The directors present the strategic report for the year ended 31 December 2023.
MBA Holding Company 3 Limited continues to operate on a profitable and stable basis and the operation continues to be run by a strong team, including Directors and senior management, offering strategic advice.
We have a clear business model to increase company profitability. Our business plan is underpinned by clear assumptions and our strong, experienced team have the expertise to flex these plans and respond proactively to opportunities as well as challenges as they are identified.
What we achieved in year ended 2023
The group has solidified its client base and expect the business to grow further in the forthcoming years.
Financial KPIs
Gross revenue decreased, with gross profit margins reflecting market trends. Gross revenues decreased by 30%, with gross profit margins reflecting market trends. Despite this, the group still has strong net assets and a healthy cash position at year end.
Total revenues generated were €37.7m (2022: €52.5m) for the year ended 31 December 2023.
Pre tax profit for the year amounted to €3.6m (2022: €2.4m).
Net assets at the balance sheet date were €15.5m (2022: €12.8m).
Our objectives for 2024
The group looks to maintain strong financial performance and will continue to develop where markets remain supportive, we will continue to focus on driving fee and profit growth as we work towards these objectives. Additionally, the group will continue to seek other business opportunities, to enhance its profitability in the UK and Europe.
Group working capital is provided via an overdraft facility secured against debtors.
Cash management has been arranged via the notional pooling pooling of group funds providing a flexible and efficient method of maximising cash usage. These arrangements continue in use. The main business risk is increased competition in our markets. As we have flexible business plans to cater for most eventualities.
The key risks for the group are the ability of customers to pay and the fluctuation of the Euro exchange rate with the British Pound. All new customers are carefully credit checked and exchange risk is minimised by ensuring client and contractor currencies are matched.
The group operates an effective credit control process and clients are contacted before payments are due, to minimise any late queries, Most clients pay within the agreed terms and any overdue payment are vigorously monitored and pursued. This policy has reduced the risk of incurring bad debts.
We, as a Board are closely monitoring our operations and cashflow on a regular basis to ensure we identify any potential issues. Additionally, we have taken steps to assess the impact that the current economic instability within the UK will have on the Group in all countries it operates within. Despite the challenges presented by the economic uncertainty, we remain in a sound financial position with strong reserves and strength in our customer base.
Invest in people
Recruitment Policy
The company operates a policy of recruiting staff from all nationalities, background and ages. Nationalities include British, Dutch, German, Indian, French, Belgium and Swiss, and their ages ranged from early 20s to 65.
Training
The group continues to train and motivate the sales team and expand the development of long term relationships with new clients as well as provide a focused and dedicated resource with which to service its existing base of major clients.
Full training is given to administrative staff.
Staff Objectives
The group had maintained its sales force to ensure there is sufficient resource to match the group's commitment to serving its existing clients and develop new relationships in other areas. As a result, the group has continued to provide first class support and the sourcing of highly skilled personnel to customer.
Statement by the directors relating to their statutory duties under section S(172) of the companies Act 2006
The directors, in line with their duties under s172 of the Companies Act 2006, act individually and collectively in the way they consider, in good faith, would be most likely to promote the success of the group for the benefit of its stakeholders, and in doing so have regard, amongst other matters, to the:
Likely consequences of any decision in the long term, in respect of our strategy and other goals. We will continue to adhere to the needs of our Corporate Governance.
Interests of the group's employees, as they are fundamental assets to the success of the Group. We will continue to monitor their working environment and welfare.
Need to foster the group's business relationships with suppliers, partners and others, especially our Clients and Contractors, who in themselves lead to the success of the Group.
Impact of the group's operations on the community and the environment, as we are in consultancy, our operations impact direct stakeholders only and have no effect on the environment. However, we try to reduce our impact of the environment by controlling our use of non-recyclable products.
Desirability of the group maintaining a reputation for high standards of business conduct, especially towards our Stakeholders.
Need to act fairly as between members of the group, the Management feel internal employees are fundamental to the success of the business and will endeavour to monitor their welfare and well-being.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 9.
The group results represent those of MBA Michael Bailey Associates Plc, Michael Bailey Associates Limited, Metroyard Limited, MBA Michael Bailey Associates GmbH, MBA Michael Bailey Associates AG, MBA Michael Bailey Associates BV, MBA Michael Bailey Associates UK Limited, MBA Michael Bailey Associates SPRL, MBA Michael Bailey Associates Project Services AG, Michael Bailey Associates Recruitment Limited, Michael Bailey Associates Project Services Limited, MBA Michael Bailey Associated Holding BV, MBA Michael Bailey Associates Project Services BV and MBA Michael Bailey Associates Recruitment BV.
A dividend of €nil was paid during the year (2022: €nil).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's current policy concerning the payment of trade creditors is to agree the terms of payment when contracts are completed and to ensure that suppliers are made aware of terms of payment at this point. The group pays its trade creditors in accordance with these contractual and legal obligations, On average trade creditors at the year end represented 28 (2022: 37) days purchases.
Kirk Rice LLP were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
As the group has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy
efficiency activities.
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of principal risks and uncertainties.
We have audited the financial statements of MBA Holding Company 3 Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 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, the company 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our audit approach was developed by obtaining an understanding of the group and parent company's activities, the key functions undertaken on behalf of the Board by management and by service organisations, and the overall control environment. Based on this understanding we assessed those aspects of the group and parent company's transactions and balances which were most likely to give rise to a material misstatement and were most susceptible to irregularities including fraud or error. Specifically, we identified what we considered to be key audit risks and planned our approach accordingly.
We gained an understanding of the legal and regulatory framework applicable to the group and parent company and the industry in which it operates, and considered the risk of acts by the company which were contrary to applicable laws and regulations, including fraud. These included but were not limited to compliance with Companies Act 2006 and FRS102.
We designed audit procedures to respond to the risk, recognising that 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.
We focused on laws and regulations that could give rise to a material misstatement in the company financial statements. Our tests included, but were not limited to:
- agreement of the financial statements disclosures to underlying supporting documentation;
- enquiries of management;
- considering the effectiveness of control environment in monitoring compliance with laws and regulations.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. As in all of our audits we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
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 group and parent 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 group and parent company, and the group and parent 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 €0 (2022 - €0 profit).
MBA Holding Company 3 Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 12 Brook House, Chapel Place, Rivington Street, London, EC2A 3SJ.
The group consists of MBA Holding Company 3 Limited 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 Euro, 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.
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 €nil (2022: €nil).
The consolidated group financial statements consist of the financial statements of the parent company MBA Holding Company 3 Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2023. 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 time of approving 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.
Turnover represents revenue from the sale of goods and services to external customers, recorded at the transaction price, excluding value-added tax (VAT) and other sales-related taxes. Revenue is recognised when the group has satisfied its performance obligations under the contract, and it is probable that economic benefits will flow to the group. Income is accrued where the group has an enforceable right to consideration as of the balance sheet date.
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.
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.
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.
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.
The Group operates defined contribution schemes for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable. The assets of the scheme are held separately from those of the Group in independently administered funds.
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.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in OCI.
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 company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors, and historical experience. See note 14 for the net carrying amount of the debtors and associated impairment provision.
The annual depreciation charge for property, plant and equipment is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 12 for the carrying amount of the property, plant and equipment and note 1.6 for the depreciation policy adopted for each class of asset.
The group makes accruals for contactor costs based on an estimated margin as per the agreed contract. These accruals are then reversed once invoices are received and paid.
The audit fee is the group audit fee. No audit fees are borne by the company.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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:
Details of the company's subsidiaries at 31 December 2023 are as follows:
* The nature of these businesses is that of IT consultancy.
**The nature of this business is that of IT and Telecoms consultancy.
***These companies are being wound down and trade transferred to another group company.
****The nature of this business is that of a holding company.
The long-term loans are secured by fixed charges over all the company as security for bank facilities available to the company.
A company (Michael Bailey Associates Limited) within the group has entered into a bank Composite Accounting Agreement with certain other group companies whereby each company has provided a guarantee that enables the bank to set-off interest and debit and credit balances held by each of the companies in certain circumstances.
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.
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 group occupies premises owned by M Garlick and rent charges to the group amounted to €133,352 (2022: €307,642).
Included within other debtors in the group balance sheet is an amount of €7,755 (2022: €14,085) due from a director, M Garlick.
Included within other debtors in the group and company balance sheet is an amount of €512,350 (2022: €512,350) owed from MBA Michael Bailey Associates Pte.
Included in other creditors within the group balance sheet is an amount of €173,354 (2022: €Nil) owed to Everlasting Property Company Limited, a related party with common director's ownership.
During the year the company purchased services totalling €47,151 (2022: €496,097) in relation to contractors for Michael Bailey Associates Pte Limited, a company with a common director. At 31 December 2023 €0 (2022: €49,460) is owed to Michael Bailey Associates Pte Limited.
At the balance sheet date, MBA Holding Company 3 Limited was controlled by M L Garlick by virtue of his majority shareholding. As of the date of signing, MBA Holding Company 3 Limited is controlled by MBA Trustee Company Limited, a UK company with the registered office address 6th Floor 9 Appold Street, London, United Kingdom, EC2A 2AP.
On 29 September 2024, MBA Holding Company 3 Limited cancelled 85,010 of its issued shares, each with a nominal value of £0.10, thereby reducing the total number of issued shares from 1,566,005 to 1,480,995. The cancellation, approved by the shareholders and registered with the appropriate authorities, was undertaken for the purpose of re-organisation. This adjustment does not materially affect the financial position or results of operations as of 31 December 2023.
On 25 October 2024, the ownership of MBA Michael Bailey Associates Holding BV was transferred from MBA Michael Bailey Associates plc to an entity owned by a director, resulting in the disposal of subsidiaries MBA Michael Bailey Associates Holding BV, MBA Michael Bailey Associates Project Services BV, and MBA Michael Bailey Associates Recruitment BV. The subsidiaries were disposed of for €13m, generating a profit on disposal of €12,997,500.
Immediately following this disposal, the ownership and control of MBA Holding Company 3 Ltd was transferred from the existing shareholders to MBA Trustee Company Ltd.
A prior year adjustment has been recognised in order to correct a material misstatement in the comparative figures. The misstatement relates to historical foreign exchange movements on the cash and cash equivalents held by the company. In order to ensure the monetary balances were correctly translated at the balance sheet date, an adjustment to the profit or loss on foreign exchange has been recognised in the profit and loss account.