Company registration number: 05755983
COMPANY INFORMATION
CONTENTS
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2025
This report lays out the direction and success of Mercator IT Solutions over the past 12 months. These accounts document the accounting period April 2024 to March 2025.
Principal activity and business review
The past 12 months have been stable from a delivery perspective. The company predominantly provides consulting services to central government with approx. 95% of the overall turnover coming from these activities.
During the accounting period to March 2025, there was minimal disturbance in terms of contracts coming to an end. This has created a stable accounting period and a steady income stream continuing on from the projects that were running in the previous accounting period.
During this period we have continued to look at our Gross Margin. This has been increased by bringing in more permanent staff and having less of a dependency on more expensive contract resource. Our average gross margin has increased from 29.2% in March 2024 to 32.7% in March 2025. Another significant increase. We anticipate this will continue to increase with the addition of more permanent staff as we continue with our people strategy.
Due to the nature of our work, we are able to utilise the Government R&D scheme. In this Tax year we have been able to claim £400,245.
We are continuing our work on building our partnerships with large Service integrators so that we can grow our business in partnership with them as part of their government ecosystem. 20-30% of most large government contracts has to flow down from the Prime supplier to its ecosystem so we feel it is a good strategy to grow our business as a trusted partner.
We have successfully started to deliver direct business into Government by getting on to more frameworks. We are delivering service through the Digital and Legacy Application Services framework (DALAS) which we successfully managed to join last year. This Framework is spearheaded by HMRC and Crown Commercial Services but is a cross government framework. We are also working with local government via the G Cloud framework.
Future developments
Mercator aims to remain as an SME to keep supporting our Service integrator partners. IT and technology will be pivotal in supporting our strategic growth. Our strategy that we started to deliver last year remains our key focus and we will continue to deliver the parts of this strategy as we continue into the next business year. The strategy is designed to ensure that technology is a key enabler of our business objectives, fully aligned with our mission to establish Mercator as a trusted and respected partner in the technology consultancy sector. This strategy outlines how IT and technology will drive our company’s objectives, emphasising the role of innovation in ensuring seamless integration between our business goals and technological advancements. The New strategy will focus on 5 key areas to move the business into its next phase of growth.
Our Key Strategic Objectives:
Our Key Strategic Objectives:
•Expand and Diversify Our Market
•Enhance Our Visibility and Brand Recognition
•Deepen Our Client and Partner Engagement
•Enhance Our Domain Expertise, Certification, and Accreditation
•Our People: Building a Brighter Future Together
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
Objective 2: Work closely with clients and partners to deepen engagement and collaboration, driving mutual growth. (Deepen Our Client and Partner Engagement)
Why is this important?
Building strong relationships with clients and partners positions Mercator as a trusted and valued partner. IT solutions that support collaboration and seamless delivery deepen these relationships, build client trust, and encourage repeat business. This not only drives sustained growth but also creates an environment where our teams feel connected and motivated, knowing they are part of meaningful partnerships that contribute to shared success.
We will achieve this by:
•Engaging with technology leaders in our client and partner organisations to align on digital and IT strategy.
•Providing tools that enable effective delivery management and collaboration.
•Supporting the bid team with effective bid tools and system integration processes.
•Fostering long-term technology partnerships and deepen client trust.
•Developing a centralised knowledge hub for bid content using Project Aiden.
•Building deep knowledge within our teams of all current and previous projects to help to support our bid process.
•Working collaboratively on partner projects to enhance our technical expertise and upskilling our teams’ knowledge.
Objective 3: Support our marketing strategy by providing data-driven insights and digital tools that enhance brand visibility. (Enhance Our Visibility and Brand Recognition)
Why is this important?
Providing data-driven insights and digital tools helps our marketing team make smarter, more impactful decisions to boost Mercator’s brand visibility. This collaboration not only strengthens our market presence but also shows our expertise and thought leadership. By building a strong, credible brand, we gain client trust and confidence, which benefits everyone at Mercator by opening doors to more opportunities and fostering pride in our shared success.
We will achieve this by:
•Supporting the creation and distribution of project-based content such as blogs and case studies.
•Participating in industry tech events to network and elevate Mercator’s profile.
•Enhancing our website to serve as a central hub for thought leadership content.
•Optimising CRM systems for better client data capture and marketing insights.
•Maintaining strong connections with industry networks like TechUK.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
Objective 4: Advance our technical expertise and achieve recognised industry certifications and accreditations. (Enhance Our Domain Expertise)
Why is this important?
Achieving recognised certifications and accreditations shows that Mercator is committed to high standards and excellence. This builds trust with clients and makes us a sought-after partner for complex projects. It also supports our people by promoting continuous learning and professional growth, giving them confidence in their skills and pride in their work. This focus on development helps our teams feel valued and motivated, making Mercator a place where they can thrive and contribute meaningfully.
We will achieve this by:
•Conducting skills mapping to identify and address training needs.
•Ensuring Mercator and our people obtain accreditations and Industry standard certifications and others relevant to
our target clients.
•Implementing structured knowledge-sharing initiatives.
•Building a highly skilled, accredited workforce that enhances Mercator’s reputation and attracts high-value talent,
clients and projects.
Objective 5: Support our People Strategy by equipping our teams with the latest technology tools and training to foster professional growth and innovation. (Strategic Priority Supported: Our People: Building a Brighter Future Together)
Why is this important?
Providing our teams with advanced tools and continuous training creates an environment where growth and job satisfaction thrive. When our people feel supported and have the resources they need, they stay motivated and engaged, which helps retain talent and attract new team members. Investing in our people shows that we value their development and contributions, reinforcing Mercator as a great place to work and empowering them to drive innovation and success.
We will achieve this by:
•Providing robust internal systems to streamline recruitment, onboarding, and operational processes.
•Strengthening data capture for actionable insights into employee engagement and development.
•Encouraging collaboration and knowledge sharing through tech communities and events.
•Reviewing and optimising CRM systems to support efficient talent acquisition.
•Automating key processes to improve productivity and reduce manual workload.
•Supporting diversity and inclusion through enhanced ED&I surveys for social value reporting.
•Celebrating team successes and offering cross-training opportunities.
•Setting a high standard of professionalism and encouraging associates to join as permanent staff.
Principal Risks and Uncertainties
As we head into the new financial year, the key risks to the business that we cited in the strategic report from last year have been dealt with without issue. The new risk for the tax year 25/26 is that our partners will start to unwind some of our growth within their organisations as they bed in the service after the initial project transitions that happened last year. We are over work share with most of our partners and so there will be a desire for our partners to swap some of our people with their own in order to readdress this balance. The risk could be that we fall back in numbers slightly as we enter the 25/26 tax year.
There is a negative feel in the UK in general around growth and employment. With a relatively new administration in the US there is a risk that we will see a stagnation of opportunities and a resistance to start new projects. This could have a knock on effect to Mercator as we rely on the government to spend and embark on new projects as well as our partners wanting to use us to help deliver the projects. In a global economic down turn we could see our partners wanting to use more of their own staff instead of turning to Mercator. This would halt our growth plans or set them back slightly.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
Financial key performance indicators
Key performance indicators are used to measure the Group's performance. The directors consider the key measures of the Group's performance to be revenue and gross profit margin, as outlined below:
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2025
The directors present their report and the financial statements for the year ended 31 March 2025.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £1,984,423 (2024 - £3,503,983).
Dividends of £657,778 (2024: £1,422,222) were paid during the financial period.
The directors who served during the year were:
The company has chosen in accordance with Section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out within the group's strategic report information required by schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008. This includes information that would have been included in the business review, principal risks and uncertainties and future developments.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
There have been no significant events affecting the Group since the year end.
Under section 487(2) of the Companies Act 2006, Menzies LLP will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCATOR IT SOLUTIONS LIMITED
We have audited the financial statements of Mercator IT Solutions Limited (the 'parent company') and its subsidiary (the 'group') for the year ended 31 March 2025, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes, including a summary of significant accounting 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).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCATOR IT SOLUTIONS LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCATOR IT SOLUTIONS LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most significant including UK Companies Act, employment law and tax legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
∙We understood how the Company is complying with those legal and regulatory frameworks by making inquiries to
management and those responsible for legal and compliance procedures.
management and those responsible for legal and compliance procedures.
∙The engagement partner assessed whether the engagement team collectively had the appropriate competence and
capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any
issues in this area.
capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any
issues in this area.
∙We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud
might occur. Audit procedures performed by the engagement team included:
might occur. Audit procedures performed by the engagement team included:
°Identifying and assessing the design effectiveness of controls management has in place to prevent and detect
fraud;
fraud;
°Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process; and
°Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
∙As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
°Posting of unusual journals and complex transactions;
°Risk of incorrect classification of subcontractors; and
°Risk of incorrect revenue recognition.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's Report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCATOR IT SOLUTIONS LIMITED (CONTINUED)
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.
for and on behalf of
Chartered Accountants
Statutory Auditor
Magna House
18-32 London Road
TW18 4BP
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2025
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 32 form part of these financial statements.
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COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 32 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2025
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CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Mercator IT Solutions Limited is a private company, limited by shares, incorporated in England and Wales. The registered number and address of the registered office is given in the company information page of these financial statements.
The prior period was extended to the 15 months ended 31 March 2024. This is because the LP and LLP companies in the group changed their year end to be in line with the tax year following the basis period reform. For ease of reporting, the remaining group companies also extended their year end to the same date. The comparative period covers 15 months and therefore is not comparable with the current 12 month period.
The prior period was extended to the 15 months ended 31 March 2024. This is because the LP and LLP companies in the group changed their year end to be in line with the tax year following the basis period reform. For ease of reporting, the remaining group companies also extended their year end to the same date. The comparative period covers 15 months and therefore is not comparable with the current 12 month period.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies.
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The directors deem 10 years to be an accurate representation of the useful life of intangible assets.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.
Depreciation is provided on the following basis:
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.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Analysis of turnover by country of destination:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
10.Intangible assets (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
11.Tangible fixed assets (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Capital redemption reserve
Profit and loss account
Page 30
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
Page 32