The director presents the strategic report and financial statements for the year ended 30 April 2024.
Turnover for the year ended 30 April 2024 amounted to £7.7m compared to £6.9m for the previous year, and the operating profit amounted to £437k compared to £139k in 2023.
The directors consider the results at the year end to be as expected and intend to pursue strategies that would enhance the growth of the group and result in improved performance.
The management of the business and the execution of the group's strategy are subject to a number of risks. Risks are reviewed by the directors and appropriate processes are put in place to monitor and mitigate them. The key risks affecting the group are set out below.
Business Risk
The group is reliant on defense spending and with government authorities being primary customers any reduction in budgets could have an impact on the group.
The group's business being geographically spread across the world market however limits the degree of operational and financial risks to an extent.
Every so often state budget allocations are withdrawn and this may result in orders being delayed and/or cancelled. This may result in the group's profit for a particular year being reduced.
Currency risk
The international nature of the group's businesses exposes it to currency risk. The company buys in Swiss francs and Canadian dollars and manages the risk by allowing for movements in currency in its mark up and margins.
As the supply line is generally short the risk attributed to currency fluctuation is therefore limited and well covered in the built in margins.
Where the supply line is long the company would generally cover for the fluctuation in the currency in its contract and thus mitigate its exposure.
Future developments
The directors aim to continue with the management policies which has resulted in the group's steady growth in recent years.
The outlook for 2025 is reasonably encouraging with the directors being optimistic that the current performance can be maintained.
The group's key financial and other performance indicators during the year were as follows:
| 2024 |
| 2023 |
| |
| £ |
| £ |
| |
Turnover |
| 7,698,027 | 6,873,811 | ||
Operating profit |
| 437,120 | 138,986 | ||
(Loss)/profit after tax |
| (78,410) | 5,972 | ||
Shareholders' funds |
| 3,307,690 | 3,463,662 | ||
Average number of employees |
| 24 | 24 |
The group's strategy is that of laying the foundation for long-term sustainable growth through recruiting in-house specialist teams with appropriate skills for the development of industry leading software and hardware for military applications.
The board believes that the framework established by the above strategy should enable the group to achieve a growth in turnover in the coming year.
As stated above, the group anticipates an increase in turnover in the coming year. In particular the group currently has substantial volume of business in hand in all areas of its business.
The board believe that it is now in a position to see growth in its turnover and profits in the coming years and the establishment of the group as a leading player in the world market in its field.
The group is committed to continue the ongoing development of its product and to remain at the forefront of changes in technology delivering quality and value to its customers.
Markets
The group customers are primarily state defence authorities and companies in the military applications sector in UK, US, EU, Australasia, Middle East and East and Central African markets.
Financial instruments
The group's policy is to finance its operations on a medium term basis from retained profits, inter company borrowings, shareholder loans and bank facilities. Overdraft facilities are utilised for short term financing requirements.
The financial instruments utilised by the group are borrowings, short term cash deposits and items such as trade creditors which arise directly from operations. Borrowing and deposit facilities are on a floating basis. The group's policy is not to trade in financial instruments.
On behalf of the board
The director presents his annual report and financial statements for the year ended 30 April 2024.
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a further dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The auditor, KLSA LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of MAS (Holdings) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 April 2024 which comprise the group profit and loss account, 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
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as going concern.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the parent company or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the sector; and
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, environmental and health and safety legislation.
We also considered potential fraud drivers: including financial or other pressures, opportunity, override of controls and personal or corporate motivations. We considered the programmes and controls that the company has established to address risks identified, or that otherwise prevent, deter and detect fraud. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included testing journals, evaluating the business rationale of significant transactions outside the normal course of business and validating the appropriateness of internal controls and significant accounting estimations based on our fraud risk criteria;
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims.
We obtained understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant are those related to the financial reporting framework, tax regulations in the jurisdictions in which the company operates.
Based on this understanding we designed our audit procedures to identify non-compliance with laws and regulations. Our procedures involved: making enquiries of management, those responsible for legal and compliance procedures and reviewing other correspondence.
We communicated identified fraud risks and non-compliance with laws and regulations with those charged with governance, throughout the audit team and remained alert to any indications throughout the audit.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion.
Fraud may involve deliberate concealment by, for example, forgery or intentional omissions, misrepresentation, or through an act of collusion that would mitigate internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £3,801,187 (2023 - £2,791 loss).
MAS (Holdings) Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit A3, Merlin Centre, Acrewood Way, St Albans, Herts, AL4 0JY.
The group consists of MAS (Holdings) Limited and all of its subsidiaries listed in note 16. The principal activities of the company and its subsidiaries (the group) are set out in director's report.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
Effective 01 May 2022, the Group transitioned from IFRS 16 to FRS 102 to align with UK accounting standards, reverting to the classification of leases as either finance or operating. This change resulted in the derecognition of right-of-use assets and lease liabilities for leases classified as operating under FRS 102. Finance leases are retained on the balance sheet and depreciated according to FRS 102 guidelines.
The transition adjustments to the consolidated balance sheet include a decrease in right-of-use assets of £474,010 and lease liabilities of £488,757, resulting in a net increase in retained earnings of £14,747. Comparative figures have been restated where feasible.
Further, all operating lease payments are presented as operating cash flows, with finance lease principal payments classified under financing activities.
Note 26 provides a detailed breakdown of future lease commitments for operating leases under FRS 102, by maturity date.
At the time of approving the financial statements, the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents amounts receivable for goods and services net of VAT and trade discounts.
Turnover represents the amounts (excluding value added tax) derived from the provision of goods and services to customers during the year. Revenue is recognised when the group becomes entitled to it - usually when it has transferred to the buyer the significant risk and rewards of ownership of the goods upon rendering of an invoice.
For uncompleted contracts that are in existence at year end, revenue is recognised on a percentage of completion basis.
Revenue recognition on contracts in New Zealand subsidiary
The group's New Zealand subsidiary estimates the percentage of completion of contracts at each reporting date and recognises the profits earned on this percentage. The determination of the percentage of completion is subject to management estimate which are subject to uncertainty. If the percentage of completion is less than estimated profit the profit recognised would reduce, conversely if the actual percentage of completion is higher than estimated the profit would be increased.
Revenue from the sale of goods 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.
Patents and trademarks
Patent application costs and trademarks are amortised on a straight line basis over their useful life, which has been determined as 10 years. Renewal cost are expensed in the year incurred.
Research and developments
Research expenditure, in one of the foreign subsidiary, are written off to the profit and loss account in the year in which it is incurred where it is determined there are no future benefits arising. Development costs are deferred where future benefits are expected and amortised over such future period. Unamortised costs are reviewed at balance sheet date to determine the level of costs which are no longer recoverable, such costs are written off.
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.
Depreciation is provided, on reducing balance, in one of the foreign subsidiaries at the following annual rates, which are the maximum permissible rates by the tax authorities of that country:
Property improvements 9 - 21.6%
Furniture & Fittings 11 - 40%
Office Furniture & Equipment 9 - 80.4%
Demonstration Equipment 25 - 60%
Plant & Equipment 9 - 80.4%
Computer Hardware 16.2 - 80.4%
Computer Software 48% - 60%
There is no specific amortisation rate determined as appropriate for development costs, capitalised in one of the foreign subsidiaries, so these costs are amortised based on the estimated number of units sold of the expected life of each project.
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.
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.
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.
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.
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 taxation is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. The deferred tax balance has not been discounted.
Taxation charge in the accounts recognises the current obligation and all amounts arising from differences between the accounting results and assessable income for the period, calculated using the liability method.
Tax effect accounting has been applied, in one of the foreign subsidiary, on a comprehensive basis to all temporary differences. A debit balance in the deferred tax account, arising from temporary differences, is only recognised if it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilized
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.
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.
Company
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange prevailing at the accounting date or if appropriate at the forward contract rate. Transactions in foreign currencies are recorded at the date of the transactions or at the contract rate if the transaction is covered by forward exchange contract. All differences are taken to the profit and loss account.
Group
The accounts of the overseas subsidiary undertakings are translated at the average rate for the profit and loss and at the closing rate for the balance sheet. The exchange difference arising on the retranslation of opening net assets is taken directly to reserves. All other translation differences are taken to the profit and loss account.
Comparatives
Certain amounts have been reclassified to conform with current formats.
In the application of the group’s accounting policies, the director is 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.
An analysis of the group's turnover is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
Finance Act 2021 made provision for the rate of corporation tax in the UK to increase (from 1 April 2023) from 19% to 25% where a company has profits in excess of £250,000. In addition, there is also a small profits rate of tax of 19% where profits are £50,000 or less.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The New Zealand corporate income tax (CIT) rate is 28%.
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
Details of the company's subsidiaries at 30 April 2024 are as follows:
No inventories whatsoever are specifically and separately pledged as security for liabilities. Inventories are generally subject to retention of title clauses.
BNZ holds a perfected security interest in all present & after acquired property of MAS Zengrange (NZ) Ltd, charged over deposits in the name of MAS Zengrange (NZ) Ltd, a guarantee for the amount of £3,903,371 (NZ $8,000,000), plus interest and cost in terms of the banks standard guarantee form from Hall and Watts Holdings Limited, a related party by virtue of being under common control.
BNZ also holds guarantees as per contingent liabilities disclosed in the Note 25 to the financial statements.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
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.
During the year the group entered into the following transactions with related parties:
The company has taken advantage of the exemption available in FRS 102 (s33 "Related Party Disclosure"), whereby it has not disclosed transactions with any wholly owned subsidiary undertaking of the group.
At the balance sheet date, amount payable to Hall & Watts Holdings Ltd,and Hall & Watts Defence Optics Ltd, all connected companies amounted to £2,166,710 (2023: £2,166,710) and £5,168,881 (2023: £5,339,824) respectively at the group level. During the year, management fees paid to Hall & Watts Defence Optics Ltd amounted to £56,000 (2023: £538,000).
At the balance sheet date, amount receivable from Hall & Watts Holdings Ltd, Hall & Watts Defence Optics Ltd and Hall & Watts Australia PTY amounted to £2,010,245, (2023: £1,974,420), £1,107,802 (2023: £1,107,802) and £21,695 (2023: £21,695) respectively at the group level.
At balance sheet date BNZ held guarantees, on behalf MAS Zengrange (NZ) Limited in favour of:
- Wellington Regional Chamber of Commerce of NZ $17,904 (2023: NZ $17,904).
- Government of the Republic of Singapore SGD $60,434 (2023: SGD $60,434), which is secured by a term deposit of SGD $60,434.
- Defence acquisition Program Admins USD $110,253 (2023: $110,253), which is secured by a term deposit of USD $79,290.
A cross guarantee and debenture has been given by group UK companies in respect of their UK bank indebtedness.
There were no other known contingent liabilities (2023: £Nil).
Lease commitments under non-cancellable operating leases relate to the group's New Zealand subsidiary and include the following: