The directors present the strategic report for the period ended 30 September 2024.
The board believes it has established a strategy and business model that promotes long-term value for shareholders.
The group's strategy is to deploy and operate a FTTP or "full fibre" network in buildings and geographic areas in and around the M25 with a high customer acquisition potential.
F & W Network Limited broadband is already available at selected sites in UK towns & cities. The group's goal is to continue to grow its customer base by providing exceptional customer service and competitive product offerings whilst extending its national fibre network footprint to homes and businesses.
The group uses both internal resources and outsource suppliers to build its fibre network.
The group continued to grow its full fibre network, turnover and customer base compared with the previous twelve-month period. This growth was driven by both the continued increase in homes passed during the period as well as an increase in penetration of the existing network footprint.
Total homes passed reached 415,000 at 30 September 2024 as the group continued to increase its network build.
During the period ended 30 September 2024, the group benefited from an additional £32m of equity investment from its shareholders.
Financial Review
Turnover for the period was £3.82m (2023: £1.54m), an increase of £2.28m. This represents both an increase in revenue from subscribers in new homes passed as well as an increase in penetration in the existing network. The primary driver of the revenue increase was from the increase in subscribers compared to 2023. Gross profit for the period was £3.73m (2023: £1.50m).
The increase in administrative costs was primarily driven by an increase in depreciation related to the increased fibre network investment in 2024 and an increase in the marketing spend to attract new customers.
As a result of the increased costs (associated with increasing network build and subscriber growth activity) the operating loss increased by £5.6m in the period to £16.2m from £10.6m in 2023, which is in line with the shareholders' expectations at this stage of the business.
The group continued to grow its network and has invested heavily in growing its homes passed footprint. The total investment cost in it's fibre network at 30 September 2024 was at £102.3m (2023: £75.4m). The group is well positioned to continue the expansion of the network into new sites within existing cities as well as expanding into new geographic areas in the UK. The rate of expansion has reduced in the period with the focus being on advertising and promotions to increase market penetration.
Risk |
| Mitigation |
Health and safety The group is involved in activities and environments that have the potential to cause serious injury to its stakeholders, or to damage property, the environment, or its reputation. It is reliant on a large, subcontracted workforce operating to the group's high standards and procedures.
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The health and safety of people is the primary focus of the group. To control risk and prevent harm the group is focused on achieving the highest standards of health and safety management. This is achieved by establishing effective health and safety procedures and ensuring that effective leadership and organisational arrangements are in place to operate these procedures. |
Brexit and global economic uncertainty The impact of Brexit, the war in Ukraine as well as wider global economic uncertainty continues to impact directly and indirectly the UK economy, with increasing input costs, costs of living impacts and reduced levels of disposable consumer income. This may result in a slowdown in the economy leading to customers delaying purchasing decisions, as well as inflationary pressures on the group's labour, material and service costs. It may also increase the level of counter-party credit and currency risk faced by the group.
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The group continues to monitor the impact of the wider global economic uncertainty and has developed plans to respond to a range of potential scenarios. This includes specific plans that cater for changes in market conditions, complications with the movement and availability of the workforce, pressure on the supply chain, delays in delivery of materials and components, changes in exchange rates and pricing impact of increased tariff and commodity costs.
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Competition The broadband telecom sector is highly competitive with low margins. If it does not compete effectively in its market sectors, the group runs the risk of losing market share. Whilst service quality, capability and reputation are considered in customer decisions, price often remains the key determining factor.
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The group mitigates competitive risk by seeking to target projects and deploy its capital where it has a competitive advantage and can manage its costs and risks. The risk profile of every project is assessed at the planning stage to determine whether it is in line with the strategic objectives of the group before approval the project is given. |
Interest Rates The group has a floating interest rate exposure linked to SONIA that it pays on its debt facility. Interest rate rises and volatility could increase borrowing costs to the group.
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The group puts in place appropriate levels of hedging instruments to mitigate its exposure to interest rate volatility and ensures long-term financial planning considers a range of interest rate scenarios. |
Regulatory Risk There is a risk that regulation imposed by Ofcom, the National Cyber Security Centre ("NCSC") and other regulatory bodies could put constraints on the group's operating model in complying with those regulations causing increased cost and operational disruption.
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The group proactively manages regulatory risk and engages policy and regulatory development at many levels. The group maintains relationships with a diverse set of suppliers in order to mitigate against specific NCSC High Risk Vendor decisions. |
Systems, data, cyber security & GDPR A loss of key systems through a lack of resilience or an information security breach or attack, could impact the successful delivery of projects and lead to a loss of confidential data, damaging the group's reputation and brand.
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Robust controls and procedures are in place to monitor the performance of the group's systems and to identify and mitigate external threats. The group is continually developing and upgrading its IT infrastructure, software and cyber threat and assessment capabilities. The group continues to develop and enhance its data protection procedures in line with its regulatory obligations. In addition, all employees undergo mandatory, annual GDPR, phishing, and cyber security training. |
The Group's key financial performance indicators are set out below:
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| 2024 | 2023 |
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Revenue |
| £3.82m | £1.54m |
Gross profit |
| £3.73m | £1.49m |
EBITDA |
| (£10.8m) | (£8.5m) |
Capital investment cost |
| £102.3m | £75.4m |
Total homes passed |
| 415,000 | 400,000 |
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EBITDA represents the operating loss for the period adding back depreciation and amortisation.
Capital investment is made up of the additions in tangible fixed assets for the group and subject to depreciation in line with accounting policies disclosed in note 1.7.
Total homes passed is defined as every unique individual Unique Property Reference Number (UPRNs) that discloses every addressable location within the network footprint. UPRN identifiers have an equivalent national grid reference from the Ordnance Survey, but grid references contain multiple UPRN identifiers, for example, a block of flats has one grid reference, but UPRN identifiers for each flat, so this is a more accurate measure of the footprint size.
The group operates a centralised treasury function which is responsible for managing the liquidity and interest risks associated with the group's activities
Interest rate risk
The group finances its operations through bank borrowings and cash resources. The group is exposed to fair value interest rate risk on its variable rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. Full details are disclosed in note 16 to the financial statements in relation to the interest rates.
Management plan to ensure that there is adequate headroom should there be an increase in base rates in order to comply with covenants throughout the term of the bank loan.
Liquidity risk
The group's objective is to maintain a balance between continuity of funding and flexibility through the use of borrowings with a range of maturities. The group seeks to control financial risk by managing its cash and borrowing requirements centrally to maximise interest income and minimise interest expenses, whilst ensuring that it has sufficient liquid resources to meet its foreseeable operating needs. In this way the group invests its cash assets safely. The group finances its operations primarily through a combination of equity funding and bank and other borrowings as required.
Price risk
The directors consider that the group's exposure to changing market prices on the values of financial instruments does not have a significant impact on the carrying value of financial assets and liabilities. As such, no specific policies are applied currently, although the directors will continue to monitor the level of price risk and manage its exposure should the need occur.
On behalf of the board
The directors present their annual report and financial statements for the period ended 30 September 2024.
The group extended its accounting reference date to 30 September 2024, and thus covers a 13 month period.
The results for the period are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The auditor, Gerald Edelman LLP, is deemed reappointed under section 487(2) of the Companies Act 2006.
Having reviewed the company and group's financial position, additional equity funding secured post period-end and anticipated future results and cash flows against the group's business plan, the directors have a reasonable expectation that the company and group has adequate resources to continue in operational existence for the foreseeable future. Thus the going concern basis has been adopted in preparing the financial statements for the period ended 30 September 2024.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of F & W Networks Ltd (the 'parent company') and its subsidiaries (the 'group') for the period ended 30 September 2024 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial period 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our audit procedures were primarily directed towards testing the accounting systems in operation upon which we have based our assessment of the financial statements for the period ended 30 September 2024.
We planned our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements resulting from irregularities, fraud or non-compliance with law or regulations.
The extent to which the audit was considered capable of detecting irregularities including fraud
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations.
Enquiring of management of whether they are aware of any non-compliance with laws and regulations.
Enquiring of management whether they have knowledge of any actual, suspected or alleged fraud.
Enquiring of management their internal controls established to mitigate risk related to fraud or non-compliance with laws and regulations.
Discussions amongst the engagement team on how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, we identified potential for fraud in posting of unusual journals.
Obtaining understanding of the legal and regulatory framework the company operates in focusing on those laws and regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations. The key laws and regulations we considered in this context included UK Companies Act, tax legislation, employment law, Health and Safety, Data Protection Act, Communications Act, Competition Act, Consumer Rights Act, Anti-Bribery Act and Money Laundering Act.
Audit response to risks identified
Fraud due to management override
To address the risk of fraud through management bias and override of controls, we:
Performed analytical procedures to identify any unusual or unexpected relationships.
Audited the risk of management override of controls, including through testing journal entries for appropriateness.
Investigated the rationale behind significant or unusual transactions.
Irregularities and non-compliance with laws and regulations
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but are not limited to:
Agreeing financial statements disclosures to underlying supporting documentation.
Enquiring of management as to actual and potential litigation claims.
Reviewing legal and professional fees for indications of non-compliance with laws and regulations.
The test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, mean that there is an unavoidable risk that even some material misstatements in respect of irregularities may remain undiscovered even though the audit is properly planned and performed in accordance with ISAs (UK). Furthermore, the more removed that laws and regulations are from financial transactions, the less likely that we would become aware of non-compliance. Our examination should therefore not be relied upon to disclose all such material misstatements or frauds, errors or instances of non-compliance that might exist. The responsibility for safeguarding the assets of the company and for the prevention and detection of fraud, error and non-compliance with law or regulations rests with the directors.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year £6,063,066 (2023: - £5,260,555 loss).
F & W Networks Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, WA14 2DT. The trading address is 25 Wilton Road, Victoria, London, SW1V 1LW.
The group consists of F & W Networks Ltd and its subsidiary undertaking.
The reporting period is for the 13 months to 30 September 2024. Comparatives are for the year ended 31 August 2023.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in the primary statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company F & W Networks Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 September 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Having reviewed the company and group's financial position, additional equity funding secured post year-end and anticipated future results and cash flows against the group's business plan, the directors have a reasonable expectation that the company and group has adequate resources to continue in operational existence for the foreseeable future. Thus the going concern basis has been adopted in preparing the financial statements for the period ended 30 September 2024.
Turnover is attributable to the sale of high speed internet broadband and the installation of the infrastructure related to that provision. Turnover is recognised net of sales tax and discounts when the amount of turnover can be reliably measured.
Installation fees are recognised on acceptance of each contract.
Turnover from internet and broadband services provided to residential customers are recognised on a monthly basis commencing when the services are provided.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in the profit and loss account.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors and bank loans that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in the profit and loss account.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates and the physical condition of the assets.
All turnover is derived in the United Kingdom.
Included under administrative expenses are amortised funding fees of £551,415 (2023: £384,884) related to the loans.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The actual charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
The group has tax losses carried forward of approximately £130.4m (2023: £87m) to utilise against future profits. No deferred tax asset has been recognised on these losses due to the uncertainty of when they will be utilised.
Details of the company's subsidiaries at 30 September 2024 are as follows:
Amounts owed by group undertakings are interest free and repayable on demand.
On 16 June 2022, the group arranged a 2.5-year, £25,000,000 million bank loan facility bearing a margin of 4.5% + the 'Cumulative Compounded RFR Rate' based on the SONIA rate. Interest is payable quarterly and the principal sum is repayable at the end of the loan term. The full loan balance is repayable on 16 December 2024.
Santander UK Plc have a fixed and floating charge over the assets of the group.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
On 4 October 2023, a special resolution was passed creating a new class of Ordinary share, the B Ordinary Share.
Both the Ordinary shares and Ordinary B shares have full voting and dividend rights. Additionally the Ordinary B shares have anti-dilution provisions in the event of a down-round.
On 4 October 2023, 3,120,000 B Ordinary shares of £1 each were issued and paid for cash at a premium of £2.50.
On 4 December 2023, 1,320,000 B Ordinary shares of £1 each were issued and paid for cash at a premium of £2.50.
On 18 January 2024, 514,279 B Ordinary shares of £1 each were issued and paid for cash at a premium of £2.50.
On 4 March 2024, 1,114,287 B Ordinary shares of £1 each were issued and paid for cash at a premium of £2.50.
On 30 September 2024, 6,863,999 B Ordinary shares of £1 each were issued and paid for cash at a premium of £2.50.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
On 11 February 2025, 3,551,881 B Ordinary shares of £1 each were issued and paid for cash at a premium of £2.50.
On 17 April 2025, an agreement was reached with Santander to renew the £25m the banking facility until December 2028.
The group has taken advantage of the exemption available in FRS 102 section 33.1A, whereby it has not disclosed transactions with the parent company or any wholly owned subsidiary undertaking of the group.
During the period, management fees amounting to £588,781 (2023: £543,478) were charged by a company for services provided. F Martinez Sanchez and C Bock Montero are directors and shareholders in that entity. At the period end the company was owed £1,222,839 (2023: £634,058) by the group.
During the period, fees amounting to £1,207,049 (2023: £1,273,267) were paid to companies in which C Bock Montero is a shareholder. At the period end this company was owed £257,495 (2023: £144,176) by the group.