 Information Management
ISO 22301 Business Continuity
ISO 45001 Health and Safety
The Company successfully completed surveillance audits in the year for ISO 9001, 45001 and 22301, achieving zero non-conformances and zero opportunities for improvement whilst receiving “best practice” recommendations for attention to detail and maintaining information security.
Purpose
As a purpose driven, progressive and inspirational company, all employees are engaged and aligned with a strong sense of purpose founded in serving others, completely committed to bringing value and having a lasting positive impact on the lives of colleagues, customers, and the local community.
Vision
The long-term Vision for the Company is to be the leading sustainable Cloud Communications company delivering world-class Customer Experience (CX) and Digital Transformation solutions to businesses. To support this Vision, the Senior Management Team have developed their plans to reverse the recent decline in financial performance and return the Company to sustainable growth. The early signs of progress are reflected in the corporate reorganisation implemented and the financial results achieved in the year, specifically, 23% organic growth in Cloud Communications recurring revenue (UCaaS and CCaaS), 22% organic growth in EBITDA and a 42% improvement in EBITDA margin.
Single Focus
For the Senior Management Team, defining and implementing a clear and simple single focus that provides companywide alignment and clarity on what is most important and critical has been a business priority.
Consistent with the Company’s sense of purpose and passion for helping customers and driven by an ambition to provide the best Customer Experience (CX) in the sector, the Company’s single focus is quite simply, an unrivalled commitment to helping customers.
New Strategic Direction
The Company’s single focus provides a framework for shaping the new strategic direction for the business, ensuring that above everything else, any changes in business strategy must first better serve the needs of customers. Consistent with this approach, the Board of Directors have completed a thorough strategic review of the business and its operations, resulting in the significant corporate reorganisation implemented in the year.
Corporate Reorganisation
A key outcome from the strategic review was the decision by the Board of Directors to re-structure the group so that the Company is organised in a way to successfully deliver on its Customer Experience (CX) ambitions and achieve the long-term Vision.
Implemented on 1st April 2024, the corporate reorganisation essentially separated and de-merged the Communications and IT Services part of Elite into two separate trading companies under a non-trading Group company.
As part of this change, the Company re-established its Netcentrix brand – a dormant group subsidiary and an IT company it acquired in 2016. From 1st April 2024, Netcentrix provides IT Managed Services incorporating Cloud Applications and Infrastructure, Technology Hardware, IT Support and Cyber Security.
Elite has been refocussed on providing Cloud Communications Services including Connectivity, Unified Communications (and UCaaS), Contact Centre (and CCaaS leveraging conversational AI), Voice Services, Mobile and IoT.
This positive change was driven by customer value and will enhance the experience that customers receive. By strategically distributing services between Elite and Netcentrix, the group aims to leverage the unique expertise of each business unit to drive growth. This approach enables the delivery of specialised and tailored solutions with increased agility; optimising the experience for customers and meeting specific requirements with precision.
Peter Jury, (formerly the Group Chief Strategy Officer) has been appointed the permanent Managing Director of Elitelele.com Plc with Group CEO, Adam Turton taking on the additional responsibility of Interim Managing Director for Netcentrix Limited.
This new strategic direction has refocussed the business on the needs of the customer and those areas where the Company can differentiate and bring most value to customers. The key strategic pillars that underpin the Company’s long-term Vision are Sustainability, Customer Experience (CX) and Digital Transformation.
Digital Transformation
Digital Transformation is the Company’s primary activity and Go to Market (GTM), supporting customers with the ongoing modernisation of business technologies to increase operational effectiveness and gain competitive advantage. The Company is investing in new and existing vendor relationships to modernise and strengthen the technology stack facing customers and the market, focusing on bringing greater value and innovation by leveraging chapter 2 technologies like AI powered omnichannel applications, workflow automation, generative AI, as well as conversational AI and analytics as the future driver of value.
Founded in 2000, the Company enjoyed early success in providing telecommunications and voice services to the Contact Centre market, a strategy that fuelled organic growth and established the Company’s credibility in the b2b communications sector.
The new strategic direction will see the Company leverage its strong telco reputation and pivot to Cloud Communications and Contact Centre focussing on conversational AI and incorporating a proactive managed service wrap around connectivity, mobile and IoT access technologies.
UCaaS, CCaaS and Artificial Intelligence (AI)
The Company’s transition to Cloud Communications is making good progress, achieving strong double digit (23%) recurring revenue organic growth for the second consecutive year (2033: 11%) for UCaaS and CCaaS sales. The Company recognises that AI will be transformational and the single greatest differentiator and driver of value for UCaaS and CCaaS over the next 5 years and is actively investing in developing its capability to deliver AI driven CX outcomes for customers.
Sustainability
As part of its long-term Vision, the Company is fully committed to sustainability. Sustainable development is the balance achieved when human, social, economic, and environmental needs are satisfied all at the same time and without neglecting one another. So that the Company can be truly sustainable, it is taking a proactive approach towards the planet, people, society, and profit, adopting the 4 Pillars of sustainability (human, social, economic, environmental) as a model to future-proof the business. That is, a business that cares deeply about its people providing competitive pay, benefits, opportunities, and professional development (human); a business that cares about the local community and society at large by supporting local charities and giving back (social); a business that is profitable and growing (economic); and a business that respects the environment prioritising sustainable product design, service delivery and green technologies (environmental).
At the same time, the Company recognises that customers are demonstrating an increased preference for brands that demonstrate sustainable business practices; Governments are introducing more regulations and mechanisms to factor in the environmental cost of business operations like the “carbon market” and carbon credits; and banks and investors are becoming increasingly interested in ESG metrics when deciding where to allocate funds.
With the focus on sustainability, more and more examples of green technology are powered by industry 4.0 digital transformation technologies including AI. And the benefits of digital transformation tech are helping companies to reach very important environmental goals.
For all these reasons, being at the forefront of technology has never been so important and presents an exciting opportunity for the Company to bring even more value to customers. The digital transformation solutions provided by the company, not only enable customers to increase security, productivity, and profitability, but they also directly contribute to sustainability and ESG metrics, increasing the scale at which the Company can influence positive change and sustainable development.
Customer Experience (CX) is a key strategy to win the loyalty of today’s demanding customers. Operating in what is a highly competitive and crowded ICT market during a time where technology products and services are becoming increasingly commoditised, the Company recognises the importance of investing in CX as a key brand differentiator.
A key theme underpinning the CX Strategy is the simple notion of being easy to do business with for customers. Customer feedback is the top driver of any successful CX Strategy and the Company’s Voice of Customer (VoC) Programme is the core foundation for driving continuous improvement and customer satisfaction. The VoC Programme is currently being expanded to gain greater feedback coverage from the customer base and across multiple interactions and touchpoints throughout the customer journey.Consistent with the Company’s single focus, the Senior Management Team have set out their ambitions to level up and deliver world-class Customer Experience (CX). The Company has seen early signs of progress in the year increasing its Google Reviews score to 4 stars, and Trust Pilot from to 4.4 stars. At the same time, the Company has seen its customer satisfaction and NPS (Net Promoter Score) improve significantly, achieving its highest level recorded (95) in the year.
So to cultivate a purpose driven, high performance culture, the Company has re-established its core values as the non-negotiable standards and behaviours its people live by.
Core Values
The Company has 4 core values as follows:
Teamwork
Hard Work
Humility
Compassion
The Company’s core values and single focus have been fully integrated into its HR policies incorporating talent identification and recruitment, employee induction and onboarding, the annual appraisal process, learning and development, as well as management and leadership best practice.
Health, Safety and Well-Being
The Company takes a proactive approach to the health, safety and wellbeing of its employees. Throughout the year the Company implemented a host of new benefits and initiatives, all with the health, safety and wellbeing of its people in mind. In light of the cost-of-living crisis, access to financial wellbeing support was introduced including financial advice webinars and free 121 financial consultations made available to every employee. The Company maintains 18 trained Mental Health First Responders and 2 Mental Health First Aiders. The Company also maintains its Employee Assistance Programme, bringing a wealth of wellbeing services to support employees through life's challenges, offering free physical and mental health assessments through its partnership with Active Lancashire.
Structured Hybrid Working
Like many businesses since COVID, the Company has wrestled with the challenges of working remotely and in an unstructured way. In the words of the new CEO, “we thrive the best when we are in the company of others” and so the Senior Management Team have implemented a new Structured Hybrid Working policy that will promote more effective cross departmental collaboration and help cultivate a positive culture. The change in policy doesn’t remove the benefit and flexibility of working from home 2 days a week but sets the exact 3 days each week that employees work from the office together to promote teamwork, communication, and collaboration.
Employee Engagement
The Company recognises the value of having happy and engaged employees and commits significant time and resource to the execution of its Employee Engagement Strategy, against which the Company is independently assessed by Investors in People and has successfully retained the Gold standard for the 9th consecutive year.
The Senior Management Team has made great progress in engaging employees around its new purpose and single focus, levelling up the cadence of structured internal communication, incorporating fortnightly trading meetings with Management and Team Leaders, companywide distribution of fortnightly Trading Digests, a companywide monthly business update with the Senior Management Team, and detailed companywide Quarterly Business Reviews (QBR’s) hosted by the CEO.
The Company maintains a 97% engagement rate on its employee engagement platform, which enables employees to interact socially, learn about new company initiatives easily, participate in surveys, recognise and reward fellow colleagues, and have company news delivered to them as it is happening. The Company has increased its rating on Glassdoor from 4.2 to 4.6 stars, with 96% of employees recommending a friend and 100% approval for the CEO.
The Company also hosts annual Sales Kick Off and Management Conference events, as well as two companywide social events in the summer and winter.
Employee Survey
The Company completes an annual employee survey to gain valuable feedback that directly contributes to the development of its Employee Engagement Strategy ensuring continuous improvement in employee satisfaction and retention. Additionally, the Company release regular employee pulse surveys to gather immediate feedback on time sensitive topics and company initiatives.
Employee Recognition
As part of its Employee Engagement Strategy, the Company takes a proactive approach to employee recognition, maintaining several employee reward and incentive schemes alongside its employee benefits portal.
The Company incentivises outstanding performance, adoption of core values and its single focus via Employee of the Month and Customer Champion awards.
The Company maintains a loyalty bonus scheme that rewards employees based on length of service and hosts an annual companywide award ceremony at its summer social event incorporating awards for Core Values, Best Newcomer, Outstanding Achievement, Team of the Year and Employee of the Year.
Like many businesses, the Company also maintains Sales Commission and Bonus Schemes aligned with business targets and objectives. There is a high level of governance and review of these schemes deployed by the Company to ensure they deliver a return on investment and drive the right behaviour aligned with the strategic objectives of the business.
Gender Pay Gap
There is a strong representation across gender in the business and specifically the Management Team. The Company actively participates in awards such as Women in Tech, Women in the Channel and other programmes which are positively endorsed by the shareholders of the business. The gender pay gap is also reviewed and benchmarked across the industry.
ESG: Environmental, Social and Governance
At the heart of the business is a strong sense of purpose and commitment to having a lasting positive impact on the lives of everyone employed as well as the communities within which they work and live. The Company is socially and environmentally conscious and the Senior Management Team recognise that they have a responsibility to do more than just deliver shareholder returns, a responsibility that they are taking very seriously. As such, the Company is investing in the development of its ESG Strategy as a catalyst for sustainability and lasting positive change.
The Company already takes a proactive approach in tackling social issues and supporting aligned charities. The Company’s Founder Matt Newing is a mentor for the Prince’s Trust, helping young people who are not in education or training, are unemployed or are struggling to find purpose and direction. Matt also formed The Change Makers Club and Action Aid, with both charities donating thousands of pounds to build new schools in Ethiopia. The original goal was to reach out to improve the lives of 2,000 children who had been denied access to education – the project has become a huge success and has now delivered quality education to over 5,000 children in Africa, having built schools in Gerar, Jarso, Anaso Sego, Dire Doyu and Gino over the past couple of years. The schools have not only helped the students but have had a positive impact on the wider community.
In addition to this, the Company supported 15 other charities raising more than £5,000 in the year. The Company recently joined other channel partners from the ICT sector as a founding member of the new ESG initiative “The Big Goal”, that has been jointly put together by The Street Soccer Foundation, Comms Dealer and channel partner Giacom to support homeless young adults who are struggling to get off the streets and into work.
The Company is formalising its new approach to sustainability and is fully committed to being transparent with stakeholders on progress. Initially prioritising and focussing on environmental sustainability, the business already follows WEEE requirements for IT and equipment disposal and actively selects suppliers who are either carbon neutral or have an ongoing commitment to achieve this status. In addition, the Company has committed to shorter-term emission reduction targets, aiming to reduce emissions by 42% by 2030, and 63% by 2035, and are developing an ambitious strategy to reach net zero by 2040.
The Company has engaged with a consultant to help shape its ESG Strategy and are developing a core set of metrics, by which performance will be measured, as they look to improve the environment and communities within which they work and live.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 July 2024.
The results for the year are set out on page 15.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Following the merger of MHA Moore & Smalley with MHA, the company's independent auditor has now become MHA. In accordance with the company's articles, a resolution proposing that MHA be reappointed as auditor of the company will be put at a General Meeting.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Elitetele.Com Plc (the 'company') for the year ended 31 July 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below:
Enquiries with management, about any known or suspected instances of non-compliance with laws and regulations or fraud within the business;
Auditing the risk of management override of controls, including testing journal entries and other adjustments made by management for appropriateness;
Reviewing board minutes and legal and professional expenditure to identify any evidence of ongoing litigation or enquiries; and
Auditing the risk of fraud in revenue by testing a sample of transactions throughout the year for occurrence, to ensure that fictitious sales have not been recorded and by reviewing contracts for appropriateness of deferred income to ensure correct cut off procedures have been applied.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Elitetele.Com Plc is a private company limited by shares incorporated in England and Wales. The registered office is Dawson House Matrix Office Park, Buckshaw Village, Chorley, PR7 7NA.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
Elitetele.com plc is a wholly owned subsidiary of New Technology Group Holdings plc. The results of this company are included in the consolidated financial statements of New Technology Group Holdings plc which are available from Companies House, Cardiff.
At the date of approval of the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
In forming their assessment, the directors have considered compliance with covenants imposed by the group wide banking facility of which the company is an obligator. The directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval of these financial statements. The impact of reasonable possible downsides has been modelled in the forecasts with reference to the banking covenants. In all reasonable scenarios which have been modelled there is sufficient headroom to allow the company and wider group to meet their liabilities as they fall due . Therefore the directors have concluded there are no material uncertainties which would impact on the ability of the company or wider group to adhere to their financial covenants.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including listed investments, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including trade and other creditors, and amounts owed to group undertakings, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The directors have made judgements when determining the useful economic life of goodwill. Amortisation is recognised so as to write off the value of the assets over the life that economic benefit is expected to flow.
At the year end, the directors have assessed whether they consider there to be any indicators of impairment in respect of goodwill and investments in subsidiaries by reference to the criteria set out in Section 27 of FRS102. Where they conclude that indicators exist, an impairment test has been conducted.
Where there are indicators of impairment of individual assets, the company performs impairment tests based on the value in use calculation. The value in use calculation is based on the payback period assessment. The payback period is calculated as the time taken for the current profit contribution of the cash generating unit to pay back the goodwill/investment value held in the company. The payback period is most sensitive to the expected future cash flows.
In accordance with FRS102 Section 27, the directors have carried out an assessment of the recoverable amount of goodwill and have recognised an impairment charge of £2,446,894 (2023: £nil), which is presented within exceptional items in the profit and loss account.
Also included within exceptional items is a loss of £1,950,188 (2023: £nil) recognised upon disposal of shares in subsidiary undertakings.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2023 - 6).
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
An increase in the UK corporation tax rate to 25% from 1 April 2023 was substantively enacted in the UK on 24 May 2021. Deferred tax has been recognised at the rates in which the temporary differences are expected to materially reverse which equates to 25%.
On 1 April 2024 the company entered into an agreement to sell the IT trade and assets of the business to Netcentrix Limited, a member of the same wholly owned group. No gain or loss arose upon disposal, with the proceeds of sale being equal to the carrying amount of the business assets sold. No goodwill arose upon this transaction.
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
As detailed in the Strategic Report, the company underwent a material reorganisation during the year, with the separation of the Communication and IT Service trade, and the subsequent sale of the IT trade to a fellow group company. As a result of this transaction, the directors carried out an assessment of the recoverable amount of goodwill and have recognised an impairment charge of £2,446,894 (2023: £nil), which is presented within exceptional items in the profit and loss account.
More information on impairment movements in the year is given in note 13.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 31 July 2024 are as follows:
*Dawson House Matrix Office Park, Buckshaw Village, Chorley, Lancashire, PR7 7NA, United Kingdom
Obligations under finance leases are secured over the assets to which they relate.
Obligations under finance leases are secured over the assets to which they relate.
Finance lease payments represent rentals payable by the company for certain items of equipment and computers.
This reserve relates to a merger reserve which arose on the hive up of subsidiary undertakings.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
As at the signing date of these financial statements, the company has not finalised its capital expenditure programme for the forthcoming year and therefore an assessment as to the likely movement of timing differences expected to reverse within the next 12 months cannot be made.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Included within creditors is £12,487 (2023: £18,696) that relates to pensions paid after the year end.
The company is party to a cross company guarantee over the group wide borrowing facility. At the year end there was £11,733,328 (2023: £12,566,664) outstanding relating to this group facility.
Elitetele.com plc participates in a debenture dated 30 June 2016 secured by a fixed and floating charge over the assets of the company.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the year the company entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The company has taken advantage of the exemption permitted under Section 33.1A of FRS 102 from disclosing transactions with members of the same wholly owned group.