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Company registration number: 03757454







ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2024


CIRCLE IT SOLUTIONS LIMITED






































img7565.png                        

 


CIRCLE IT SOLUTIONS LIMITED
 


 
COMPANY INFORMATION


Directors
R E Burke 
R V Harry 
H E Long (appointed 11 April 2024)




Registered number
03757454



Registered office
Kilby House
Lower Eashing

Liverpool Innovation Park

Liverpool

L7 9NJ




Trading Address
Brook House 2 Lime Tree Court
Mulberry Drive

Pontprennau

Cardiff

CF23 8AB






Independent auditor
Menzies LLP
Chartered Accountants & Statutory Auditor

4th Floor

95 Gresham Street

London

EC2V 7AB





 


CIRCLE IT SOLUTIONS LIMITED
 



CONTENTS



Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of income and retained earnings
9
Statement of financial position
10
Notes to the financial statements
11 - 22


 


CIRCLE IT SOLUTIONS LIMITED
 


 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024

Business review
 
ARO Group has solidified its position as a market-leading Cloud Services provider in 2024, navigating a challenging macroeconomic environment with resilience and strategic focus. The Group prioritised operational excellence, achieving significant improvements in key performance indicators (KPIs), notably in recurring revenue and gross profit margins. 
The principal activity of Circle IT remains to provide managed IT services that enable our clients to use technology to achieve secure business transformation and to receive professional ongoing support and advice. 
Despite a cautious market, with several large customers deferring planned capital expenditure, Circle IT delivered an exceptional performance demonstrating Circle IT’s ability to adapt and thrive amid external pressures.
Adjusted EBITDA, a core financial metric was resilient at £4.0 million (2023: £5.3m) following delays in non-recurring projects, particularly in the public sector. Normalised operating cash conversion for the Group reached an impressive 96%, reinforcing ARO’s financial discipline and operational efficiency.
In summary, 2024 was a year of strategic progress for Circle IT and the ARO Group, marked by robust KPI achievements, enhanced operational integration, and a strengthened foundation for future growth. The Company remains well-positioned to capitalise on emerging opportunities in the Cloud Services market.

Going concern

The business is well funded and resourced to continue its growth strategy. The Directors have reviewed detailed business forecasts and scenarios, including for cash flow and group borrowing facility headroom for the forthcoming years, as well as the need to refinance existing borrowings prior to the respective dates of maturity.  The Directors have concluded there are no material going concern risks.

Subsequent events

There are no significant events affecting the Company since the year end.

Principal risks and uncertainties
 
The management of the business and the execution of the Group’s strategy are subject to several risks. The process of risk acceptance and risk management is addressed through a framework of policies, procedures and internal control. Compliance with regulation, legal and ethical standards is a high priority for the Group. The CFO and the finance team take an important oversight role in this regard.
The key business risks and uncertainties affecting the Group are considered to relate to macro-economic conditions, risk of non-payment by customers, integration of acquired businesses, and Ofcom regulation changes. These are managed by strong credit control and vetting procedures, a robust commercial approval process for new contracts and re-signs, and a portfolio approach to our product set. All underpinned by the stability provided by long term customer contracts.

Key performance indicators
 
The results of the Company show sales of £24.9m, a 12% decrease on 2023. This was primarily as a result of delayed non-recurring project spend, particularly in the public sector which is expected to be delivered in H1 2025. The company achieved EBITDA of £4.0m.

Page 1

 


CIRCLE IT SOLUTIONS LIMITED
 



STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024

Financial instruments
 
The principal financial instruments of the Company comprise of bank balances, trade debtors and trade creditors.
Working capital requirements are met principally out of trade debtors and trade creditors which arise directly from the Company’s normal operations. The Company’s finance facilities are held in sterling and the Company does not enter any hedging arrangements.
Trade debtors are managed in respect of credit and there is a policy to minimise any risk by assessing new customers' credit risk and monitoring existing customers' creditworthiness. At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.
Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due. Cash flow is closely monitored as part of day to day control procedures and the Directors review cash flow projections on a weekly basis and ensure appropriate facilities are available to be drawn upon, as necessary.


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



R E Burke
Director

Date: 15 May 2025

Page 2

 


CIRCLE IT SOLUTIONS LIMITED
 


 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024

The Directors present their report and the financial statements for the year ended 31 December 2024.

Directors' responsibilities statement

The Directors are responsible for preparing the Strategic report, the Directors' report and the 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 of the profit or loss of the Company for that period.

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


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

make judgements and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The profit for the year, after taxation, amounted to £3,504,776 (2023 - £5,238,826).

The directors have not recommended payment of dividends for the period.

Directors

The Directors who served during the year were:

R E Burke 
R V Harry 
A C Ashton (resigned 22 January 2024)
H E Long (appointed 11 April 2024)

Matters covered in the Strategic report

The Company has chosen in accordance with Section 414C(II) of the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 to set out within the Company’s Strategic Report, the 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 Directors' Report, such as the business review, details of the principal risks and uncertainties and subsequent events.

Page 3

 


CIRCLE IT SOLUTIONS LIMITED
 


 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024

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'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's auditor is aware of that information.

Auditor

The auditor, Menzies LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

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





H E Long
Director

Date: 15 May 2025

Page 4

 


CIRCLE IT SOLUTIONS LIMITED
 

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

Opinion


We have audited the financial statements of Circle IT Solutions Limited (the 'Company') for the year ended 31 December 2024, which comprise the Statement of income and retained earnings, the Statement of financial position 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 Company's affairs as at 31 December 2024 and of its profit for the year 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 Company 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 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

 


CIRCLE IT SOLUTIONS LIMITED


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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CIRCLE 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 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.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its 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, or returns adequate for our audit have not been received from branches not visited by us; or
the 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.


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 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 Company or to cease operations, or have no realistic alternative but to do so.


Page 6

 


CIRCLE IT SOLUTIONS LIMITED


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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CIRCLE 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 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: 

The Companies Act 2006;
Financial Reporting Standard 102;
UK employment legislation; and,
UK 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, 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 financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:

Identifying and assessing the measures 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; 
Challenging assumptions and judgments made by management in its significant accounting estimates; 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:

The use of management override of controls to manipulate results, or to cause the Company to enter into transactions not in its best interests; or
Posting of unusual journals and complex transactions.


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

 


CIRCLE IT SOLUTIONS LIMITED


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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CIRCLE 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.





Robin Hopkins FCA (Senior statutory auditor)
  
for and on behalf of
Menzies LLP
 
Chartered Accountants
Statutory Auditor
  
4th Floor
95 Gresham Street
London
EC2V 7AB

15 May 2025
Page 8

 


CIRCLE IT SOLUTIONS LIMITED
 


 
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2024

2024
2023
Note
£
£

  

Turnover
 4 
24,891,960
28,378,367

Cost of sales
  
(14,698,904)
(16,579,138)

Gross profit
  
10,193,056
11,799,229

Administrative expenses
  
(6,238,605)
(6,523,335)

Other operating income
 5 
-
2,407

Operating profit
 6 
3,954,451
5,278,301

Amounts written off investments
  
(462,360)
-

Interest receivable and similar income
 9 
5
32

Profit before tax
  
3,492,096
5,278,333

Tax on profit
 10 
12,680
(39,507)

Profit after tax
  
3,504,776
5,238,826

  

  

Retained earnings at the beginning of the year
  
13,968,351
8,729,525

  
13,968,351
8,729,525

Profit for the year
  
3,504,776
5,238,826

Retained earnings at the end of the year
  
17,473,127
13,968,351
The notes on pages 11 to 22 form part of these financial statements.

Page 9

 


CIRCLE IT SOLUTIONS LIMITED
REGISTERED NUMBER:03757454



STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024

2024
2023
Note
£
£

Fixed assets
  

Intangible assets
 11 
87,626
118,815

Tangible assets
 12 
50,384
64,460

Investments
 13 
1,925,566
2,387,926

  
2,063,576
2,571,201

Current assets
  

Stocks
 14 
51,646
50,999

Debtors: amounts falling due within one year
 15 
19,331,905
15,980,725

Cash at bank and in hand
 16 
1,137,068
1,541,033

  
20,520,619
17,572,757

Creditors: amounts falling due within one year
 17 
(4,747,974)
(5,799,833)

Net current assets
  
 
 
15,772,645
 
 
11,772,924

Total assets less current liabilities
  
17,836,221
14,344,125

Provisions for liabilities
  

Deferred tax
 18 
(29,523)
(42,203)

  
 
 
(29,523)
 
 
(42,203)

Net assets
  
17,806,698
14,301,922


Capital and reserves
  

Called up share capital 
 19 
412
412

Share premium account
 20 
333,109
333,109

Capital redemption reserve
 20 
50
50

Profit and loss account
 20 
17,473,127
13,968,351

  
17,806,698
14,301,922


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




H E Long
Director

Date: 15 May 2025

The notes on pages 11 to 22 form part of these financial statements.

Page 10

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

1.


General information

Circle IT Solutions Limited is a private company limited by shares, incorporated in England & Wales under the Companies Act 2006. The registered office and trading address are given on the Company Information page.

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 management to exercise judgement in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Arrow Communications Holdings Limited as at 31 December 2024 and these financial statements may be obtained from Companies House.

 
2.3

Exemption from preparing consolidated financial statements

The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.

 
2.4

Going concern

The group is cash generative on an operating basis and the detailed forecasts prepared by the directors indicate that it is expected to remain so for the foreseeable future. The directors keep loan maturity and repayment dates of loans within the group under continuing review and take steps in good time to ensure sufficient opportunity for refinancing before these milestones. As such the directors consider it appropriate that the financial statements are prepared on the going concern basis.

Page 11

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

2.Accounting policies (continued)

 
2.5

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. 
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have transferred to the buyer, usually on despatch of the goods, the amount of revenue can be measured reliably, it is probable that the associated economic benefits will flow to the entity, and the costs incurred or to be incurred in respect of the transactions can be measured reliably. Revenue from the provision of customer support is recognised on a straight line basis over the contract duration.

 
2.6

Operating leases: the Company 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.

 
2.7

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.8

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company 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 Company in independently administered funds.

Page 12

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

2.Accounting policies (continued)

 
2.9

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. 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 operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.


 
2.10

Intangible assets

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Statement of income and retained earnings over its useful economic life.

Other 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 estimated useful lives range as follows:

Goodwill
-
10
years straight line
Computer software
-
3
years straight line

 
2.11

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.

Page 13

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

2.Accounting policies (continued)


2.11
Tangible fixed assets (continued)

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Short-term leasehold property
-
33%
Fixtures and fittings
-
33%
Computer equipment
-
20% to 33%

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.

 
2.12

Impairment of fixed assets and goodwill

Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each reporting date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.

 
2.13

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.14

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.15

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Company's Statement of financial position when the Company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with 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.

Page 14

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of the accounts in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the accounts and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The key estimates and assumptions used in these accounts are set out below.
Accrued income
Amounts recoverable on contact are measured by reference to stage of completion which is calculated by multiplying total contract revenue by a factor of costs incurred at the reporting date over total estimated costs. This requires management to estimate costs on a job by job basis. 


4.


Turnover

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


2024
2023
£
£

Collaboration
556,780
510,125

Connectivity
24,335,180
27,868,242

24,891,960
28,378,367


All turnover arose within the United Kingdom.


5.


Other operating income

2024
2023
£
£

Other operating income
-
2,407

-
2,407



6.


Operating profit

The operating profit is stated after charging:

2024
2023
£
£

Other operating lease rentals
48,912
48,912

Page 15

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

7.


Auditors' remuneration

2024
2023
£
£
Fees payable to the Company's auditors for the audit of the Company's financial statements

26,500

18,500
 


8.


Employees

Staff costs were as follows:


2024
2023
£
£

Wages and salaries
-
4,806,680

Social security costs
-
574,348

Cost of defined contribution scheme
-
200,140

-
5,581,168


The average monthly number of employees, including the Directors, during the year was as follows:


        2024
        2023
            No.
            No.







Operations & Direct billable
-
66



Sales / pre-sales
-
20



Central / Other
-
8

0
94

Throughout the current year, all employees were contracted with another group company and therefore no employees are disclosed within this Company. The costs of the employees are recharged to this Company via a management fee.


9.


Interest receivable

2024
2023
£
£


Other interest receivable
5
32

5
32

Page 16

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

10.


Taxation


2024
2023
£
£

Corporation tax


Adjustments in respect of previous periods
-
(30,861)


-
(30,861)


Total current tax
-
(30,861)

Deferred tax


Origination and reversal of timing differences
(12,680)
70,368

Total deferred tax
(12,680)
70,368


Tax on profit
(12,680)
39,507

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2023 - higher than) the standard rate of corporation tax in the UK of 25% (2023 - 23.5%). The differences are explained below:

2024
2023
£
£


Profit on ordinary activities before tax
3,492,096
5,278,333


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 23.5%)
873,024
1,240,408

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
11,180
47,885

Capital allowances for year in excess of depreciation
(1,866)
38,745

Write off in value of investment in subsidiaries
115,590
-

Adjustments to tax charge in respect of prior periods
-
(30,861)

Group relief of tax losses
(1,010,608)
(1,256,670)

Total tax charge for the year
(12,680)
39,507


Factors that may affect future tax charges

There were no factors that may affect future tax charges.

Page 17

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

11.


Intangible assets




Goodwill

£



Cost


At 1 January 2024
358,272



At 31 December 2024

358,272



Amortisation


At 1 January 2024
239,457


Charge for the year on owned assets
31,189



At 31 December 2024

270,646



Net book value



At 31 December 2024
87,626



At 31 December 2023
118,815



Page 18

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

12.


Tangible fixed assets





Short-term leasehold property
Fixtures and fittings
Computer equipment
Total

£
£
£
£



Cost or valuation


At 1 January 2024
246,719
475,623
105,311
827,653


Additions
-
34,877
-
34,877



At 31 December 2024

246,719
510,500
105,311
862,530



Depreciation


At 1 January 2024
243,480
416,204
103,509
763,193


Charge for the year on owned assets
3,239
44,426
1,288
48,953



At 31 December 2024

246,719
460,630
104,797
812,146



Net book value



At 31 December 2024
-
49,870
514
50,384



At 31 December 2023
3,239
59,419
1,802
64,460


13.


Fixed asset investments





Investments in subsidiary companies

£



Cost or valuation


At 1 January 2024
2,387,926


Amounts written off
(462,360)



At 31 December 2024
1,925,566





Subsidiary undertaking


The following was a subsidiary undertaking of the Company:

Name

Registered office

Class of shares

Holding

Fabric IT Ltd
Kilby House, Liverpool Innovation Park, Liverpool, England, L7 9NJ
Ordinary
100%

Page 19

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

14.


Stocks

2024
2023
£
£

Stock
51,646
50,999

51,646
50,999



15.


Debtors

2024
2023
£
£


Trade debtors
2,352,714
3,860,733

Amounts owed by group undertakings
13,918,628
10,216,738

Other debtors
8,017
4,343

Prepayments and accrued income
3,052,546
1,898,911

19,331,905
15,980,725



16.


Cash and cash equivalents

2024
2023
£
£

Cash at bank and in hand
1,137,068
1,541,033

1,137,068
1,541,033



17.


Creditors: Amounts falling due within one year

2024
2023
£
£

Trade creditors
2,010,981
3,420,590

Amounts owed to group undertakings
213,189
259,482

Other taxation and social security
524,846
813,104

Other creditors
2,863
2,863

Accruals and deferred income
1,996,095
1,303,794

4,747,974
5,799,833


Page 20

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

18.


Deferred taxation




2024


£






At beginning of year
(42,203)


Charged to profit or loss
12,680



At end of year
(29,523)

The provision for deferred taxation is made up as follows:

2024
2023
£
£


Accelerated capital allowances
(29,523)
(42,203)

(29,523)
(42,203)


19.


Share capital

2024
2023
£
£
Allotted, called up and fully paid



28,300 (2023 - 28,300) A1 Ordinary shares of £0.01 each
283
283
2,200 (2023 - 2,200) A2 Ordinary shares of £0.01 each
22
22
4,500 (2023 - 4,500) A3 Ordinary shares of £0.01 each
45
45
6,171 (2023 - 6,200) A4 Ordinary shares of £0.01 each
62
62
100 (2022 - 100) B Ordinary shares of £0.0001- each
-
-

412

412



20.


Reserves

Share premium account

This reserve records the amount above the nominal value received for shares sold, less transaction costs.

Capital redemption reserve

This reserves relates to the nominal value of shares purchased back by the Company.

Profit and loss account

This reserve records retained earnings and accumulated losses.

Page 21

 


CIRCLE IT SOLUTIONS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

21.


Commitments under operating leases

At 31 December 2024 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2024
2023
£
£


Not later than 1 year
92,195
49,441

Later than 1 year and not later than 5 years
59,691
94,761

151,886
144,202


22.Financial commitments

Loans included within entities of the group that the Company is a part are secured by fixed and floating charges over the assets of the Company and the group.  At the year end the loans amounted to £199,798,217 (2023: £196,799,237).


23.


Controlling party

The Company's immediate parent company is Arrow Business Communications Limited.
The ultimate parent entity is Arrow Communications Holdings Limited, to which consolidated accounts include this company. The consolidated accounts are available from Companies House for the year ended 31 December 2023.
The ultimate controlling party of Arrow Communications Holdings Limited is MML Capital Europe VII Equity I S.A., a company based in Luxembourg. MML Capital Europe VII Equity I S.A is a 100% subsidiary of MML Partnership Capital VII SCSp acting by its general partner MML Partnership Capital VII GP S.a.r.l.

 
Page 22