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Company registration number: 05755983







ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
31 MARCH 2024


MERCATOR IT SOLUTIONS LIMITED






































img359a.png                        

 


MERCATOR IT SOLUTIONS LIMITED
 


 
COMPANY INFORMATION


Directors
M G Churchouse 
M F Clemens 




Registered number
05755983



Registered office
Mercator House
London Road

Crowborough

East Sussex

TN6 2TT




Independent auditor
Menzies LLP
Chartered Accountants & Statutory Auditor

Magna House

18-32 London Road

Staines-Upon-Thames

TW18 4BP





 


MERCATOR IT SOLUTIONS LIMITED
 



CONTENTS



Page
Group strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Consolidated statement of comprehensive income
9
Consolidated statement of financial position
10
Company statement of financial position
11
Consolidated statement of changes in equity
12
Company statement of changes in equity
13
Consolidated statement of cash flows
14
Consolidated analysis of net debt
15
Notes to the financial statements
16 - 29


 


MERCATOR IT SOLUTIONS LIMITED
 


 
GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 31 MARCH 2024

Introduction
 
This report lays out the direction and success of Mercator IT Solutions Limited over the past 15 months. The decision was taken in early 2023 to run a 15 month accounting period to move the business from a calendar operating year to a tax year. These accounts document the accounting period from January 2023 to March 2024.

Principal activity and business review
 
The past 15 months have been stable from a delivery perspective. The company predominantly provides consulting services to central government with approximately 90% of the overall turnover coming from these activities.
During the accounting period to March 2024, there was minimal disturbance in terms of contracts coming to an end. This has paved the way for a stable accounting period and a steady increase in billable revenue due to current projects continuing and a few new ones starting.
During this period we have continued to look at our Gross Margin. This has been increased by bringing in more permanent staff and having less of a dependency on more expensive contract resource. Our average gross margin has increased from 19.2% in December 2022 to 29.2% in March 2024. A significant increase. We anticipate this will continue to increase with the addition of more permanent staff in the future.
Due to the nature of our work, we are able to utilise the Government R&D scheme.
We are currently working hard on building our partnerships with large Service integrators so that we can grow our business in partnership with them as part of their government ecosystem. 20-30% of most large government contracts has to flow down from the Prime supplier to its ecosystem so we feel it is a good strategy to grow our business as a trusted partner.
We are also hoping to grow our business into Government by getting on to more frameworks. We are currently bidding on various Lots of the new Digital and Legacy Application Services framework and hoping to be successful in at least 2 lots out of the 5 lot framework. This Framework is being spearheaded by HMRC and Crown Commercial Services but is a cross government framework.

Future developments
As Mercator aims to evolve from an SME to a leading player in the industry, IT and technology will be pivotal in supporting our strategic growth. Our strategy is designed to ensure that technology is a key enabler of our business objectives, fully aligned with our mission to establish Mercator as a trusted and respected partner in the technology consultancy sector. This strategy outlines how IT and technology will drive our company’s objectives, emphasising the role of innovation in ensuring seamless integration between our business goals and technological advancements. The New strategy will focus on 5 key areas to move the business into its next phase of growth.
 
Our Key Strategic Objectives: 

Expand and Diversify Our Market 
Enhance Our Visibility and Brand Recognition 
Deepen Our Client and Partner Engagement 
Enhance Our Domain Expertise, Certification, and Accreditation 
Our People: Building a Brighter Future Together

Page 1

 


MERCATOR IT SOLUTIONS LIMITED
 



GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024

Principal risks and uncertainties
 
As we head into the new financial year, the key risks to the business is the current length remaining on some of our current contracts and also the fact that a General Election was called during this financial year in July 2024.
Contract risk
Our largest current contract which is held with Atos is currently due to be disaggregated across 5 new suppliers over the course of the next year. This is a risk but equally provides us with an opportunity to grow by following our partner strategy that was mentioned in the above section in this report.
A risk as we go through transition is that our amount of current workshare on each project gets diluted by the new prime supplier who ultimately owns the delivery of each project into government.
There is a risk that our current biggest client Atos is potentially heading for financial issues as they restructured a large debt in December 2024. This could potentially have an impact on cashflow during the next financial year.
Employee risk
We have worked very hard to grow and scale our culture with a large influx of permanent staff. As we go through a contract transition, there will be a risk that we may lose some of our staff if we don’t have projects for them to work on.
Political risk
A new government will always present a risk as it will bring change. At the same time it will also present opportunities. We will have to make sure that we are prepared and agile in our approach to help where we can.

Financial key performance indicators
 
Key performance indicators are used to measure the company's performance. The director considers the key measures of the company's performance to be revenue and gross profit margin, as outlined below:


2024
2022
Revenue
£48,182,543
£34,181,844
Gross profit margin
29.2%
19.2%



This report was approved by the board and signed on its behalf.



M G Churchouse
Director

Date: 15 May 2025

Page 2

 


MERCATOR IT SOLUTIONS LIMITED
 


 
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 MARCH 2024

The directors present their report and the financial statements for the period ended 31 March 2024.

Directors' responsibilities statement

The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the group's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The profit for the period, after taxation, amounted to £3,503,983 (2022 - £1,498,805).

Dividends of £1,422,222 (2022: £391,667) were paid during the financial period.

Directors

The directors who served during the period were:

M G Churchouse 
M F Clemens 

Matters covered in the Strategic report

The company has chosen in accordance with Section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out within the group's strategic report information required by schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008. This includes information that would have been included in the business review, principal risks and uncertainties and future developments.

Disclosure of information to auditor

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the company and the group's auditor is unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company and the group's auditor is aware of that information.

Page 3

 


MERCATOR IT SOLUTIONS LIMITED
 


 
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2024

Post balance sheet events

There have been no significant events affecting the group since the year end.

Auditor

The auditor, Menzies LLP, have been appointed on 19 February 2025. Under section 487(2) of the Companies Act 2006Menzies LLP will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

This report was approved by the board and signed on its behalf.
 





M G Churchouse
Director

Date: 15 May 2025

Page 4

 


MERCATOR IT SOLUTIONS LIMITED
 

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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCATOR IT SOLUTIONS LIMITED

Opinion


We have audited the financial statements of Mercator IT Solutions Limited (the 'parent company') and its subsidiary (the 'group') for the period ended 31 March 2024, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes, including a summary of significant accounting policiesThe 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).


In our opinion the financial statements:


give a true and fair view of the state of the group's and of the parent company's affairs as at 31 March 2024 and of the group's profit for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


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 in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 or the 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 ReportOur 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.


Page 5

 


MERCATOR IT SOLUTIONS LIMITED


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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCATOR IT SOLUTIONS LIMITED (CONTINUED)

Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Group Strategic Report and the Directors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Other matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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.


Other matters
The corresponding figures for the prior year have not been audited as the company was exempt from audit in the prior year. 


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement set out on page 3, 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 group's and 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.


Page 6

 


MERCATOR IT SOLUTIONS LIMITED


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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCATOR IT SOLUTIONS LIMITED (CONTINUED)

Auditor's responsibilities for the audit of the financial statements
 

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 Group 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:

The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most significant including UK Companies Act, employment law and tax legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

We understood how the Company is complying with those legal and regulatory frameworks by making inquiries to management and those responsible for legal and compliance procedures.

The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any issues in this area.

We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:

°Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;

°Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process; and

°Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.

As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:

°Posting of unusual journals and complex transactions;
°Risk of incorrect classification of subcontractors; and
°Risk of incorrect revenue recognition.

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 for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.


Page 7

 


MERCATOR IT SOLUTIONS LIMITED


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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCATOR IT SOLUTIONS LIMITED (CONTINUED)

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 2006Our 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.





Hezelina Hashim FCCA (Senior statutory auditor)
  
for and on behalf of
Menzies LLP
 
Chartered Accountants
Statutory Auditor
  
Magna House
18-32 London Road
Staines-Upon-Thames
TW18 4BP

15 May 2025
Page 8

 


MERCATOR IT SOLUTIONS LIMITED
 


 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 MARCH 2024

15 months ended
31 March 2024
Unaudited Year ended 31 December 2022
Note
£
£

  

Turnover
 4 
48,182,543
34,181,844

Cost of sales
  
(34,116,326)
(27,625,868)

Gross profit
  
14,066,217
6,555,976

Administrative expenses
  
(9,719,785)
(5,329,537)

Other operating income
 5 
619,156
477,894

Operating profit
 6 
4,965,588
1,704,333

Interest receivable and similar income
  
3,359
415

Profit before taxation
  
4,968,947
1,704,748

Tax on profit
 10 
(1,464,964)
(205,943)

Profit for the financial period
  
3,503,983
1,498,805

  

Total comprehensive income for the period
  
3,503,983
1,498,805

Profit for the period attributable to:
  

Owners of the parent company
  
3,503,983
1,498,805

  
3,503,983
1,498,805

Total comprehensive income for the period attributable to:
  

Owners of the parent company
  
3,503,983
1,498,805

  
3,503,983
1,498,805

The notes on pages 16 to 29 form part of these financial statements.

Page 9

 


MERCATOR IT SOLUTIONS LIMITED
REGISTERED NUMBER:05755983



CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2024

31 March
Unaudited
31 December
2024
2022
Note
£
£

Fixed assets
  

Intangible assets
 11 
7,667
-

Tangible assets
 12 
85,778
92,388

  
93,445
92,388

Current assets
  

Debtors: amounts falling due within one year
 14 
11,344,323
8,530,846

Cash at bank and in hand
 15 
560,487
567,645

  
11,904,810
9,098,491

Creditors: amounts falling due within one year
  
(7,679,653)
(6,954,038)

Net current assets
  
 
 
4,225,157
 
 
2,144,453

Total assets less current liabilities
  
4,318,602
2,236,841

  

Net assets
  
4,318,602
2,236,841


Capital and reserves
  

Called up share capital 
  
202
202

Capital redemption reserve
  
2
2

Profit and loss account
  
4,318,398
2,236,637

  
4,318,602
2,236,841


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




M G Churchouse
Director

Date: 15 May 2025

The notes on pages 16 to 29 form part of these financial statements.

Page 10

 


MERCATOR IT SOLUTIONS LIMITED
REGISTERED NUMBER:05755983



COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2024

31 March
Unaudited
31 December
2024
2022
Note
£
£

Fixed assets
  

Intangible assets
 11 
7,667
-

Tangible assets
 12 
85,778
92,388

Investments
 13 
1,805
1,805

  
95,250
94,193

Current assets
  

Debtors: amounts falling due within one year
 14 
11,318,981
8,554,870

Cash at bank and in hand
 15 
460,696
485,976

  
11,779,677
9,040,846

Creditors: amounts falling due within one year
 16 
(7,630,341)
(6,930,261)

Net current assets
  
 
 
4,149,336
 
 
2,110,585

Total assets less current liabilities
  
4,244,586
2,204,778

  

  

Net assets
  
4,244,586
2,204,778


Capital and reserves
  

Called up share capital 
 17 
202
202

Capital redemption reserve
 18 
2
2

Profit and loss account
 18 
4,244,382
2,204,574

  
4,244,586
2,204,778


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 


M G Churchouse
Director

Date: 15 May 2025

The notes on pages 16 to 29 form part of these financial statements.

Page 11

 


MERCATOR IT SOLUTIONS LIMITED
 



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2024


Called up share capital
Capital redemption reserve
Profit and loss account
Total equity

£
£
£
£


At 1 January 2022
202
-
1,129,499
1,129,701


Comprehensive income for the year

Profit for the year
-
-
1,498,805
1,498,805
Total comprehensive income for the year
-
-
1,498,805
1,498,805


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(391,667)
(391,667)

Purchase of own shares
-
2
-
2


Total transactions with owners
-
2
(391,667)
(391,665)



At 1 January 2023
202
2
2,236,637
2,236,841


Comprehensive income for the period

Profit for the period
-
-
3,503,983
3,503,983
Total comprehensive income for the period
-
-
3,503,983
3,503,983


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(1,422,222)
(1,422,222)


Total transactions with owners
-
-
(1,422,222)
(1,422,222)


At 31 March 2024
202
2
4,318,398
4,318,602


The notes on pages 16 to 29 form part of these financial statements.

Page 12

 


MERCATOR IT SOLUTIONS LIMITED
 



COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2024


Called up share capital
Capital redemption reserve
Profit and loss account
Total equity

£
£
£
£


At 1 January 2022
202
-
1,130,142
1,130,344


Comprehensive income for the year

Profit for the year
-
-
1,466,099
1,466,099
Total comprehensive income for the year
-
-
1,466,099
1,466,099


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(391,667)
(391,667)

Purchase of own shares
-
2
-
2


Total transactions with owners
-
2
(391,667)
(391,665)



At 1 January 2023
202
2
2,204,574
2,204,778


Comprehensive income for the year

Profit for the period
-
-
3,462,030
3,462,030
Total comprehensive income for the period
-
-
3,462,030
3,462,030


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(1,422,222)
(1,422,222)


Total transactions with owners
-
-
(1,422,222)
(1,422,222)


At 31 March 2024
202
2
4,244,382
4,244,586


The notes on pages 16 to 29 form part of these financial statements.

Page 13

 


MERCATOR IT SOLUTIONS LIMITED
 



CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 MARCH 2024

15 months
ended
31 March
Year ended
31 December
2024
2022
£
£

Cash flows from operating activities

Profit for the financial period
3,503,983
1,498,805

Adjustments for:

Amortisation of intangible assets
852
-

Depreciation of tangible assets
29,866
22,246

Loss on disposal of tangible assets
6,327
-

R&D tax recoverable
(619,156)
(477,894)

Interest received
3,359
415

Taxation charge
1,464,964
205,943

Increase in debtors
(2,500,685)
(5,288,255)

Increase in creditors
10,176
1,504,748

Corporation tax paid
(249,400)
(100,283)

Net cash generated from/(used in) operating activities

1,650,286
(2,634,275)


Cash flows from investing activities

Purchase of intangible fixed assets
(8,519)
-

Purchase of tangible fixed assets
(46,783)
(75,015)

Sale of tangible fixed assets
17,200
-

Interest received
(3,359)
(415)

Net cash used in investing activities

(41,461)
(75,430)

Cash flows from financing activities

Movement in bank financing arrangements
(193,761)
2,928,681

Dividends paid
(1,422,222)
(391,667)

Net cash used in financing activities
(1,615,983)
2,537,014

Net decrease in cash and cash equivalents
(7,158)
(172,691)

Cash and cash equivalents at beginning of period
567,645
740,336

Cash and cash equivalents at the end of period
560,487
567,645


Cash and cash equivalents at the end of period comprise:

Cash at bank and in hand
560,487
567,645

560,487
567,645


The notes on pages 16 to 29 form part of these financial statements.

Page 14

 


MERCATOR IT SOLUTIONS LIMITED
 



CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE PERIOD ENDED 31 MARCH 2024




At 1 January 2023
Cash flows
At 31 March 2024
£

£

£

Cash at bank and in hand

567,645

(7,158)

560,487

Bank financing arrangements

(2,959,276)

193,761

(2,765,515)


(2,391,631)
186,603
(2,205,028)

The notes on pages 16 to 29 form part of these financial statements.

Page 15

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

1.


General information

Mercator IT Solutions Limited is a private company, limited by shares, incorporated in England and Wales. The registered number and address of the registered office is given in the company information page of these financial statements. 
The current period has been extended to the 15 months ended 31 March 2024. This is because the LP and LLP companies in the group changed their year end to be in line with the tax year following the basis period reform. For ease of reporting, the remaining group companies also extended their year end to the same date. The comparative period covers 12 months and therefore is not comparable with the current 15 month period.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires group management to exercise judgment in applying the group's accounting policies (see note 3).

The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.

The following principal accounting policies have been applied:

 
2.2

Basis of consolidation

The consolidated financial statements present the results of the company and its own subsidiaries ("the group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.

Page 16

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

2.Accounting policies (continued)

 
2.3

Foreign currency translation

Functional and presentation currency

The company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

 
2.4

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. Revenue is generated via the provision of IT consultancy and is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. Revenue is recognised based on the time spent by permanent staff or subcontractors on projects, and when this time was carried out. To ensure revenue is recognised in the correct period, timesheets will be completed and these are reviewed by the customer before they are subsequently billed to the customer.

 
2.5

Operating leases: the group as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.6

Research and development

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. The group specialises in the development of state-of-the-art software solutions across a wide variety of industries. The group employs the skills and experiences of numerous technical experts with years' experience in the field of software who are qualified to undertake research and development activities. The group provide results-focused and agile solutions, enabled by the investment in the research and development team to ensure they have the in-house expertise in a vast array of state-of -the-art technologies. The group is entitled to claim a research and development tax relief under the RDEC scheme.

Page 17

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

2.Accounting policies (continued)

 
2.7

Pensions

Defined contribution pension plan

The group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Once the contributions have been paid the group has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the group in independently administered funds.

 
2.8

Taxation

Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company and the group operate and generate income.

 
2.9

Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

The directors deem 10 years to be an accurate representation of the useful life of intangible assets.

 
2.10

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.

Depreciation is provided on the following basis:

Motor vehicles
-
25%
Reducing balance basis
Office equipment
-
25%
Reducing balance basis

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

Page 18

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

2.Accounting policies (continued)

 
2.11

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.12

Financial instruments

The group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

 
2.13

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Key sources of estimation uncertainty
Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:
Management reviews the useful lives, depreciation methods, and residual values of the tangible fixed assets on a regular basis. During the financial period, the directors determined no significant changes in the useful lives and residual values. The carrying amounts of tangible fixed assets are disclosed in note 12.

Page 19

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

4.


Turnover

An analysis of turnover by class of business is as follows:


2024
2022
£
£

IT Consultancy
48,182,543
34,181,844

48,182,543
34,181,844


Analysis of turnover by country of destination:

2024
2022
£
£

United Kingdom
47,748,334
33,805,041

France
434,209
376,803

48,182,543
34,181,844



5.


Other operating income

2024
2022
£
£

R&D tax recoverable
619,156
477,894

619,156
477,894



6.


Operating profit

The operating profit is stated after charging/(crediting):

2024
2022
£
£

Research & development charged as an expense
174,719
91,092

Exchange differences
8,858
(15,526)

Depreciation and amortisation on fixed assets
30,718
22,247

Loss on sale of fixed assets
6,327
-

Bad debts
130,266
-

Operating lease rentals
165,319
143,985

Page 20

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

7.


Auditor's remuneration

During the period, the group obtained the following services from the company's auditor:


2024
2022
£
£

Fees payable to the company's auditor for the audit of the consolidated and parent company's financial statements
35,000
-

Fees payable to the Company's auditors and its associates in respect of:

Taxation compliance services
4,990
-

All non-audit services not included above
19,785
2,725


8.


Employees

Staff costs, including directors' remuneration, were as follows:


Group
31 March
Group
31 December
Company
31 March
Company
31 December
2024
2022
2024
2022
£
£
£
£

Wages and salaries
6,026,958
3,484,212
6,026,958
3,484,212

Social security costs
717,645
158,752
717,645
158,752

Cost of defined contribution scheme
370,996
20,903
370,996
20,903

7,115,599
3,663,867
7,115,599
3,663,867


The average monthly number of employees, including the directors, during the period was as follows:


        2024
        2022
            No.
            No.







Internal consultants
47
33



Administration
29
26

76
59


9.


Directors' remuneration

2024
2022
£
£

Directors' emoluments
76,023
17,576

Group contributions to defined contribution pension schemes
151,285
-

227,308
17,576


During the period retirement benefits were accruing to 2 directors (2022 - 2) in respect of defined contribution pension schemes.

Page 21

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

10.


Taxation


2024
2022
£
£

Corporation tax


Current tax on profits for the year
1,403,732
294,802

Adjustments in respect of previous periods
61,232
(88,859)


1,464,964
205,943


Total current tax
1,464,964
205,943


1,464,964
205,943

Factors affecting tax charge for the period/year

The tax assessed for the period/year is lower than (2022 - higher than) the standard rate of corporation tax in the UK of 23.8% (2022 - 19%). The differences are explained below:

2024
2022
£
£


Profit on ordinary activities before tax
4,968,947
1,704,333


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.8% (2022 - 19%)
1,182,609
323,823

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
47,082
59,080

Capital allowances for period/year in excess of depreciation
(112)
(7,923)

Adjustments to tax charge in respect of prior periods
61,232
(88,859)

Adjustment in research and development tax credit leading to an increase (decrease) in the tax charge
154,789
(90,800)

Foreign tax on subsidiaries
12,665
10,622

Deferred tax movement not recognised
6,699
-

Total tax charge for the period/year
1,464,964
205,943

Page 22

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

11.


Intangible assets

Group







Trademarks

£



Cost


Additions
8,519



At 31 March 2024

8,519



Amortisation


Charge for the period on owned assets
852



At 31 March 2024

852



Net book value



At 31 March 2024
7,667



At 31 December 2022
-



Company






Trademarks

£



Cost


Additions
8,519



At 31 March 2024

8,519



Amortisation


Charge for the year
852



At 31 March 2024

852



Net book value



At 31 March 2024
7,667



At 31 December 2022
-

Page 23

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

12.


Tangible fixed assets

Group








Motor vehicles
Office equipment
Total

£
£
£



Cost or valuation


At 1 January 2023
29,974
136,066
166,040


Additions
-
46,783
46,783


Disposals
(29,974)
-
(29,974)



At 31 March 2024

-
182,849
182,849



Depreciation


At 1 January 2023
4,912
68,740
73,652


Charge for the period on owned assets
1,535
28,331
29,866


Disposals
(6,447)
-
(6,447)



At 31 March 2024

-
97,071
97,071



Net book value



At 31 March 2024
-
85,778
85,778



At 31 December 2022
25,062
67,326
92,388

Page 24

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

           12.Tangible fixed assets (continued)


Company









Motor vehicles
Office equipment
Total

£
£
£

Cost or valuation


At 1 January 2023
29,974
136,066
166,040


Additions
-
46,783
46,783


Disposals
(29,974)
-
(29,974)



At 31 March 2024

-
182,849
182,849



Depreciation


At 1 January 2023
4,912
68,740
73,652


Charge for the period on owned assets
1,535
28,331
29,866


Disposals
(6,447)
-
(6,447)



At 31 March 2024

-
97,071
97,071



Net book value



At 31 March 2024
-
85,778
85,778



At 31 December 2022
25,062
67,326
92,388






Page 25

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

13.


Fixed asset investments

Company








Investments in subsidiary companies

£



Cost or valuation


At 1 January 2023
1,805



At 31 March 2024
1,805





Subsidiary undertaking


The following was a subsidiary undertaking of the company:

Name

Registered office

Class of shares

Holding

Mercator IT Solutions SAS
36, Rue du Louvre, 75001, Paris, France
Ordinary
100%

The principal activity of Mercator IT Solutions SAS is the provision of consulting services, operating in France.
Mercator IT Solutions SAS has been consolidated within these financial statements.





14.


Debtors

Group
31 March
Group
31 December
Company
31 March
Company
31 December
2024
2022
2024
2022
£
£
£
£


Trade debtors
4,729,533
3,700,531
4,710,944
3,675,675

Amounts owed by associated companies
2,245,211
1,024,693
2,245,211
1,024,693

Other debtors
267,570
408,902
277,871
457,782

Prepayments and accrued income
2,991,525
2,599,028
2,974,471
2,599,028

Tax recoverable
1,110,484
797,692
1,110,484
797,692

11,344,323
8,530,846
11,318,981
8,554,870


Page 26

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

15.


Cash and cash equivalents

Group
31 March
Group
31 December
Company
31 March
Company
31 December
2024
2022
2024
2022
£
£
£
£

Cash at bank and in hand
560,487
567,645
460,696
485,976

560,487
567,645
460,696
485,976



16.


Creditors: Amounts falling due within one year

Group
31 March
Group
31 December
Company
31 March
Company
31 December
2024
2022
2024
2022
£
£
£
£

Bank financing arrangements
2,765,515
2,959,276
2,765,515
2,959,276

Trade creditors
393,686
240,379
378,966
236,289

Amounts owed to associated companies
225,527
315,762
225,527
315,762

Corporation tax
1,265,622
356,422
1,265,370
345,800

Other taxation and social security
709,649
351,985
701,673
344,386

Other creditors
80,803
99,183
80,803
99,183

Accruals and deferred income
2,238,851
2,631,031
2,212,487
2,629,565

7,679,653
6,954,038
7,630,341
6,930,261


Secured Creditors
Included within Bank financing arrangements are amounts of £2,765,515 (2022: £2,959,276) in relation to an invoice financing arrangement with RBS Invoice Finance Limited for which it has a fixed and floating charge over the assets of the company.


17.


Share capital

31 March
31 December
2024
2022
£
£
Allotted, called up and fully paid



200 (2022 - 200) Ordinary shares of £1.00 each
200
200
2 (2022 - 2) Ordinary A shares of £1.00 each
2
2

202

202

Ordinary shares are voting shares, with rights to dividends and distributions. Ordinary A shares are non voting shares, with rights to dividends and distributions.


Page 27

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

18.


Reserves

Profit and loss account

The profit and loss reserve records retained earnings and accumulated profits attributable to the shareholders of the Group.


19.


Commitments under operating leases

At 31 March 2024 the group and the company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:


Group
31 March
Group
31 December
Company
31 March
Company
31 December
2024
2022
2024
2022
£
£
£
£

Not later than 1 year
260,010
22,667
260,010
22,667

Later than 1 year and not later than 5 years
626,035
-
626,035
-

886,045
22,667
886,045
22,667


20.


Transactions with directors

Included within other debtors are the following advances and credits between the group and directors in the period. The overdrawn balances are subject to s455 tax which has been paid.  

31 March
31 December
2024
2022
£
£
M Churchouse
Balance outstanding at start of year

51,205

51,205
 
Amounts advanced

-

-
 
Amounts repaid

-

-
 
Balance outstanding at end of year
51,205

51,205
 

31 March
31 December
2024
2022
£
£
M Clemens
Balance outstanding at start of year

61,482

61,482
 
Amounts advanced

-

-
 
Amounts repaid

(8,000)

-
 
Balance outstanding at end of year
53,482

61,482
 

Page 28

 


MERCATOR IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2024

21.


Related party transactions

During the period, the group entered into transactions with companies partly or wholly owned by shareholders who hold a majority interest in the group. At the period end, the group were owed £2,241,019 (2022: £1,024,693) by related parties. This amount is included within debtors and is repayable on demand. At the period end, the group owed £355,793 (2022: £315,762) to related parties. This amount is included within creditors and is repayable on demand. During the period, the group provided for bad debt expenses of £130,266 (2022: £nil) in relation to debts owed by related parties.


22.


Controlling party

The ultimate controlling parties are considered to be M Churchouse and M Clemens.

 
Page 29