REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
FOR |
IDEAL NETWORKS LIMITED |
REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
FOR |
IDEAL NETWORKS LIMITED |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
CONTENTS OF THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Directors | 4 |
Report of the Independent Auditors | 6 |
Income Statement | 10 |
Statement of Other Comprehensive Income | 11 |
Balance Sheet | 12 |
Statement of Changes in Equity | 13 |
Notes to the Financial Statements | 14 |
IDEAL NETWORKS LIMITED |
COMPANY INFORMATION |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
DIRECTORS: |
SECRETARY: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
St David's Court |
Union Street |
Wolverhampton |
WV1 3JE |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
The directors present their strategic report for the year ended 31 December 2022. |
REVIEW OF BUSINESS |
During the year the principal activities of the business continued to be the design, delivery and management of core technology infrastructure products and services to businesses and public sector organisations. The Directors are satisfied with the performance for the year as set out in the financial statements in the following pages. |
Key financial highlights are as follows: |
2022 | 2021 | Change |
Turnover | £5,075,850 | £14,469,300 | +£606,550 |
Gross Profit | £6,218,665 | £5,913,545 | +£305,120 |
Gross Profit as a proportion of turnover | 41.2% | 40.9% | +0.4% |
Operating Profit before exceptional items | £187,478 | £101,971 | £85,507 |
Operating Profit % before exceptional items | 1.2% | 0.7% | +0.5% |
Average number of employees | 59 | 59 | - |
The increase in turnover and decrease in profits in the year is attributed to changes in the business mix. This has included the effect of an increase in the proportion of services business and in the proportion of longer-term contracts won during the year. |
PRINCIPAL RISKS AND UNCERTAINTIES |
The key risks to the company and mitigating measures are considered to be as follows: |
Contract awards, renewal and terms |
The principal risk affecting the company's performance is the winning and renewal of commercially sustainable contracts to provide core technology infrastructure related products and services. A failure to win and retain sufficient business risks a loss of income streams which contribute to the firm's central administrative costs and business profits. |
The company manages this risk by: |
- | investment in a highly skilled sales and technical solutions team to ensure that we provide products and services that meet customer need; |
- | providing breadth and depth of expertise in core technology infrastructure products and services; |
- | providing a depth of specialist sector knowledge to address customer needs and add value; and |
- | maintaining close relationships with customers as part of our product offer to ensure that customer needs and challenges are understood and responded to quickly and effectively. |
Employee Retention |
The company relies on having experienced skilled staff to provide the technological expertise on which our customers rely. Loss of key staff can lead to increased recruitment costs which increase company expenditure, put pressure on performance and make it difficult to achieve company financial targets. |
This risk is mitigated by ensuring we have a depth of skills among our staff, through the provision of technical and partner accreditation training and career development, by maintaining strong relationships with technology partners, through the monitoring and benchmarking of reward structures and through the provision of supportive and collegiate environment that continues to make Ideal an attractive place to work. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
ON BEHALF OF THE BOARD: |
27 September 2023 |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
The directors present their report with the financial statements of the company for the year ended 31 December 2022. |
PRINCIPAL ACTIVITY |
The principal activity of the company in the year under review was that of information technology consultants. |
DIVIDENDS |
Dividends of £113,600 on the Ordinary A shares were paid in the year. |
Dividends of £nil on the Ordinary B shares were paid in the year. |
Dividends of £nil on the Ordinary C shares were paid in the year. |
The total distribution of dividends in the year ended 31 December 2022 was £113,600. |
The directors do not recommend the payment of a final dividend. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 January 2022 to the date of this report. |
Other changes in directors holding office are as follows: |
GOING CONCERN |
The Directors have performed an assessment on going concern, including stress-testing the cashflow for a worst case scenarios. Based on the work performed, they 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. |
The Directors therefore have a reasonable expectation that the company will have adequate resources to continue in existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations. |
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally accepted Accounting Practice (United Kingdom Accounting Standards 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 these financial statements, the directors are required to: |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
STATEMENT OF DIRECTORS' RESPONSIBILITIES - continued |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; 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 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. They 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. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
IDEAL NETWORKS LIMITED |
Opinion |
We have audited the financial statements of Ideal Networks Limited (the 'company') for the year ended 31 December 2022 which comprise the Income Statement, Statement of Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity 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 Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its loss for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' 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. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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 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. |
Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
IDEAL NETWORKS LIMITED |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors. |
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of Directors' remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. ;or |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on pages four and five, 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 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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
IDEAL NETWORKS LIMITED |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the group 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. |
The extent to which the audit was considered capable of detecting irregularities, including fraud irregularities, |
including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council's website, to detect material misstatements in respect of irregularities, including fraud. |
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we 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. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and |
regulations, including fraud. |
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included: |
- | Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud. |
- | Reviewing minutes of meetings of those charged with governance. |
- | Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection. |
- | Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations. |
- | Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias. |
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 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. |
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 Report of the Auditors. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
IDEAL NETWORKS LIMITED |
Use of our report |
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors 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 |
St David's Court |
Union Street |
Wolverhampton |
WV1 3JE |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
INCOME STATEMENT |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
2022 | 2021 |
Notes | £ | £ | £ | £ |
TURNOVER | 3 |
Cost of sales |
GROSS PROFIT |
Exceptional costs |
Administrative expenses |
6,304,886 | 5,876,770 |
(86,221 | ) | 36,775 |
Other operating income |
OPERATING (LOSS)/PROFIT | 5 | ( |
) |
Interest receivable and similar income |
(LOSS)/PROFIT BEFORE TAXATION | ( |
) |
Tax on (loss)/profit | 7 |
(LOSS)/PROFIT FOR THE FINANCIAL YEAR |
( |
) |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
STATEMENT OF OTHER COMPREHENSIVE INCOME |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
2022 | 2021 |
Notes | £ | £ |
(LOSS)/PROFIT FOR THE YEAR | ( |
) |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
( |
) |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
BALANCE SHEET |
31 DECEMBER 2022 |
2022 | 2021 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Tangible assets | 10 |
CURRENT ASSETS |
Stocks | 11 |
Debtors | 12 |
Cash at bank and in hand |
CREDITORS |
Amounts falling due within one year | 13 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
PROVISIONS FOR LIABILITIES | 15 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 16 |
Contributed equity |
Retained earnings |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
Called up |
share | Retained | Contributed | Total |
capital | earnings | equity | equity |
£ | £ | £ | £ |
Balance at 1 January 2021 |
Changes in equity |
Total comprehensive income | - |
Dividends | - | ( |
) | - | ( |
) |
Balance at 31 December 2021 |
Changes in equity |
Total comprehensive income | - | ( |
) | ( |
) |
Dividends | - | ( |
) | - | ( |
) |
Balance at 31 December 2022 |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
1. | STATUTORY INFORMATION |
Ideal Networks Limited is a |
2. | ACCOUNTING POLICIES |
BASIS OF PREPARING THE FINANCIAL STATEMENTS |
The presentation currency of the financial statements is the Pound Sterling (£) and amounts are rounded to the nearest £. |
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. |
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below. |
GOING CONCERN |
The Directors have performed an assessment on going concern, including stress-testing the cashflow for a worst case scenarios. Based on the work performed, they 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. |
The Directors therefore have a reasonable expectation that the company will have adequate resources to continue in existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements. |
FINANCIAL REPORTING STANDARD 102 - REDUCED DISCLOSURE EXEMPTIONS |
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland": |
• | the requirements of Section 7 Statement of Cash Flows; |
• | the requirement of paragraph 33.7. |
RELATED PARTY EXEMPTION |
The company has taken advantage of exemption, under s33.1a of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group. |
TURNOVER |
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates. |
Revenue from the sale of equipment and licences is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on delivery of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
2. | ACCOUNTING POLICIES - continued |
Revenue from contracts for the provision of professional 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 it is probable will be recovered. |
Revenue from the provision of managed services and support services is recognised over the length of the contract. |
Revenue from royalties and commissions is recognised when the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the entity. |
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: |
Leasehold improvements | Over the term of the lease - 10 years |
Fixture and fittings | 15% Reducing Balance |
Computer and office equipment | 15% Reducing Balance |
Motor vehicles | 20% Reducing Balance |
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. |
STOCKS |
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition. |
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss. |
FINANCIAL INSTRUMENTS |
The company has elected to apply the provision 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 provision 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. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
2. | ACCOUNTING POLICIES - continued |
Basic financial assets |
Basic financial assets, which include trade and other debtors, intercompany balances, 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. |
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 arrangement 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. |
Basic financial liabilities |
Basic financial liabilities, including trade and other creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised. |
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. |
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. |
Derecognition of financial liabilities |
Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled. |
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. |
TAXATION |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
2. | ACCOUNTING POLICIES - continued |
DEFERRED TAX |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
FOREIGN EXCHANGE |
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period. |
HIRE PURCHASE AND LEASING COMMITMENTS |
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases. |
Assets held under finance leases are recognised as assets at the lower of fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability. |
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. |
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term. |
PENSION COSTS AND OTHER POST-RETIREMENT BENEFITS |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
2. | ACCOUNTING POLICIES - continued |
EMPLOYEE BENEFITS |
The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received. |
IMPAIRMENT |
At each balance sheet date, the company reviews the carrying amount of its assets to determine whether there is any indication that any items have suffered an impairment loss. If any such indication exists, the recoverable amount of an asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. |
CONTRIBUTED EQUITY |
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the price earnings model. The fair value determined at the grant date is expensed on a straight line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity. |
When the terms and conditions of equity-settled shared-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value of the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value. |
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. |
SIGNIFICANT JUDGEMENTS AND ESTIMATES |
In the application of the firm's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities. The estimates and underlying assumptions are based on historical experience and are reviewed on an ongoing basis. |
The estimates and assumptions which have the highest risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below: |
Depreciation |
The company exercises judgements to determine useful lives and residual values of fixed assets. the assets are depreciated down to their residual values over their useful economic lives. |
Percentage complete revenue |
The estimation of total contract costs represents a significant estimate that impacts the turnover recognised for service contracts. Frequent assessments and reviews are made of actual costs incurred on a contract and the forecast costs associated with completion a service contract. Key inputs into the assessment of forecast costs include the contract work remaining, cost of required resource to complete the remaining work and risks associated with completion of the contractual obligations. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
3. | TURNOVER |
The turnover and loss (2021 - profit) before taxation are attributable to the one principal activity of the company. |
An analysis of turnover by class of business is given below: |
2022 | 2021 |
£ | £ |
An analysis of turnover by geographical market is given below: |
2022 | 2021 |
£ | £ |
United Kingdom |
Europe |
United States of America |
4. | EMPLOYEES AND DIRECTORS |
2022 | 2021 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
The average number of employees during the year was as follows: |
2022 | 2021 |
Admin | 10 | 9 |
Delivery | 30 | 27 |
Sales & Solutions | 19 | 23 |
A defined contribution pension scheme is operated by the company. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension charge represents contributions payable by the company to the fund and amounted to £161,578 (2021 - £152,652). Employer and employee contributions amounting to £22,046 (2021 - £19,926) were payable to the fund at year end and are included in creditors. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
4. | EMPLOYEES AND DIRECTORS - continued |
2022 | 2021 |
£ | £ |
Directors' remuneration |
Directors' pension contributions to money purchase schemes |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes |
Information regarding the highest paid director is as follows: |
2022 | 2021 |
£ | £ |
Emoluments etc |
Pension contributions to money purchase schemes |
5. | OPERATING (LOSS)/PROFIT |
The operating profit is stated after charging/(crediting): |
2022 | 2021 |
£ | £ |
Other operating leases | 319,220 | 319,220 |
Depreciation - owned assets | 86,107 | 79,829 |
Loss on disposal of fixed assets | 18,351 | - |
Auditor's remuneration | 20,000 | 16,750 |
Foreign exchange differences | (67,569 | ) | 8,928 |
Defined contribution pension cost | 161,578 | 152,652 |
6. | EXCEPTIONAL ITEMS |
2022 | 2021 |
£ | £ |
Management restructure and employee settlement costs | 194,830 | - |
In the year ended 31 December 2022, exceptional items related to onerous operating lease costs. The total costs have been shown as an exceptional cost in the profit and loss account. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
7. | TAXATION |
Analysis of the tax charge |
The tax charge on the loss for the year was as follows: |
2022 | 2021 |
£ | £ |
Current tax: |
UK corporation tax |
Deferred tax | ( |
) |
Tax on (loss)/profit |
RECONCILIATION OF TOTAL TAX CHARGE INCLUDED IN PROFIT AND LOSS |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
2022 | 2021 |
£ | £ |
(Loss)/profit before tax | ( |
) |
(Loss)/profit multiplied by the standard rate of corporation tax in the UK of |
( |
) |
Effects of: |
Expenses not deductible for tax purposes |
Depreciation on ineligible assets | - | 5,120 |
Effect of CA's super deduction | - | (1,185 | ) |
Capital allowances in excess of depreciation | (5,576 | ) | - |
Tax losses carried forward | 16 | - |
Group relief | - | (139 | ) |
Deferred tax movement | 23,048 | - |
Total tax charge | 23,048 | 26,377 |
8. | DIVIDENDS |
2022 | 2021 |
£ | £ |
Ordinary A shares of £1 each |
Interim |
9. | DIRECTORS' TRANSACTIONS |
Dividends totalling £nil (2021 - £nil) were paid in the year in respect of shares held by the company's directors. |
During the year the directors accrued interest on their directors loan account of £3,209 (2021 - £3,219). |
Interest is charged at 2.5% and the loans are repayable on demand. At the year end the balance was a debtor of £142,004 (2021 - £150,040). |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
10. | TANGIBLE FIXED ASSETS |
Improvements | Fixtures |
to | and | Motor | Computer |
property | fittings | vehicles | equipment | Totals |
£ | £ | £ | £ | £ |
Cost |
At 1 January 2022 |
Additions |
Disposals | ( |
) | ( |
) |
At 31 December 2022 |
Depreciation |
At 1 January 2022 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) |
Impairments |
At 31 December 2022 |
Net book value |
At 31 December 2022 |
At 31 December 2021 |
11. | STOCKS |
2022 | 2021 |
£ | £ |
Finished goods |
12. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2022 | 2021 |
£ | £ |
Trade debtors |
Amounts owed by group undertakings |
Other debtors |
Deferred costs | 3,027,994 | 3,109,569 |
Directors' current accounts | 142,004 | 150,040 |
Tax |
Prepayments and accrued income |
Deferred bonus |
Amounts owed by parent are unsecured, interest free and repayable on demand. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
13. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2022 | 2021 |
£ | £ |
Trade creditors |
Corporation tax |
Social security and other taxes |
VAT | 326,977 | 464,249 |
Other creditors |
Accrued expenses |
Deferred income | 4,873,876 | 4,970,268 |
14. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Non-cancellable operating leases |
2022 | 2021 |
£ | £ |
Within one year | 336,632 | 336,632 |
Between one and five years | 815,295 | 1,151,927 |
1,151,927 | 1,488,559 |
Lessor |
At the reporting end date the company had contracted with tenants for the following minimum lease payments: |
2022 | 2021 |
£ | £ |
Within one year | 160,225 | - |
Between one and five years | 373,858 | - |
534,083 | - |
In May 2022 the company contracted with a lessor with minimum lease payments of £540,759 over the lease term and costs in relation to a rent-free period granted under the lease of £100,141 |
15. | PROVISIONS FOR LIABILITIES |
2022 | 2021 |
£ | £ |
Deferred tax | 65,994 | 42,947 |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
15. | PROVISIONS FOR LIABILITIES - continued |
Deferred |
tax |
£ |
Balance at 1 January 2022 |
Provided during year |
Balance at 31 December 2022 |
The deferred tax provision relates to accelerated capital allowances. |
16. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2022 | 2021 |
value: | £ | £ |
Ordinary A | £1 | 10,100 | 10,100 |
Ordinary B | £1 | 1 | 1 |
Ordinary C | £1 | 1 | 1 |
10,102 | 10,102 |
Ordinary A, Ordinary B and Ordinary C shares all have the same rights. Each share entitles the holder to receive notice of and to attend and vote at general meetings of the company; to participate in the profits of the company available for distribution in such amount and in such manner as the company may resolve in general meeting; and in the event of a winding-up, participate in the distribution of any assets of the company (including uncalled shares at the commencement of the winding-up) after paying and discharging the debts and liabilities of the company and costs of the winding-up. |
17. | DIRECTORS' ADVANCES, CREDITS AND GUARANTEES |
The following advances and credits to directors subsisted during the years ended 31 December 2022 and 31 December 2021: |
2022 | 2021 |
£ | £ |
Balance outstanding at start of year |
Amounts advanced |
Amounts repaid | ( |
) | ( |
) |
Amounts written off | - | - |
Amounts waived | - | - |
Balance outstanding at end of year |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
17. | DIRECTORS' ADVANCES, CREDITS AND GUARANTEES - continued |
The directors are partners and the amounts disclosed above are shared equally between them. |
During the year the directors paid interest on their director loan account of £3,209 (2021 - £3,219). |
Interest is charged on the loan account at 2.5% and the loans are repayable on demand. |
18. | ULTIMATE CONTROLLING PARTY |
The immediate controlling party is the parent company Ideal Group Holdings Limited which owns all of the issued share capital of the company. There is no ultimate controlling party of the group. |
IDEAL NETWORKS LIMITED (REGISTERED NUMBER: 05815973) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
19. | CONTRIBUTED EQUITY NOTE |
In 2013, the company established an Enterprise Management Incentive share option scheme to key management personnel. The share options were granted on 27 December 2013, 1 January 2015 and 9 & 27 April 2018. The general terms and conditions of each arrangement are: |
- | Options to be exercised within ten years from the grant date; |
- | Options issued in 2013 and 2015 can only be exercised after 3 years of continuous employment; |
- | Options issued in 2018 can only be exercised after a successful probationary period plus 18 months of continuous employment or after 2 years of continuous employment as applicable and subject to the employee meeting the 2018 and 2019 budget for the 2018 options; |
- | Notice must be given in writing to the Board of Directors of the company; and |
- | The options can be exercised subject to the employee meeting performance conditions agreed in accordance with their contract of employment |
The method of settlement is an equity-based share-based payment arrangement. |
The expense in relation to options over the shares in Ideal Group Holdings Limited is recognised by the company as equity settled share based payment cost in the profit and loss and as a capital contribution. |
Number of share options | Weighted average exercise price |
2022 | 2021 | 2022 | 2021 |
Number | Number | £ | £ |
Outstanding at 1 January | 757 | 1,388 | 32.52 | 33.94 |
Options lapsed | - | (631 | ) | - | - |
New options granted | - | - | - | - |
Outstanding at 31 December | 757 | 757 | 32.52 | 32.52 |
Exercisable at 31 December | 757 | 757 | 32.52 | 32.52 |
The options outstanding at 31 December 2022 had an exercise price of £16.86 and £35.65 and a remaining contractual life of 2 years and 6 years. |
The weighted average fair value of options granted in the year was determined using the Price earnings option pricing model. The Price earnings model is considered to apply the most appropriate valuation method due to the relatively short contractual lives of the options and the requirement to exercise within a short period after the employee becomes entitled to the shares (the "vesting date"). |
The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. |
Non-vesting conditions and market conditions are taken into account when estimating the fair value of the option at grant date. Service conditions and non-market performance conditions are taken into account by adjusting the number of options expected to vest at each reporting date. |
During the year the company recognised total share-based payment expenses of £nil (2021 - £nil) which related to equity settled share based payment transactions. |