The directors present the strategic report for the year ended 31 August 2024.
The company is engaged in the supply of assessment services and solutions. These services focus on delivering tangible business outcomes across six main pillars of technology and services to corporate, SME, Graphic Arts and public sector customers. These six areas are Licensing, Cyber Security, Unified Communications, Sourcing of Technology, Digital Workplace Technology and Managed Print.
The company is a strategic partner of over 80 leading Technology Vendors that provide hardware, disruptive software, services and Cloud solutions. These include the likes of Xerox, HP, Microsoft, Lenovo, Apple, Barracuda, Avant, Nexthink and Arctic Wolf.
The directors are satisfied with the performance of the company during the year.
The directors continue to focus on business transformation and obtained great results during the year demonstrating growth in profit before tax while achieving over 34% of turnover from the new offerings being taken to market. In terms of new sales made during the year, 56% came from the aforementioned new technology services.
The transformation process surrounds utilising the strong platform from being a leading Managed Print Service Provider, to becoming an IT Managed Services provider that remains the leader in Managed Print Services.
The directors are focused on continuing to broaden and improve the services and the value Xeretec brings and delivers to its customers. This is particularly the case in the big growth markets of PC / Laptop Services, Cyber and AI.
The directors are therefore regarding 2024 — 2025 as a year where the benefits of investment in these areas started to show, believing the platform for sustainable long-term growth now exists.
Turnover has decreased from £61.1m to £52.2m due to the absence of large revenue centric contract wins compared to the previous year. Gross margins have increased from 28% to 33% and profit before tax has increased from £1.6m to £1.7m. Relationships with suppliers and customers remained strong throughout the period.
As at the balance sheet date the group had a positive cash position of £7.7m and net assets of £1.6m.
The economic climate remains uncertain because of a group of factors including inflation, interest rates, the impending material NI increases in labour costs and the macro political climate. These conditions have an impact not just upon the group cost base, but also upon customers and their ability / propensity to acquire new technology software and services.
The relevant risks are being managed and modelled sensibly and there is a core focus on driving sales in the customer offerings developed as part of the group's strategy. Many of these offerings deliver enhanced value to customers in the areas of cost reduction, productivity / efficiency improvement, service level improvement, improving compliance and improving environmental impacts.
This focus not only ensures that the group's offerings have the highest relevance to customers in these uncertain times, but also that are targeted at the areas of the market where the largest growth opportunities exist.
Outside of this there is a high degree of competition in the marketplace for all the business key revenue and profit lines. The group prides itself on the value it brings to its customers and that it focusses on disruptive value offerings.
The board of directors see the following key priorities to develop and drive performance:
Continued focus on maximising the opportunities within the Managed Print Service arena.
Continued focus on maximising the opportunities from the new revenue / profit streams of Licensing, Cyber Security, Unified Communications, Sourcing of Technology, Digital Workplace Technology and the disruptive solutions that are being brought to market.
Adding more disruptive and innovative offerings to the portfolio to help increase sales in new areas and take hold of new market opportunities.
Continuing to deliver value and a premium service to the group's customer base.
Continuing development of employees to build the talent base foundations from which to grow.
The board monitor and review all aspects of the business as a matter of course and through monthly board meetings.
Turnover, gross margins, net profit before tax, cash position and net assets are the key financial performance indicators reviewed by the business.
Further analysis is completed on new revenue / profit stream growth, services trends and cost base analysis.
The 2024 performance can be summarised as:
Turnover has decreased from £61.1m to £52.2m due to the absence of large revenue centric contract wins compared to the previous year. Gross margins have increased from 28% to 33% and profit before tax has increased from £1.6m to £1.7m. Relationships with suppliers and customers remained strong throughout the period.
In performing their duties under s172, the directors of the company have had regard to the matters set out in s172 as follows:
The Board of Xeretec Group Limited (XGL) consider that they have adhered to the requirements of s.172 of the Companies Act 2006 (the "Act") and have, in good faith, acted in a way that they consider would be most likely to promote the success of the company (and the group) for the benefit of its shareholders as a whole and, in doing so, have had regard to and recognised the importance of considering all stakeholders and other matters (as set out in s.172(1)(a-f) of the Act) in its decision-making.
The reporting legislation around stakeholder engagement is welcomed by the Board and the commentary below sets out our s.172(1) statement. This statement provides details of key stakeholder engagement undertaken by the Board during the year and how this helps the Board to factor potential impacts on stakeholders in the decision-making process.
XGL’s long-term success depends on the support of its key stakeholders. XGL has a clearly defined strategy which is accompanied by a long-term financial plan. The board reviews and updates the strategic plan formally at least annually and progress is monitored on a regular basis with the board and wider management team.
The board make decisions with a long-term view of the sustainability of the business in mind, as evidenced by the ongoing transition from Managed Print provider to IT technology and services provider. This long-term outlook is demonstrated by the recent significant investment in CRM, Order Management and Financial Systems. The business continues to aim for high professional standards which is backed up by internal governance protocols and external certifications. Acting fairly between stakeholders is common practice at XGL and any conflicts of interest are duly disclosed.
The group considers that employees, clients and suppliers, are key to its long-term success.
Employees
The Group aims to provide a highly rewarding environment for its people and a platform from which they can grow. The company operates an open-door policy and encourages employee feedback to help achieve continuous improvement. Communication is recognised as critical in the business and updates from the CEO by way of physical delivery, Teams presentations and emails are regular. With offices all over the country XGL takes pride in contributing to several communities and are keen to expand this further.
Customer Relations
XGL always put their customers front and centre of business thinking and processes. We strive to ensure our customers are happy with the service(s) being provided and ensure any queries are dealt with in an open and timely manner. All customers have direct access to a dedicated account manager as well as a centralised helpdesk. Feedback from customers is encouraged particularly through customer success story filming.
Suppliers
XGL see fantastic working relationships with suppliers as fundamental to business success. Suppliers need to provide disruptive customer value add technology, solutions and services. They critically need to support a quick turnaround, stock availability, quality customer service and support with complex implementations. During the year XGL have built relationships with new suppliers who provide disruptive technologies to help their customers achieve strategic goals. XGL take pride in ensuring all suppliers are paid on time.
Environment
XGL have undertaken a project via a third-party provider to calculate its full carbon footprint for scope 1, 2 & 3 emissions. This measurement will identify the emissions hotspots and enable XGL to produce a strong Net-Zero strategy as part of its critical responsibility to climate change. XGL are already on the journey having increased the size of its electric vehicle pool this year and putting a focus on more efficient offices under the guidance of its ISO 14001 membership..
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 August 2024.
The results for the year are set out on page 9.
Interim dividends were paid amounting to £953,620 (2023: £553,620) for the group and £953,620 (2023: £553,620) for the company. 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:
The auditor, Shaw Gibbs (Audit) Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
None of the subsidiaries of the group breach the large company thresholds as defined by Companies Act 2006 and therefore the directors have opted not to disclose the relevant information in the consolidated accounts as such disclosures are not required at company level. The parent company does not incur such costs and therefore again, no disclosures have been made.
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company'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 with respect to principal risks and uncertainties and development and performance.
We have audited the financial statements of Xeretec Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 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
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 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
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in 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 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 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 directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept 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 directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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 directors either intend to liquidate the parent company or to cease operations, or have 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.
At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the group and company and how the management seek to comply with those laws and regulations. This helps us to plan appropriate risk assessments.
During the audit we focus on relevant risk areas and review the compliance with the laws and regulations by making relevant enquiries and undertaking corroboration, for example by reviewing Board Minutes and other documentation.
We assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures including:
Reviewing the controls set in place by management;
Making enquiries of management as to whether they consider fraud or other irregularity may have taken place, or where such opportunity might exist;
Challenging management assumptions with regard to accounting estimates; and
Identifying and testing journal entries, particularly those which appear to be unusual by size or nature.
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 profit for the year was £1,503,520 (2023: £1,891,369) including intercompany dividends of £953,620 (2023: £553,620).
Xeretec Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Ashridge House, Oaklands Park, Fishponds Road, Wokingham, Berkshire, RG41 2FD.
The group consists of Xeretec Group 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 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 include certain financial instruments and freehold land and buildings at fair value. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption in FRS 102 Section 33 and has not disclosed transactions and outstanding balances with and between its wholly owned subsidiary undertakings, Xeretec Ireland Limited and Landscape Printing Systems Limited.
As permitted by Section 408 Companies Act 2006, the company has not presented its own statement of total comprehensive income and related notes. The profit for the financial year of the parent undertaking is disclosed on the company balance sheet.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent (being this company) 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 each category of financial instrument; 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 Xeretec Group Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 August 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.
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 sales to external customers and affiliated companies at invoiced amounts less value added tax or local taxes on sales.
Turnover from sale of goods is recognised at the point of sale which is generally considered to be that of the contract activation date, when all the goods required to fulfil the contract are delivered to the customer and installed.
Turnover from maintenance and support services is recognised over the contracted term of supply. Turnover from one-off services is recognised when the service is delivered.
Turnover from the equipment leased to customers is recognised over the length of the rental period. The cost of these assets is shown in the fixed asset note.
Turnover recognised but not invoiced as at the balance sheet date is included in accrued income. Turnover invoiced but not recognisable as at the balance sheet date is included under deferred income.
Freehold land is not depreciated.
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.
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.
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, 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.
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 contributes to a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
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 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 profit or loss.
For the purpose of preparing consolidated financial statements, the assets and liabilities of foreign subsidiary undertakings are translated at the exchange rates ruling at the balance sheet date. Statement of comprehensive income items are translated at the average exchange rates for the year, unless exchange rates fluctuated significantly in the year, in which case the exchange rates ruling at the dates of the transactions are used. Exchange differences arising are taken to the group's retained earnings.
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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Stocks are valued at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in-fist-out (FIFO) method. Estimated selling price less costs to complete and sell, includes, where necessary, provisions for slow moving and obsolete stocks. The estimation of these provisions takes into consideration the forecasted customer demand, the promotional, competitive and economic environment as well as the ageing of stock and the discontinuation of certain product lines by the key suppliers. These variables are monitored by the directors and a provision is in place to mitigate the relevant risks.
Having taken into consideration the historic and current level of bad debts, the directors consider it appropriate to have a general bad debt provision in place which is calculated at 1% of trade debtors. The relevant figure is then adjusted accordingly, if it is considered necessary, as a result of significant bad debts and/or due to underlying economic conditions which suggest a higher than normal risk of bad debts.
The useful economic lives of non-current assets have been derived from the judgement of the directors, using their best estimate of the write-down period. With respect to the rental print equipment assets included in the tangible fixed assets, the relevant period is considered to be that of the rental agreement. Tangible fixed assets held under finance leases, are written down over the lease term or their useful economic lives, whichever is the shorter.
Warranty provisions are accounted for when there is a contractual obligation for the company to cover the costs of machine repairs and/or replacements. The provisions are based on the estimated cost of parts, labour and/or replacement machines and they are determined on a contract by contract basis.
The fair value of the freehold property has been arrived at on the basis of a valuation carried out by Conway McBeth (a firm of chartered surveyors), who are not connected with the company, as at 30 May 2024. The valuation was carried out on an open market basis (which is considered to be a true reflection of the fair value) in accordance with the RICS accepted practices. The directors do not believe that there has been a material change in the fair value of the property between the valuation date and the year end.
An analysis of the group's turnover is as follows:
Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £37,545 (2023: £121,755).
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 1 (2023: 1).
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:
Included in plant and machinery is print equipment with a cost of £1,609,834 (2023: £1,470,109), depreciation of £1,183,428 (2023: £1,080,834) and net book value of £426,406 (2023: £389,275) which generates rental income. The costs of the assets acquired during the year for the purpose of leasing to the customers was £176,690 (2023: £150,941).
The cost of the assets disposed of during the year that were previously leased to customers was £26,728 (2023: £1,082,543) and the associated depreciation amounted to £8,465 (2023: £1,082,543).
The fair value of the freehold property has been arrived at on the basis of a valuation carried out by Conway McBeth (a firm of chartered surveyors), who are not connected with the company, as at 30 May 2024. The valuation was carried out on an open market basis (which is considered to be a true reflection of the fair value) in accordance with the RICS accepted practices. The directors do not believe that there has been a material change in the fair value of the property between the valuation date and the year end. The valuation at that date was €675,000 (£578,031) which resulted in an upward revaluation of €140,000 (£167,769). Had the property not been revalued, its cost would have been stated at £238,177 and its net book value at £172,123.
Details of the company's subsidiaries at 31 August 2024 are as follows:
As permitted by the reduced disclosure framework within FRS 102, the company has taken advantage of the exemption from disclosing the carrying amount of certain classes of financial instruments, denoted by 'n/a' above.
Included in the company and consolidated other borrowings above is an amount of £257,194 (2023: £120,201) with respect to the current portion of the non-convertible, unsecured and interest free 2022 and 2025 loan notes that were issued in the 2020 financial year. The relevant repayment terms of the 2025 loan notes have been extended to 2029.
HSBC Bank Plc holds a fixed and floating charge over the undertaking and all property and assets of the company and group, present and future.
There exists an unlimited multilateral agreement between Xeretec Group Holdings Limited, Xeretec Group Limited, Xeretec Office Systems Limited, Xeretec Scotland Limited, Landscape Holdings Limited and Landscape Printing Systems Limited. As at 31 August 2024, total group bank loans amounted to £11,950,000.
On 25th September 2014 Xeretec Office Systems Limited signed two Minimum Periodic Rental Agreements ("MPRAs") with Xerox Finance Limited in respect of the leasing of certain equipment. Assets, the subject of the MPRAs, are rented to customers and are subject to Managed Print Service Agreements ("MPSAs"). Pursuant to said agreements the company signed Deeds of Assignment on the same date with Xerox Finance Limited covering all assets which are the subject of the MPSAs and all present and future book debts owing to the company arising out of said MPSAs. Similar agreements were subsequently signed on 13 October 2016, 26 April 2017, 7 June 2017, 29 March 2019 and 21 December 2023.
Ulster Bank Ireland DAC hold a letter of guarantee of €35,000 from the directors of Xeretec Ireland Limited as security for an overdraft facility provided to the company.
All monies due or to become due by Xeretec Ireland Limited to Ulster Bank together with interest are secured by debenture deeds with the bank which provide for a floating charge over all the undertaking of the company and all its property both present and future including its book debts and other debts, goodwill and uncalled capital for the time being.
The company and consolidated other borrowings relate to the non-current portion of the non-convertible, unsecured and interest free 2025 loan notes that were issued during the 2020 financial year. The relevant repayment terms of the 2025 loan notes have been extended to 2029.
The above bank loans relate to the revolving credit facility provided by HSBC Bank Plc to Xeretec Group Limited. The revolving credit facility debt is secured via a debenture. Further details are provided in note 19.
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.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The Ordinary A and B shares each carry full voting, dividend and capital distribution rights, including on winding up. They do not confer any rights of redemption.
On 17 July 2017 the company set up an Enterprise Management Incentive Plan, whereby rights were granted to certain directors and employees of its subsidiary undertakings for the equity instruments of Xeretec Group Limited. The share options vesting conditions are based on business and personal financial performance targets, none of which has been met to the date that these financial statements were approved. As a result no adjustments have been processed to the financial statements with respect to the plan.
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:
Company
Included in company (and group) other borrowings due within one year is an amount owed to a director of £92,270 (2023: £230,675). This balance is unsecured and interest free.
As at the year end the company (and group) owed a director £227,919 (2023: £236,054) of which £46,154 (2023: £11,951) was due within one year. This is in the form of non-convertible, unsecured and interest free 2025 loan notes to be repaid monthly. The relevant repayment terms of the 2025 loan notes have been extended to 2029.
As at the year end the company (and group) is owed £6,005,484 (2023: £5,902,078) by Ivy Windmill Limited which shares a common director and shareholder. Interest of £28,860 (2023: £30,523) has been charged on the loan.
During the period, the company paid dividends of £953,620 (2023: £553,620) to its shareholders.
As at the year end the company is owed £744,603 (2023: £814,603) from Hawkcliff Property Ltd, a company with common directors and shareholders. This loan is interest free and repayable on demand.
The company has taken advantage of the available exemptions in FRS 102 Section 33 and has not disclosed transactions and outstanding balances with its wholly owned subsidiary undertakings Xeretec Ireland Limited and Landscape Printing Systems Limited.
The company maintains current account balances with its subsidiary undertaking Xeretec Office Systems Limited. The associated transactions relate to payments and receipts for goods and services, management charges, dividends and bank transfers as applicable.
At the year end, the company owed £606,626 (2023: £Nil) to Xeretec Office Systems Limited. This loan was interest free and repayable on demand.
Group
The Xeretec group companies maintain current account balances with their ultimate parent company and fellow subsidiary undertakings. The associated transactions relate to payments and receipts for goods and services, bank transfers, management charges and amounts for dividend payments as applicable.
As a result of those transactions, at the year end the Xeretec Office Systems Limited was owed £62,577 (2023: £4,822) by Xeretec Ireland Limited, £244,600 (2023: £583,020) by Landscape Printing Systems Limited and £606,626 (2023: £Nil) from Xeretec Group Limited.
During the year Xeretec Office Systems Limited paid rent of £125,000 (2023: £125,000) to Hawkcliff Property Ltd, a company controlled by two of the directors. At the year end the company owed £Nil (2023: £Nil) to Hawkcliff Property Ltd.
As at the year end Xeretec Ireland Limited was owed £27,836 (2023: £69,744) from a director. The balance is interest free and repayable on demand.
Some of the group companies paid dividends to their immediate intra-group parent companies. Those dividends were eliminated in the consolidated financial statements and while we do not disclose them in detail, the relevant balances can be found in the individual companies' financial statements.
Remuneration of £500,655 (2023: £517,821) was paid to key management personnel.
Non-controlling interest relates to the minority shareholding that Xeretec Group Limited does not control in Xeretec Office Systems Limited.