The directors present their strategic report of New Technology Group Holdings plc (the “company”) and its subsidiary undertakings (together, the “group”) for the year ended 31 July 2024.
The financial results for the year are set out on page 16. A material corporate reorganisation of Elitetele.com plc was 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 Elitetele.com plc 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 each company in the newly formed Group to better develop the people, services, systems and processes specifically required to bring more value and deliver the best Customer Experience (CX) possible. 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.
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).
Elite revenues 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 Elite’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.
For the discontinued operations in Elitetele.com plc and reformed Netcentrix Limited, total revenue has fallen by £433,755 (4%) in line with trading expectations and driven by a planned reduction in one off revenue in the IT Managed Services business, as Netcentrix strategically shifts its focus away from complex on-premise IT infrastructure solutions (delivering one off revenue that does not repeat) towards Cloud IT solutions and Managed Services (yielding multi-year recurring revenue). This is reflected in strong double digit recurring revenue organic growth (12% and £831,857) for the second consecutive year (2023: 11.5%). This has been driven by cloud applications and cloud infrastructure sales, specifically Microsoft Azure Infrastructure, Azure Virtual Desktop and Modern Workplace sales incorporating proactive managed services.
Overall, the Group has delivered strong financials and kept a healthy and robust customer base with revenue of £31,644,508 (2023: £33,645,523) and overall EBITDA of £2,200,048 (2023: £3,069,541).
Included in the results for the period was a write off of Goodwill (£2,446,894 loss), a write off of the associated the corresponding reorganisation and separation of the Communication and IT Services that completed on 1st April 2024. This resulted in an operating loss of £3,072,976, 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 Group. The largest investment held is in Maintel Holdings plc, a company operating in similar markets to the Group. These movements have contributed to an overall net loss before tax of £2,888,386 (2023: £458,176 loss).
The Group remains on a strong financial footing with cash balances of £4,619,325 (2023: £4,263,670). At the period end, the Group had net current assets of £7,374,986 (2023: £5,565,874). This increase is mainly as a result of the positive EBITDA in the year.
The Group had net assets of £11,438,831 (2023: £14,650,228) 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 £3,384,161 (2023: £8,273,300), again, all as a result of the corporate reorganisation of the Group.
Strategy
For much of the year the year and prior to the corporate reorganisation, the Group 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 31.6 33.6
Gross Profit 15.1 16.5
Gross Margin 47.8% 49%
EBITDA* 2.2 3.1
EBITDA % 7.0% 9.2%
Employee Numbers 153 178
*EBITDA is the Group'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 Group and supplement the KPIs with additional information as required.
The Directors continually monitor the Group 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 Group. The Group 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 Group partners with Tier 1 Network Providers and this enables the Group to be vendor agnostic and take an independent approach when consulting with customers and providing Cloud Communications and IT solutions. This approach minimises the Group’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 Group’s approach to supply chain management. The supply chain is proactively managed by the Group 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 Group also proactively reviews and tests current supplier contracts against ongoing changes in local and national legislation, regulatory changes, anti-slavery and environmental impacts.
2027 PSTN Switch Off
The PSTN switch off in 2027 (formerly 2025, prior to BT announcing the delay earlier in the year) is the single biggest compelling event in the communications sector since the privatisation of BT in 1984 and the deregulation of the UK telecommunications market in the 1990’s. The PSTN switch off is the national de-commission of the public switch telephone network which will now close in December 2027 – by which time every phone line in the UK will have moved to a fully digital network across a fibre-based service.
The revenue erosion risks associated with the PSTN switch off are being managed and offset by the significant opportunity for Elitetele.com plc to capitalise on the rising demand from businesses looking to move to Cloud Communications technology like Unified Communication as a Service (UCaaS) and Contact Centre as a Service (CCaaS). The Group is well positioned to capitalise on this opportunity and Elite is making good progress in its transition to Cloud Communications, achieving strong double digit (23%) recurring revenue organic growth for the second consecutive year (2023: 11%) for UCaaS and CCaaS sales.
Ofcom Regulation
The Group operates in markets regulated by Ofcom, the Office of Communications. The Group 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 Group time to consult, understand and plan accordingly. Additionally, the Group are members of the FCS (Federation of Communication Suppliers), an organisation that provides assistance to the Group, ensuring that critical customer policies are Ofcom compliant (as an extra validation step).
Data Protection and GDPR
Like many businesses, the Group 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 Group’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 Group 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 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 Group’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 Group has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities, which are conducted in sterling. The Group does not enter into any formally designated hedging arrangements.
Section 172 Statement
The Directors of the Group have a duty to promote the success of the Group. A director of the Group 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 Group’s employees;
the need to foster the Group's business relationships with suppliers, customers and others;
the impact of the Group’s operations on the community and the environment;
the desirability of the Group to maintain a reputation for high standards of business conduct; and
the need to act fairly between members of the Group.
The directors of the Group consider the key stakeholders of the business to be its employees, customers, suppliers, bank and shareholders.
Quality Management and Accreditations
The Group is externally assessed and audited across a number of quality standards and ISO accreditations. The Group 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 Group 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 Group of companies, 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 Group is to be the leading sustainable technology provider 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 Group 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% recurring revenue organic growth in Cloud Communications (driven by UCaaS and CCaaS sales) delivered by Elitetele.com plc; and 12% recurring revenue organic growth in IT Managed Services (driven by Microsoft Azure Cloud Infrastructure, Azure Virtual Desktop and Modern Workplace sales incorporating Managed Services) delivered by Netcentrix Limited.
For the Senior Management Team, defining and implementing a clear and simple single focus that provides groupwide alignment and clarity on what is most important and critical has been a business priority.
Consistent with the Group’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 Group’s single focus is quite simply, an unrivalled commitment to helping customers.
New Strategic Direction
The Group’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 Elitetele.com plc, so that the newly formed Group 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 (New Technology Group Holdings plc).
As part of this change, the Group 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 each Group company on the needs of the customer and those areas where they can differentiate and bring most value to customers. The key strategic pillars that underpin the Group’s long-term Vision are Sustainability, Customer Experience (CX) and Digital Transformation.
Digital Transformation
Digital Transformation is the Group’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 Group 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. For Elite, this means leveraging chapter 2 technologies like AI powered omnichannel applications, generative AI, as well as conversational AI and analytics as the future driver of value. For Netcentrix, focussing on proactive Managed Services and investing in Cyber Security and Managed Security Services as a differentiator and driver of value is fundamental to its plans.
Historically, the Group has delivered IT Services via a Service Delivery Partner model focussed on IT Support across a combination of Hardware Solutions, Hosted Desktop, Cloud Applications and Infrastructure Services for customers.
The new strategic direction will see the Netcentrix business in the Group pivot from IT Support to IT Managed Services focussing on Cloud Applications and Cloud Infrastructure, investing in Cyber Security and Managed Security Services as a differentiator and driver of value. Given the demand for public cloud services delivered by key players like AWS, Microsoft Azure and Google Cloud, the Group continues to invest in developing its Microsoft capability and is actively migrating its private cloud Hosted Desktop customers to Azure Virtual Desktop (AVD) and Modern Workplace solutions.
Cloud Communications and Contact Centre
Founded in 2000, Elitetele.com plc enjoyed early success in providing telecommunications and voice services to the Contact Centre market, a strategy that fuelled organic growth and established Elite’s credibility in the b2b communications sector.
The new strategic direction and corporate reorganisation will see Elite 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)
Elite’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 Group 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 Group 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 Group 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 Group to bring even more value to customers. The digital transformation solutions provided by the Group, 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 Group 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 Group 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 Group’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 Group’s single focus, the Senior Management Team have set out their ambitions to level up and deliver world-class Customer Experience (CX). The Group has seen early signs of progress in the year with Elite increasing its Google Reviews score to 4 stars, and Trust Pilot to 4.4 stars. Elite has also seen its customer satisfaction and NPS (Net Promoter Score) improve significantly, achieving its highest level recorded (95) in the year. At the same time, Netcentrix has established a 5 star rating on Google Reviews and a 4 start rating on Trust Pilot.
Culture
So to cultivate a purpose driven, high performance culture, the Group has re-established its core values as the non-negotiable standards and behaviours its people live by.
Core Values
The Group has 4 core values as follows:
Teamwork
Hard Work
Humility
Compassion
The Group’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 Group takes a proactive approach to the health, safety and wellbeing of its employees. Throughout the year the Group 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 Group maintains 18 trained Mental Health First Responders and 2 Mental Health First Aiders. The Group 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 Group has wrestled with the challenges of working remotely and in an unstructured way. In the words of the Group 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.
The Group 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 Group 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, groupwide distribution of fortnightly Trading Digests, a groupwide monthly business update with the Senior Management Team, and detailed companywide Quarterly Business Reviews (QBR’s) hosted by the CEO.
The Group maintains a 97% engagement rate on its employee engagement platform, which enables employees to interact socially, learn about new group initiatives easily, participate in surveys, recognise and reward fellow colleagues, and have group news delivered to them as it is happening. The Group 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 Group also hosts annual Sales Kick Off and Management Conference events, as well as two groupwide social events in the summer and winter.
Employee Survey
The Group 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 Group 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 Group takes a proactive approach to employee recognition, maintaining several employee reward and incentive schemes alongside its employee benefits portal.
The Group incentivises outstanding performance, adoption of core values and its single focus via Employee of the Month and Customer Champion awards.
The Group maintains a loyalty bonus scheme that rewards employees based on length of service and hosts an annual groupwide 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 Group 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 Group 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 Group 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 Group 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 Group is investing in the development of its ESG Strategy as a catalyst for sustainability and lasting positive change.
The Group already takes a proactive approach in tackling social issues and supporting aligned charities. The Group’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 Group supported 15 other charities raising more than £5,000 in the year. The Group 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 Group 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 Group 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 Group 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 16.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
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 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 New Technology Group Holdings plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 July 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their 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 either occurrence or completeness, and 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £800,120 (2023 - £0 profit).
New Technology Group Holdings plc (“the company”) is a public limited company domiciled and incorporated in England and Wales. The registered office is Dawson House Matrix Office Park, Buckshaw Village, Chorley, PR7 7NA.
The group consists of New Technology Group Holdings plc and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company New Technology Group Holdings plc together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 July 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the date of approval of the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
In forming their assessment, the directors have considered compliance with covenants imposed by the group wide banking facility. 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 group to meet its liabilities as they fall due . Therefore the directors have concluded there are no material uncertainties which would impact on the ability of the group to adhere to its financial covenants.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and discounts.
Revenue from inbound and outbound telecom services is recognised over the duration of the contract period, although amounts are typically invoiced monthly and therefore no accrued or deferred income typically arises on this income stream. Revenue from call usage is recognised at the point of use.
Broadband and connectivity services are typically contracted between 12 and 36 months. Revenue is recognised monthly as the service is provided. The monthly wholesale costs are matched with the monthly revenue as consumed.
Hosted and cloud services are typically billed on a per user, per month charge at a set price. Such revenue is recognised when monies are billed at the start of each month, inline with the services provided in that same month.
IT service installations and maintenance and support are recognised in the period in which the service is provided. Ongoing maintenance and support can either occur as a one off sale or as a recurring contract.
Revenue from the sale of mobile phone contracts is recognised over the duration of the contract period, hence balances are held within deferred income until the revenue is earned.
Early termination fees are contracted income which arise when a customer has to pay to end the contract earlier than the contract end date. There is not sufficient certainty to recognise early termination fees prior to the receipt date, hence these balances are held within deferred income until the cash is received.
Revenue from the sale of goods, including hardware and infrastructure sales, is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than the functional currency (foreign currency) are initially recorded at the exchange rate prevailing on the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies are translated at the rate ruling at the date of the transaction, or, if the asset or liability is measured at fair value, the rate when that fair value was determined.
All translation differences are taken to profit or loss, except to the extent that they relate to gains or losses on non-monetary items recognised in other comprehensive income, when the related translation gain or loss is also recognised in other comprehensive income.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The 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 director's 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 payback 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.
The average monthly number of persons (including directors) employed by the group and 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 - 4).
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%.
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 group underwent a material reorganisation during the year, with the separation of the Communication and IT Service trade. As a result, 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 12.
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:
Registered office addresses (all UK unless otherwise indicated):
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 or group for certain items of equipment and computers. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 13 months (2023: 25 months). All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
As at the signing date of these financial statements, the group 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.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Included within creditors is £35,600 (2023: £18,696) that relates to pensions paid after the year end.
There is a cross party guarantee, which includes the company, over the group wide borrowing facility. At the year end there was £11,733,328 (2023: £12,566,664) outstanding relating to this facility.
Elitetele.com plc Limited 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 group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The remuneration of key management personnel is as follows.
Prior to 1 April 2024. the directors' were deemed to be the same as key management personnel and therefore key management personnel compensation was not disclosed in the prior year.
Key management personnel has been disclosed for the full year.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date: