Methods Business and Digital Technology Limited
Annual Report and Financial Statements
For the year ended 30 April 2021
Company Registration No. 02485577 (England and Wales)
Methods Business and Digital Technology Limited
Company Information
Directors
P Rowlins
M Thompson
S Horrocks
Z Lewis
P Crossley-Smith
A Morgans
N Godfrey
(Appointed 26 May 2021)
M Hewitt
(Appointed 6 October 2021)
Company number
02485577
Registered office
Saffron House
6-10 Kirby Street
London
EC1N 8TS
Auditor
Moore Kingston Smith LLP
Devonshire House
60 Goswell Road
London
EC1M 7AD
Methods Business and Digital Technology Limited
Contents
Page
Strategic report
1 - 4
Directors' report
5 - 7
Independent auditor's report
8 - 11
Profit and loss account
12
Balance sheet
13
Statement of changes in equity
14
Statement of cash flows
15
Notes to the financial statements
16 - 32
Methods Business and Digital Technology Limited
Strategic Report
For the year ended 30 April 2021
Page 1
The directors present the strategic report for the year ended 30 April 2021.
Fair review of the business
Our mission
Methods is the UK’s leading independent 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.
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 a 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
With a predominantly public-sector client base, this financial year has provided less predictable than previous years with a number of Brexit related issues and the impact of the Covid-19 pandemic. Together, these affected our public sector customers’ decisions about the procurement of new services. As a consequence, revenue fell back slightly from £84.6m in 2020 to £82.7m in 2021.
Operating profit before share-based payments has declined from £4.1m (4.9%) in 2020 to £3.8m (4.6%). This decline arises from reduced margins in the public sector due to higher levels of competition and continued investment in sales and marketing and new offerings. These investments will enable us to grow once the impact of the pandemic recedes.
Included in the profit for the year is an accelerated share option charge. The expected exercise date of the share options was changed to
30 April 2022
due to discussions taking place with an external third party that would result in an exercisable event.
Our order book increased over the year from £43.8m to £44.0m with significant Order Entry in the Justice, Education and Homeland Security sectors of government.
The
company
continues to generate cash with £
2
.
5
m (2020: £
6.4
m) cash generated from operations
. The company repaid £0.5m to group and connected companies which resulted in a
n overall decrease in cash at bank from £14.6m to £14.1m.
Methods Business and Digital Technology Limited
Strategic Report (Continued)
For the year ended 30 April 2021
Page 2
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.
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
.
Covid-19 Pandemic
Since the start of the pandemic in March 2020, there has been a continuing demand for our services. Due to the nature of our services, our focus on the public sector and our business systems, the Covid-19 pandemic has therefore not caused any significant deterioration in the company's trading performance and liquidity. We have been able to deliver projects to our customers remotely and our back office has continued to function remotely without interruption, helped greatly by use of our cloud based internal business systems.
Going Concern
The Directors note that the company has a strong net asset balance sheet position with no external debt or external financial covenants.
The Directors have assessed the company'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 Covid-19 and other relevant factors. 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 company 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, 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 company 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.
Methods Business and Digital Technology Limited
Strategic Report (Continued)
For the year ended 30 April 2021
Page 3
Brexit
The company trades primarily with the UK public sector and is therefore not directly exposed to any potential changes in access to the European Union Single Market. The company's principal cost is UK resident staff and contractors and therefore the risks from potential changes in residency rules are low. Brexit has reduced the number of European nationals with technical skills, which has created wage inflation and has exacerbated skills shortages in certain technical areas.
Principal risks and uncertainties
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
company
including those that could impact its business model, future performance and solvency. The table 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 Board reviews and agrees policies for managing risk and keeps a register which is effective at anticipating and planning for high probability low impact events such as management or client loss. In the light of recent events stemming from the Covid-19 pandemic the board has decided to look at risk in a different and more strategic way. The greater the risk, the less likely it seems, and the less risky it becomes. Countering the cognitive biases that influence decision making by a board about strategic risk and existential threat requires processes that are explicitly designed and implemented to avoid the worst anticipation failures. The pandemic has made the “standard” risk assessment of probability times impact to be seen as wholly inappropriate. Time, not probability, is the critical factor. Two estimates of time are relevant: how long will it be before calamity strikes and the time required to implement mitigation options. If the former is genuinely greater than the latter, then there exists a positive Safety Margin. This concept of the Safety Margin is critical. However thoroughly analysed, assessments of probability done once a year are of limited value before an existential threat materialises and of no value whatsoever if the threat materialises in fact. The Safety Margin on the other hand, if properly analysed and appropriately used, can be of great value before and after a threat materialises and throughout mitigation activity.
The focus of the board in assessing Strategic Risk, is on monitoring high-value, leading warning indicators of a potential threat becoming an actual threat. These indicators are reflected in our choice of KPIs and discussed at every board meeting. Successful adaptation in the face of a material risk relies on resilience: how fast can Methods respond to a negative event. Resilience is a function of several interacting factors, including maintenance of staff and cash reserves, organisational problem detection and problem solving capabilities. Investing in adaptation in the face of Strategic Risk could be seen as a cost or diverting resources from investment but the Board believes that it creates real value.
As Covid-19 has demonstrated there are many risks which are currently unknown and outside the
company
’s control. Where possible Methods takes steps to mitigate risks but realises that it cannot safeguard against all of them. Therefore the approach of the board has been to monitor risks and focus on the time to respond to an arising risk rather than cope with all potential risks; this is done regularly at board meetings by assessing the
company'
s performance. There has been no material change to Methods risk profile from previous years and the board considers its risk assessment processes to be reasonable robust and comprehensive for a company of its size.
Methods Business and Digital Technology Limited
Strategic Report (Continued)
For the year ended 30 April 2021
Page 4
Reporting on section 172 of the Companies Act 2006
The Directors continue to have regard to the interests of key stakeholders of the
c
ompany and those of its related undertakings, including the impact of its activities on the community, environment and the
c
ompany’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
c
ompany for its shareholders in the long term. The Directors receive monthly updates from management on matters affecting the
c
ompany’s stakeholders which assists the Directors in their decision-making process.
Performance and development
The
c
ompany made
o
perating
p
rofit of £
2
.
4
m (2020: £4.0m). Operating profit before share-based payments was £3.8m (2020: £4.1m) for the year on a turnover of £82.7m (2020: £84.6m).
At 30 April 2021 the
c
ompany had net assets of £12.
6
m (2020: £10.5m).
Cash in bank and in hand at year end decreased from £14.6m to £14.1m.
Key financial and other performance indicators
The Board monitors at each of its monthly board meetings the following key performance indicators as these are the strongest indicators of the ongoing financial health of the Company in terms of profit and cash flow.
-
Turnover: £82.7m (2020: £84.6m)
-
Profitability
1: 4.6% (2020: 4.9%)
-
EBITDA 2: £4.0m (2020: £4.2m)
-
Cash generated from operations: £
2
.
5
m (2020: £
6
.
4
m)
-
Order Book: £44.0m (2020: £43.8m)
-
Staff Attrition 3: 27.9% (2020: 18.6%)
-
Contractor Ratio 4: 60.1% (2020: 60.5%)
1 = Operating profit before share-based payments / Turnover
2 = Earnings before interest, tax, depreciation, amortisation, share-based payments, 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
P Rowlins
Director
6 April 2022
Methods Business and Digital Technology Limited
Directors' Report
For the year ended 30 April 2021
Page 5
The directors present their annual report and financial statements for the year ended 30 April 2021.
Principal activities
The principal activity of the company continued to be that of the provision of business change, technology and procurement consultancy services, primarily for public sector clients.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
P Rowlins
M Thompson
A Gaskell
(Resigned 2 March 2021)
S Horrocks
Z Lewis
P Crossley-Smith
A Morgans
N Godfrey
(Appointed 26 May 2021)
M Hewitt
(Appointed 6 October 2021)
Results and dividends
The results for the year are set out on page 12.
Interim dividends were paid amounting to £1,100,
000.
The Directors do not recommend payment of a final dividend.
Statement of directors' responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing the financial statements, the Directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
state whether applicable United Kingdom Accounting Standards, comprising FRS 102, have been followed,
subject to any material departures disclosed and explained in the financial statements;
-
make judgements and accounting estimates that are reasonable and prudent; and
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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 enable them to ensure that the financial statements comply with the Companies Act 2006.
Methods Business and Digital Technology Limited
Directors' Report (Continued)
For the year ended 30 April 2021
Page 6
Statement in respect of stakeholder engagement
The Directors have determined that the
c
ompany and related undertakings’ key stakeholders are the shareholders of Methods Holdings Limited (the company’s parent company); staff; associates and contractors; customers; technology partners.
How the Directors engage with these stakeholders is summarised below:
Shareholders
The shareholders of
the parent company
are also the Directors
of the parent company
. The key areas of interest for the shareholders of
the parent company
is the current and future financial performance of the
c
ompany 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, as Directors of
the parent company
, also determine the overall strategic direction of the company taking into consideration the needs of all our stakeholders.
Our staff
The 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, 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 company, 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 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 company needs to establish relationships with new partners where new products can enhance services to our clients.
Methods Business and Digital Technology Limited
Directors' Report (Continued)
For the year ended 30 April 2021
Page 7
Financial instruments
Financial risk management policy
The
c
ompany'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
Liquidity risk arises in relation to the
c
ompany's management of working capital and the risk that the
c
ompany 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.
Credit risk
Trade debtors and trade creditors give risk to credit risk for the
c
ompany.
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 profit and loss account.
The risk arising from the possible non-advance of credit by the
c
ompany'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.
Streamlined Energy and Carbon Reporting
The company is
not obligated to report on Streamlined Energy Carbon Reporting as this disclosure will be made under the immediate and also ultimate parent
c
ompany, Methods Holdings Limited.
Qualifying third party indemnity provisions
The
c
ompany has purchased insurance to cover its Directors and Officers against their costs in defending themselves in any legal proceedings taken against them in that capacity and in respect of damages resulting from the unsuccessful defence of any proceedings.
Statement of disclosure to auditor
So far as each person who was a Director at the date of approving this report is aware, there is no relevant audit information of which the
c
ompany’s auditors are unaware. Additionally, the Directors individually have taken all the necessary steps that they ought to have taken as Directors in order to make themselves aware of all relevant audit information and to establish that the
c
ompany’s auditors are aware of that information.
On behalf of the board
P Rowlins
Director
6 April 2022
Methods Business and Digital Technology Limited
Independent Auditor's Report
To the Members of Methods Business and Digital Technology Limited
Page 8
Opinion
We have audited the financial statements of Methods Business and Digital Technology Limited
(the 'company')
for the year ended 30 April 2021 which comprise the Profit And Loss Account, the Balance Sheet, the Statement of Changes in Equity, the Statement of Cash Flows and notes to the financial statements, 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 FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 30 April 2021 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the
financial statements
section of our report. We are independent of the
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the
directors
with respect to going concern are described in the relevant sections of this report.
The
directors are
responsible for the other information. The other information comprises the information included in the annual report, other than the
financial statements
and our auditor’s report thereon. 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.
In connection with our audit of the
financial statements
, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the
financial statements
or a material misstatement of the other information. 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.
Methods Business and Digital Technology Limited
Independent Auditor's Report (Continued)
To the Members of Methods Business and Digital Technology Limited
Page 9
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 year for which the financial statements are prepared is consistent with the financial statements
; and
-
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the Strategic Report and the Directors' Report
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the
financial statements
, the
directors are
responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors
either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Methods Business and Digital Technology Limited
Independent Auditor's Report (Continued)
To the Members of Methods Business and Digital Technology Limited
Page 10
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
-
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
-
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
-
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
-
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
-
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required. We placed particular focus on revenue recognition, including accrued and deferred income, and conducted increased testing on those areas.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
-
Conclude on the appropriateness of the
directors'
use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Methods Business and Digital Technology Limited
Independent Auditor's Report (Continued)
To the Members of Methods Business and Digital Technology Limited
Page 11
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
for no purpose other than to draw to the attention of
the company’s members those matters we are required to
include
in an auditor's report
addressed to them.
To the fullest extent permitted by law, we do not accept or assume responsibility to
any party
other than the company and the company’s members as a body, for our work, for this report, or for the opinions we have formed.
Jamie Sherman (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP
6 April 2022
Chartered Accountants
Statutory Auditor
Devonshire House
60 Goswell Road
London
EC1M 7AD
Methods Business and Digital Technology Limited
Profit and loss account
For the year ended 30 April 2021
Page 12
2021
2020
Notes
£
£
Turnover
3
82,749,746
84,560,810
Other operating income
3
545,492
537,806
Other external expenses
(59,551,289)
(62,871,794)
Staff costs
6
(16,185,082)
(13,469,257)
Depreciation and other amounts written off tangible fixed assets
12
(180,437)
(94,674)
Other operating expenses
(3,576,777)
(4,518,443)
Operating profit before share-based payments
4
3,801,653
4,144,448
Charge for share based payments
20
(1,394,753)
(94,634)
Operating profit
4
2,406,900
4,049,814
Interest receivable and similar income
8
13,462
43,445
Interest payable and similar expenses
9
(91,958)
(26,362)
Profit before taxation
2,328,404
4,066,897
Taxation
10
(595,721)
(738,181)
Profit for the financial year
1,732,683
3,328,716
The profit and loss account has been prepared on the basis that all operations are continuing operations.
There are no items of other comprehensive income for either the year or the prior year, accordingly no statement of other comprehensive income has been presented.
Methods Business and Digital Technology Limited
Balance Sheet
As at 30 April 2021
Page 13
2021
2020
Notes
£
£
£
£
Fixed assets
Tangible assets
12
580,599
761,036
Current assets
Debtors
14
14,809,591
11,546,852
Cash at bank and in hand
14,088,576
14,601,774
28,898,167
26,148,626
Creditors: amounts falling due within one year
15
(16,901,606)
(16,194,186)
Net current assets
11,996,561
9,954,440
Total assets less current liabilities
12,577,160
10,715,476
Creditors: amounts falling due after more than one year
16
(119,150)
Provisions for liabilities
17
(46,602)
Net assets
12,577,160
10,549,724
Capital and reserves
Called up share capital
21
400
400
Share premium account
352,184
352,184
Profit and loss reserves
12,224,576
10,197,140
Total equity
12,577,160
10,549,724
The financial statements were approved by the board of directors and authorised for issue on 6 April 2022 and are signed on its behalf by:
P Rowlins
Director
Company Registration No. 02485577
Methods Business and Digital Technology Limited
Statement of Changes in Equity
For the year ended 30 April 2021
Page 14
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 May 2019
400
352,184
7,673,790
8,026,374
Year ended 30 April 2020:
Profit and total comprehensive income for the year
-
-
3,328,716
3,328,716
Dividends
11
-
-
(900,000)
(900,000)
Capital contribution from Methods Holdings Limited in relation to fair value of share options granted to employees
20
-
-
94,634
94,634
Balance at 30 April 2020
400
352,184
10,197,140
10,549,724
Year ended 30 April 2021:
Profit and total comprehensive income for the year
-
-
1,732,683
1,732,683
Dividends
11
-
-
(1,100,000)
(1,100,000)
Capital contribution from Methods Holdings Limited in relation to fair value of share options granted to employees
20
-
-
1,394,753
1,394,753
Balance at 30 April 2021
400
352,184
12,224,576
12,577,160
Methods Business and Digital Technology Limited
Statement of Cash Flows
For the year ended 30 April 2021
Page 15
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
2,485,534
6,372,834
Interest paid
121,342
(26,362)
Income taxes paid
(1,411,742)
(1,083,045)
Net cash inflow from operating activities
1,195,134
5,263,427
Investing activities
Purchase of tangible fixed assets
(826,998)
Proceeds on disposal of tangible fixed assets
1,203
Interest received
13,462
43,445
Net cash generated from/(used in) investing activities
13,462
(782,350)
Financing activities
(Decrease)/increase in loans with connected companies
(354,131)
3,723,067
Decrease in loans with group companies
(267,663)
(23,922)
Dividends paid
(1,100,000)
(900,000)
Net cash (used in)/generated from financing activities
(1,721,794)
2,799,145
Net (decrease)/increase in cash and cash equivalents
(513,198)
7,280,222
Cash and cash equivalents at beginning of year
14,601,774
7,321,552
Cash and cash equivalents at end of year
14,088,576
14,601,774
Methods Business and Digital Technology Limited
Notes to the Financial Statements
For the year ended 30 April 2021
Page 16
1
Accounting policies
Company information
Methods Business and Digital Technology Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Saffron House, 6-10 Kirby Street, London, EC1N 8TS.
1.1
Accounting convention
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 a
mounts
in these financial statements are
rounded to the nearest
pound
.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This 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
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares
;
-
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 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 financial statements of the company are consolidated in the financial statements of
Methods Holdings Limited
. These consolidated financial statements are available from its registered office, Saffron House, 6-10 Kirby Street, London, England, EC1N 8TS
.
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
1
Accounting policies
(Continued)
Page 17
1.2
Going concern
The Directors have assessed the company’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 Covid-19 and other relevant factors. 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.
true
Under both the base case and severe but plausible stressed scenarios the company 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 18 months, 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. As such, whilst the Covid-19 pandemic has increased uncertainty, the Directors have a reasonable expectation that the Company 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
.
1.3
Turnover
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.
1.4
Other external charges
Other external charges comprise the cost of contractors and services outsourced to third party providers.
1.5
Other operating charges
Other operating charges comprise the costs incurred with third parties relating to operating the company.
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
1
Accounting policies
(Continued)
Page 18
1.6
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and machinery
Straight line over 3 years
Fixtures, fittings & equipment
Straight line over 5 years
Computer equipment
Straight line over 3 years
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 credited or charged to profit or loss
.
1.7
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities 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
profit
or
loss
.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
1.8
Impairment of fixed assets
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.
1.9
Cash at bank and in hand
Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.
1.10
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
1
Accounting policies
(Continued)
Page 19
Basic financial assets
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
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.
Impairment of financial assets
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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
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.
Classification of financial liabilities
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 company after deducting all of its liabilities.
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
1
Accounting policies
(Continued)
Page 20
Basic financial 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
paymen
ts 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. A
m
ounts 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
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
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
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
profit and loss account
, 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
company
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.
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
1
Accounting policies
(Continued)
Page 21
1.13
Provisions
Provisions are recognised when the
company
has a legal or constructive present obligation as a result of a past event, it is probable that the
company
will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i
s
measured at present value
,
the unwinding of the discount is recognised as a finance cost in
profit
or
loss
in the period
in which
it arises.
1.14
Employee benefits
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.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
1
Accounting policies
(Continued)
Page 22
1.16
Share-based payments
The parent company participates in an equity-settled share based payments arrangement granted to certain employees of this company. Equity-settled share-based payments are measured at fair value at the date of grant using the Directors' valuation.
The Company's share based arrangement consists of options that may be exercised on a change of control, transfer of business or a listing but does not include a reorganisation. The cost of granting share options is recognised rateably through the profit and loss account from the date of grant up to the likely date of exercise of the options, having first assumed a reasonable attrition rate through to the likely date of exercise.
Where the performance of certain non-market conditions are required to be satisfied before the options can vest or be exercised, the Company estimates the fair value of the options to be nil if these conditions are not likely to arise in the near future. This estimate is revised at each financial year end.
Where the options vest on date of grant and the Company expects the options to be exercised within a short period of time, the Company calculates the cost of the grant using the intrinsic value of the underlying shares to be obtained on exercise as this is expected to amount to a reasonable approximation of the fair value of the options. Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would
have been recognised over the remaining vesting period is recognised immediately
.
The parent company has no cash-settled arrangements.
1.17
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to income 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 lease asset are consumed.
2
Judgements and key sources of estimation uncertainty
In the application of the company’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.
Critical judgements
The following judgement (apart from those involving estimates) ha
s
had the most significant
effect on amounts recognised in the financial statements.
Loss making contracts
Where a contract is loss making the company provides for the full loss of the contract once the loss has been identified and validated by management.
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
2
Judgements and key sources of estimation uncertainty
(Continued)
Page 23
Key sources of estimation uncertainty
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 recognition
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 Company 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 1.3 of the financial statements and the turnover for the year is disclosed in note 3 of the financial statements.
Recoverability of Work in Progress and Trade Debtors
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 and provisions
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 Company that have not yet been billed and invoices relating to the financial year that are received after the year end.
Share-based payments
The cost of granting share options is recognised rateably through the profit and loss account from the date of grant up to the likely date of exercise of the options, having first assumed a reasonable attrition rate through to the likely date of exercise.
Attrition rates and based on historic rates of employee turnover and likely exercise dates are based on the assumed intentions of the shareholders at the year end.
3
Turnover and other revenue
2021
2020
£
£
Turnover analysed by class of business
Rendering of services
82,749,746
84,560,810
2021
2020
£
£
Other significant revenue
Management fees charged to companies under common control
544,950
537,616
Sundry other income
542
190
2021
2020
£
£
Turnover analysed by geographical market
United Kingdom
82,749,746
84,560,810
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
Page 24
4
Operating profit
2021
2020
Operating profit for the year is stated after charging:
£
£
Depreciation of owned tangible fixed assets
180,437
94,674
Share-based payments
1,394,753
94,634
Operating lease charges
727,639
777,692
5
Auditor's remuneration
2021
2020
Fees payable to the company's auditor:
£
£
For audit services
Audit of the financial statements of the company
23,500
29,780
For other services
Taxation compliance services
5,300
Other taxation services
59,564
All other non-audit services
1,500
1,500
64,864
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Consultants
135
112
Office and Admin
56
52
Sales and Marketing
19
15
210
179
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
14,030,315
11,687,371
Social security costs
1,676,674
1,387,560
Pension costs
478,093
394,326
16,185,082
13,469,257
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
Page 25
7
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
1,425,307
1,184,444
Company pension contributions to defined contribution schemes
42,430
43,243
1,467,737
1,227,687
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2020: 6).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2021
2020
£
£
Remuneration for qualifying services
228,002
193,594
Company pension contributions to defined contribution schemes
7,976
8,184
8
Interest receivable and similar income
2021
2020
£
£
Interest income
Interest on bank deposits and loans
13,462
43,445
9
Interest payable and similar expenses
2021
2020
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
17
125
Interest payable to group undertakings
91,941
26,237
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
Page 26
10
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
925,882
718,159
Adjustments in respect of prior periods
(7,025)
(54,888)
Total current tax
918,857
663,271
Deferred tax
Origination and reversal of timing differences
(323,136)
74,910
Total tax charge
595,721
738,181
The actual charge for the year can be reconciled to the expected charge for the year based on the profit and the standard rate of tax as follows:
2021
2020
£
£
Profit before taxation
2,328,404
4,066,897
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
442,397
772,710
Tax effect of expenses that are not deductible in determining taxable profit
305,624
34,226
Adjustments in respect of prior years
(7,025)
(54,888)
Group relief
(12,261)
Research and development tax credit
(5,094)
(31,661)
Other permanent differences
172,773
Deferred tax adjustment in respect of share based payments
(324,082)
Deferred tax adjustment in respect of prior years
946
(7,140)
Clawback of previous year relief
15,701
24,934
Temporary timing differences
6,742
Taxation charge for the year
595,721
738,181
11
Dividends
2021
2020
£
£
Interim dividend
1,100,000
900,000
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
Page 27
12
Tangible fixed assets
Plant and machinery
Fixtures, fittings & equipment
Computer equipment
Total
£
£
£
£
Cost
At 1 May 2020 and 30 April 2021
75,283
774,223
13,407
862,913
Depreciation and impairment
At 1 May 2020
7,788
91,854
2,235
101,877
Depreciation charged in the year
15,576
160,392
4,469
180,437
At 30 April 2021
23,364
252,246
6,704
282,314
Carrying amount
At 30 April 2021
51,919
521,977
6,703
580,599
At 30 April 2020
749,864
11,172
761,036
13
Fixed asset investments
2021
2020
£
£
Unlisted investments
The unlisted investments represent minority interest
s
in two Limited Liability Partnerships. As at 30 April 202
1
, the Directors do not believe that the investments are recoverable and therefore the full provision against the investments made in the previous years have remained.
Movements in fixed asset investments
Unlisted investments
£
Cost or valuation
At 1 May 2020 & 30 April 2021
655,000
Impairment
At 1 May 2020 & 30 April 2021
655,000
Carrying amount
At 30 April 2021
-
At 30 April 2020
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
Page 28
14
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
6,487,979
3,504,993
Other debtors
54,911
360,872
Prepayments and accrued income
7,990,167
7,680,987
14,533,057
11,546,852
Deferred tax asset (note 18)
276,534
14,809,591
11,546,852
15
Creditors: amounts falling due within one year
2021
2020
£
£
Trade creditors
794,147
617,801
Amounts due to group undertakings
22,065
289,728
Amounts due to connected companies
3,132,953
3,487,084
Corporation tax
217,162
590,897
Other taxation and social security
3,891,254
3,317,216
Other creditors
169,782
71,297
Accruals and deferred income
8,674,243
7,820,163
16,901,606
16,194,186
Amounts due to connected companies are unsecured, interest bearing
at
Bank of England base rate plus 1.25% and repayable on demand. Amounts due to group undertakings are not interest bearing and repayable on demand.
16
Creditors: amounts falling due after more than one year
2021
2020
£
£
Corporation tax
119,150
17
Provisions for liabilities
2021
2020
Note
£
£
Deferred tax liabilities
18
46,602
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
Page 29
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liability/(asset)
Liability/(asset)
2021
2020
Balances:
£
£
Capital allowances
65,843
74,084
Share based payments
(324,082)
-
Other timing differences
(18,295)
(27,482)
(276,534)
46,602
2021
Movements in the year:
£
Liability/(asset) at 1 May 2020
46,602
Credit to profit or loss
(323,136)
Liability/(asset) at 30 April 2021
(276,534)
19
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
478,093
394,326
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
Page 30
20
Share-based payment transactions
In a prior period
the parent
c
ompany entered into an equity-settled share-based payment arrangement in respect of employees of this
c
ompany. All options outstanding
at the year end
are under an Enterprise Management Incentive (“EMI”) scheme.
Grant date
14/02/2018
09/10/2018
02/04/2019
19/03/2020
Total
Number granted
995,987
45,000
100,000
125,000
1,265,987
Contractual life
10
10
10
10
10
Average weighted exercise price
£0.61
£0.92
£1.28
£1.28
£0.90
Options outstanding at 30 April 2021
623,668
45,000
100,000
125,000
893,668
Average contractual life at 30 April 2021
6.8
7.4
7.9
8.9
7.2
21
Share capital
2021
2020
£
£
Ordinary share capital
Issued and fully paid
400 Ordinary shares of £1 each
400
400
400
400
22
Financial commitments, guarantees and contingent liabilities
The
c
ompany and connected companies (through common ownership) are party to a banking arrangement with Coutts &
c
ompany, whereby an unlimited cross guarantee is given for all liabilities to the bank of any kind whether incurred alone or jointly with another. At the year end, the overall liability of the
c
ompany and connected companies to the bank was £
n
il (20
20
: £
n
il).
The
c
ompany, and connected companies (through common ownership) are party to an invoice discounting facility with RBS Invoice Finance Limited, whereby an unlimited multi-party guarantee is given for all liabilities to RBS Invoice Finance Limited. At the year end, the overall liability of the
c
ompany, its parent company and connected companies to RBS Invoice Finance Limited was £
n
il (20
20
: £
n
il).
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
Page 31
23
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2021
2020
£
£
Within one year
951,558
574,761
Between two and five years
2,005,837
2,605,669
2,957,395
3,180,430
24
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
During the year the company rendered and purchased services of £1,132,997 (2020: £773,410) and £322,867 (2020: £88,467) respectively with companies under common control.
During the year the company charged management fees of £544,950 (2020: £537,616) to companies under common control.
At the year end the company owed £3,132,953 (2020: £3,487,084) to companies under common control. These amounts are unsecured, interest bearing at Bank of England base rate plus 1.25% and repayable on demand.
A Director of the company also serves as a Director of Amersham & Chalfont Hockey Community Sports Club Limited, a Community Amateur Sports Club, and also as a director of Amersham AGP Limited, which is a subsidiary of Amersham & Chalfont Hockey Community Sports Club Limited. In November 2016, an interest free loan of £100,000 was advanced to Amersham AGP Limited which is included in other debtors. The loan is to be repaid over a period of up to six years. In return for the preferential terms of the loan, Methods acts as principal sponsor, has the pitch named after the company, has the majority of advertising space at the facility and benefits from preferential rates for use of the club’s facilities. As at 30 April 2021, £45,000 (2020: £70,000) remained outstanding.
25
Controlling party
Methods Holdings Limited is the
c
ompany’s immediate parent
c
ompany.
The Directors consider the ultimate controlling party to be the Director, P Rowlins, by virtue of his majority shareholding in the ultimate parent company.
Methods Holdings Limited is the parent undertaking of the largest and smallest group for which group financial statements are drawn up, and of which the
c
ompany is a member. The registered office address of Methods Holdings Limited is Saffron House, 6-10 Kirby Street, London, EC1N 8TS.
The group financial statements of Methods Holdings Limited are publicly available from its registered office address: Saffron House, 6-10 Kirby Street, London, EC1N 8TS.
Methods Business and Digital Technology Limited
Notes to the Financial Statements (Continued)
For the year ended 30 April 2021
Page 32
26
Cash generated from operations
2021
2020
£
£
Profit for the year after tax
1,732,683
3,328,716
Adjustments for:
Taxation charged
595,721
738,181
Finance costs
91,958
26,362
Investment income
(13,462)
(43,445)
Gain on disposal of tangible fixed assets
(1,203)
Depreciation and impairment of tangible fixed assets
180,437
94,674
Charge for share-based payments
1,394,753
94,634
Movements in working capital:
(Increase)/decrease in debtors
(2,884,441)
4,405,504
Increase/(decrease) in creditors
1,387,885
(2,270,589)
Cash generated from operations
2,485,534
6,372,834
27
Analysis of changes in net funds
1 May 2020
Cash flows
30 April 2021
£
£
£
Cash at bank and in hand
14,601,774
(513,198)
14,088,576
2021-04-30
2020-05-01
false
CCH Software
CCH Accounts Production 2021.300
P Rowlins
M Thompson
A Gaskell
S Horrocks
Z Lewis
P Crossley-Smith
A Morgans
N Godfrey
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