The directors present the strategic report for the year ended 31 December 2024.
Our mission
Methods will continue to be one of UK's leading transformation partner for public services. Our mission is to deploy modern technology to deliver improved business and social outcomes that are people-centred, safe, and flexible for the future. We do this by combining innovative people, proven delivery methods, market-driven technology solutions, UK-based talent with security clearance, regional offices for supporting local clients, Government approved secure facilities, and effective partnerships with market leading specialist product and technology suppliers. In addition to this, we have a strategic aim to extend our market offerings into the private sector over time. We see this as a key area of expansion for us, aligned to the aims of the ALTEN group, though mindful this will remain a small part of our business overall.
Our people
As specialists in technology-enabled public service modernisation, Methods colleagues share an enviably strong sense of mission. Our recruitment efforts focus on finding the best talent from all areas and communities across the country and we are involved in various independent projects to nurture young talent and apprentices. Upon joining, all colleagues take part in our focussed induction programme and are then ‘buddied’ with a more experienced colleague for their first few months. This process, coupled with our wide ranging and ongoing investment in learning and development, has contributed to increased colleague retention during the year, underpinning positive growth in colleague numbers.
The Board holds collective responsibility for ensuring best practice and delivery in relation to gender and pay equality, as well as diversity and inclusion, formally reviewing these key commitments on a quarterly basis. This oversight underpins our focus as an equal opportunities employer, dedicated to the recruitment, nurturing and growth of talent from all backgrounds and ethnicities.
In designing and delivering organisational transformation, colleagues are highly motivated by the opportunities presented by modern Cloud-based utilities and services to transform public services, safeguarding them for the digital era. Whether they are cloud engineers, technology and service architects, service management specialists, developers, data scientists, or experts in creating user-centric digital experience, Methods’ people are recognised for their shared commitment and approach to modernisation by deploying a common set of professional values. Our shared values: our commitment to the use of government design standards; Cloud-first architecture and services; open standards as appropriate; security by design underpinned by adoption of Agile lifecycles and techniques have been honed over 20 years.
Our financial performance
The Group operates through two divisions: Professional Services, which provides IT Associate services mainly to the UK Public Sector, and IT Services, which provides outcome-based IT related services. Revenue for the year ending 31 December 2024 was £87.4m compared to £67.4m in the 8 month period to 31 December 2023. 2024 vs 2023 extrapolated shows a 13% reduction in revenue. Several factors have caused this decline within our IT services due to an election year and a squeeze on public sector budgets which in turn has made our clients start to insource their services. Our Professional Services division carried on with similar trend of year on year decline from being impacted by the implementation of new IR35 rules in the Public Sector in 2017.
Operating profit before sale related costs has decreased from £3.0m (2.9% OPM) on 2023 extrapolated to a loss of £0.3m (-0.3% OPM). This decrease arises from loss of contracts within the public sector.
Our order book decreased over the year from £35.3m to £34.3m.
The Group's cash at bank and in hand balance decreased from £3.9m to £2.9m, following payment of a dividend, of which £2.9m is held in our parent company cash pool on the Group's behalf, with no restrictions on availability to the business.
The future
In working extensively with public services, we strive to deliver efficiently, to deliver value early and to facilitate clients' own capabilities. We continue to offer new ideas and working through practical ways of enhancing our services to deliver higher quality and better value outcomes, quicker than our competitors.
Additionally, we are continuing to invest in developing our own complex delivery services for clients to adopt where it would be either not cost effective or too difficult for clients to do it for themselves. Whilst the overall outsourcing trend has slowed, there are still a range of specialist services in - as examples - managed cloud services, multi-vendor management, service integration, cloud automation and orchestration, security operations, building applications rapidly, adoption of new technologies to deliver new business capabilities where we are very well placed to offer new and enhanced capabilities for our customers.
Our primary markets are: central government, education, justice, defence, healthcare, borders, environment and food, transport and local and place based services. Future government spending plans include continued investment in digital and cloud services together with an on-going push to reduce the reliance on legacy technology and related services. Many large public sector organisations still retain a significant legacy technology base. This migration and transition capability is a core competence. As mentioned above, we continue to focus on extending our service offerings into the private sector and have seen good progress with this in relation to cyber security, which we are confident will continue. This is a new strategic aim for us and, though is likely always to be the smaller part of our business, is seen as a key area for growth for the Company.
Whilst we maintain a position of being technology agnostic, we also have expertise in market leading products such as Microsoft enterprise technologies, AWS services, ServiceNow as examples. We believe that they will continue to be the technologies of choice for many government organisations working at scale.
We are optimistic that a responsive UK based expert supplier of specialist market-leading competencies to enable better use of new and emerging technology has a solid future for profitable growth and to prosper.
There are many actual and potential risks which could have a material impact on Methods operations, its financial results, reputation with clients and colleagues and the value of its assets. These could cause future results to miss forecast and have other material adverse consequences. Every year the board carries out an assessment of the principal risks facing the group including those that could impact its business model, future performance and solvency. The list below identifies the principal risks but is not intended to be exhaustive
staff recruitment and retention
lack of new business development
customer churn
financial weakness
systems collapse
The Directors continue to have regard to the interests of key stakeholders of the group and those of its related undertakings, including the impact of its activities on the community, environment and the group’s reputation, when making decisions. The Directors, acting fairly between shareholders, and acting in good faith, consider what is most likely to promote the success of the group for its shareholders in the long term. The Directors receive monthly updates from management on matters affecting the group’s stakeholders which assists the Directors in their decision-making process.
The Group made Operating loss before costs of £0.3m (period to 31st December 2023: £1.9m profit) for the year on a turnover of £87.4m (period to 31 December 2023: £67.4m).
At 31 December 2024 the Group had net assets of £3.3m (31 December 2023: £7.5m).
The Board monitors the following key performance indicators considering these to be robust indicators of the ongoing financial health of the Group in terms of profit and cash flow:
Turnover: £87.4m (period to 31 December 2023: £67.4m)
Profitability1: -0.3% (period to 31 December 2023: 2.9%)
EBITDA 2: -£0.2m (period to 31 December 2023: £2.1m)
Cash generated from operations: £3.8m (period to 31 December 2023: £2.4m)
Order Book: £34.3m (period to 31 December 2023: £35.3m)
Staff Attrition 3: 25.0% (period to 31 December 2023: 20.0%)
Contractor Ratio 4: 35.0% (period to 31 December 2023: 48.0%)
1 = Operating profit before sale related costs / Turnover
2 = Earnings before interest, tax, depreciation, amortisation, exceptional items and amounts written off investments.
3 = Staff Leavers / The average of Staff Heads at start of year and staff heads at the end of the year
4 = Contractor FTE’s delivering services to clients / Total of Staff and Contractor FTEs delivering services to clients
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 14.
Interim dividends were paid amounting to £4,500,000 (Dec 2023: £14,000,000). No final dividends were paid (Dec 2023: £nil). The Directors do not recommend payment of a further dividend.
Statement in respect of stakeholder engagement
The Directors have determined that the company and related undertakings' key stakeholders are the Group's and Company's shareholders; staff; associates and contractors; customers; technology partners.
How the Directors engage with these stakeholders is summarised below:
Shareholders
The key areas of interest for the shareholders is the current and future financial performance of the group and Company along with updates on HR and operational matters. Shareholders are provided with a quarterly report on the following topics: financial performance; sales performance; marketing; HR; operations; risks. The shareholders also determine the overall strategic direction of the Group and company taking into consideration the needs of all our stakeholders.
Our staff
The Group’s and company’s long-term success is predicated on the commitment of our colleagues to our purpose and its demonstration of our values every day. We engage with our workforce to ensure that we are fostering an environment that they are happy to work in and supports their well-being. We are making significant investments in our workforce as we believe that maintaining low turnover rates across the entire workforce is a key source of efficiency and productivity. We engage through one-to-one meetings with managers, town hall meetings, update calls and our intranet. The company is also accredited under the Investors In People scheme and we have also recently achieved the Social Value Quality Mark level 1. A colleague forum, which is representative of the various disciplines working in the company, meets every 6 weeks to discuss issues of importance to colleagues and the Group, the results of which are discussed by the Directors and considered when making decisions.
Our associates and contractors
Our associates and contractors provide key niche skills and flexible capacity which enables us to deliver services to our customers. They are integrated into our project teams and are essential to the success of our projects. Regular communication between management and contractors occurs and the issues facing our contractors are fed back to the Board. The company is in the process of creating an intranet accessible by all our contractors to provide a more structured method of communication. The Board also regularly reviews the appropriate skill mix of our contractors compared to permanent colleagues which can lead to selected key contractors becoming permanently employed.
Our customers
We are in regular communication with our customers both during the delivery of services to ensure we are delivering high quality services, meeting their needs, and through events and ad hoc meetings to establish their longer terms needs and priorities. These discussions are an essential part of decisions both in the way we deliver and interact with our customers and to define current and future service offerings the company invests in.
Our technology partners
The Group and Company establishes partnerships with key technology providers whose products and offerings are core to our service offerings. Then ongoing relationship with our partners is led by a member of the Board and regular meetings and updates are held with partners by the Director and our staff. The Board also reviews whether the Group and Company needs to establish relationships with new partners where new products can enhance services to our clients.
The Group and Company's financial instruments comprise cash and liquid resources, and various items such as trade debtors and trade creditors that arise directly from its operations. The main financial risks arising from these financial instruments are liquidity and credit risk.
Liquidity risk arises in relation to the Group and Company's management of working capital and the risk that the Group and Company will encounter difficulties in meeting financial obligations as and when they fall due. To minimise this risk, the liquidity position and ongoing working capital requirements are regularly reviewed by the Directors.
Trade debtors and trade creditors give rise to credit risk for the Group.
Trade debtors are, where appropriate, subject to a credit check, and regular reviews are undertaken of exposures to key customers and those where known risks have arisen or still persist. Unpaid balances are rigorously followed up on an ongoing basis. Any indications of impairment to the recoverability of trade debtor balances are provided for in the statement of comprehensive income.
The risk arising from the possible non-advance of credit by the Group and Company's trade creditors either by exceeding the credit limit or not paying within the specified terms is managed by prompt payment and monthly monitoring of the trade balance and credit limit terms for all suppliers.
The financial risk regarding amounts owed by connected companies is considered low risk as they are under the common control of the ultimate shareholders.
Energy efficiency action
We are committed to reducing our environmental impact on a day-to-day basis. We believe that organisations are responsible for achieving and maintaining good environmental practice and should operate in a sustainable manner. To this end we have several initiatives in place: from reducing our single use plastics; recycling; promoting the Government's Cycle to Work scheme; selecting flowers and planting on our terraces; regular communication to employees on our emissions to encourage a culture of concern and focus on reducing our emissions; to using environmentally friendly technologies which will help reduce our carbon footprint. We are committed to monitoring and reporting on the effectiveness of what we do in this aim.
Methodology
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol - Corporate Standard and have used the UK Government's Greenhouse gas reporting: conversion factors 2021 for Group reporting.
KPMG Ireland were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
We have audited the financial statements of Methods Holdings Limited (‘the Company’) and its consolidated undertakings (‘the Group’) for the year ended 31 December 2024 set out on pages 14 to 37, which comprise the which comprise the consolidated profit and loss account and other comprehensive income, the consolidated and company balance sheet, the consolidated and company statement of changes in equity, the consolidated cash flow statement and related notes, including the summary of significant accounting policies set out in note 1.
The financial reporting framework that has been applied in their preparation is UK Law and UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
Basis for opinion
Conclusions relating to going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).
In our evaluation of the directors' conclusions, we considered the inherent risks to the Group and the Company’s business model and analysed how those risks might affect the Group and the Company’s financial resources or ability to continue operations over the going concern period.
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 or the Company’s ability to continue as a going concern for a period of at least twelve months from the date 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.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Group or the Company will continue in operation.
Opinions on other matters prescribed by the Companies Act 2006
Based solely on our work on the other information undertaken during the course of the audit:
we have not identified material misstatements in the directors' report or the strategic report;
in our opinion, the information given in the directors’ report and the strategic report is consistent with the financial statements;
in our opinion, the directors’ report and the strategic report have been prepared in accordance with the Companies Act 2006.
Detecting irregularities including fraud
We identified the areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements and risks of material misstatement due to fraud, using our understanding of the entity's industry, regulatory environment and other external factors and inquiry with the directors. In addition, our risk assessment procedures included: inquiring with the directors as to the Group’s policies and procedures regarding compliance with laws and regulations and prevention and detection of fraud; inquiring whether the directors have knowledge of any actual or suspected non-compliance with laws or regulations or alleged fraud; inspecting the Group’s regulatory and legal correspondence; and reading Board minutes.
We discussed identified laws and regulations, fraud risk factors and the need to remain alert among the audit team.
The Group is subject to laws and regulations that directly affect the financial statements including companies and financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items, including assessing the financial statement disclosures and agreeing them to supporting documentation when necessary.
The Group is not subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements.
Auditing standards limit the required audit procedures to identify non-compliance with these non-direct laws and regulations to inquiry of the directors and inspection of regulatory and legal correspondence, if any. These limited procedures did not identify actual or suspected non-compliance.
We assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. As required by auditing standards, we performed procedures to address the risk of management override of controls. On this audit we do not believe there is a fraud risk related to revenue recognition. We did not identify any additional fraud risks.
In response to risk of fraud, we also performed procedures including: identifying journal entries to test based on risk criteria and comparing the identified entries to supporting documentation; evaluating the business purpose of significant unusual transactions; assessing significant accounting estimates for bias; and assessing the disclosures in the financial statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
The purpose of our audit work and to whom we owe our responsibilities
Our 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 of the Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £4,438,605 (period ended 31 December 2023 - £13,978,711 profit).
Methods Holdings (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Saffron House, 6-10 Kirby Street, London, EC1N 8TS.
The group consists of Methods Holdings and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. 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 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
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’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The Directors have assessed the Group’s ability to continue trading as a going concern for at least 12 months from the date of approving these financial statements, including considering the impact of economic conditions. As part of the Directors’ assessment a monthly forecast has been produced. In addition, the Directors have stress tested these forecasts looking at different severe but plausible scenarios.
Under both the base case and severe but plausible stressed scenarios the Group would still have sufficient liquidity and resources to continue trading, and meet its liabilities as they fall due, for at least 12 months from the date of these financial statements. The financial resilience of the company is greatly helped by the cash reserves it has accumulated over the last two years (which is now held by the group) and the ability to call on group support as required, the flexible nature of its cost base due to the number of contractors used to deliver services (allowing cost to immediately reduce as revenue reduces) and the high credit worthiness of its public sector customers.
The Directors have a reasonable expectation that the Group has adequate resources to continue trading, and meets its liabilities as they fall due for at least 12 months from the date of signing these financial statements. Thus, the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents amounts receivable for services net of VAT.
Time and materials revenue is recognised to the extent that time has been completed and materials expensed in the year. The amount recognised is based on the billable value of time worked.
Revenue from fixed price contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. If it is expected that there will be a loss on a contract as a whole, all of the loss is recognised as soon as it is foreseen.
Revenue from managed services or subscription income, where the customer is charged a fixed amount over a period of time, is recognised rateably over period for which the charge applies.
Revenue from the resale of third party goods, licences or services is recognised on the date of delivery to the customer of the goods, licence or services.
Revenue recognised but not yet invoiced to the client is recognised on the balance sheet as Accrued Income within Debtors.
Amounts invoiced to clients in advance of revenue being recognised, are recognised as Deferred Income within Creditors failing due within one year. The balance is released to the profit and loss account as service is delivered to the customer in line with the appropriate revenue recognition method.
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.
Equity investments are measured at fair value through the statement of comprehensive income, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the Group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Fixed assets 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). Fixed 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.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any accrued 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.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgement (apart from those involving estimates) has had the most significant effect on amounts recognised in the financial statements.
Where a contract is loss making the Group provides for the full loss of the contract once the loss has been identified and validated by management.
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.
Revenue is recognised based on the value of services delivered in a period. For time and materials engagements this is based on the billable value of time worked. For fixed price projects the Group recognises revenue based on the percentage completion of the contract. Percentage completion is calculated by dividing the total cost to date on the contract by the total estimated cost for the whole contract. Total estimated costs are based on management judgement and detailed project plans. The accounting policy for revenue is disclosed in note 1.4 of the financial statements and the turnover for the year is disclosed in note 3 of the financial statements.
Where the recoverability of Work in Progress and Trade Debtors is unlikely, a provision is made for the unrecoverable amount. Where it is almost certain the amounts will not be recovered the amounts are written off permanently.
Accruals are based on the best estimate of costs that are expected to be invoiced after the year end. These are based on management's knowledge of costs relating to the Group that have not yet been billed and invoices relating to the financial year that are received after the year end.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2024 are as follows:
Amounts due from group undertakings are not interest bearing and repayable on demand.
Amounts due from the parent company (included in amounts due from group undertakings) are interest bearing at the banks rate and repayable on demand.
Amounts due to group undertakings are not interest bearing and repayable on demand.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £1,294,236 (2023: £718,815). Contributions totalling £297,146 (2023: £236,254) were payable to the fund at the reporting date and are included in creditors.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The remuneration of key management personnel is as follows.
The Group has taken advantage of the exemption within section 33.10 of FRS 102 to not disclose transactions with wholly owned group companies.