DARKSTORM_TRADING_LIMITED - Accounts
DARKSTORM_TRADING_LIMITED - Accounts
Company Registration No. 03771094 (England and Wales)
FOR THE YEAR ENDED 7 JULY 2014
COMPANY INFORMATION
Directors
Secretary
Company number
Registered office
Auditors
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditors' report
4 - 5
Profit and loss account
6
Balance sheet
7
Notes to the financial statements
8 - 18
STRATEGIC REPORT
FOR THE YEAR ENDED 7 JULY 2014
- 1 -
The directors present the strategic report and financial statements for the year ended 7 July 2014.
Review of the business
The key financial results are as follows:
2014 2013
Turnover £12,884,821 £13,768,978
Movement in turnover (6.4%) 4.0%
Gross profit £3,490,552 £3,669,862
The directors anticipated a testing year and are not dissatisfied with the 6.4% reduction in turnover. The industries in which the company operates are cyclical and, during the tough economic climate, turnover will decline due to customer budget constraints. The 6.4% decline in turnover is represented by a 7.9% reduction in international sales and 6.1% decline in domestic sales. Overseas business currently represents 18.7% of turnover, up from 16% in the previous year. Despite a decrease in sales, gross margins have improved from 26.7% to 27.1% which the directors are pleased with.
The group's division of services by turnover are as follows:
2014 2013
Security £11,376,649 £12,072,154
Cleaning £1,359,801 £1,450,530
Risk management consultancy £148,371 £246,294
The company continues to focus on reducing its liabilities and strengthening the balance sheet. This will be achieved by retaining future profits to reduce the reliance on the current finance facilities, the exposure to which has already reduced by 31% since the year ended 7 July 2013.
2014 2013
Turnover £12,884,821 £13,768,978
Movement in turnover (6.4%) 4.0%
Gross profit £3,490,552 £3,669,862
The directors anticipated a testing year and are not dissatisfied with the 6.4% reduction in turnover. The industries in which the company operates are cyclical and, during the tough economic climate, turnover will decline due to customer budget constraints. The 6.4% decline in turnover is represented by a 7.9% reduction in international sales and 6.1% decline in domestic sales. Overseas business currently represents 18.7% of turnover, up from 16% in the previous year. Despite a decrease in sales, gross margins have improved from 26.7% to 27.1% which the directors are pleased with.
The group's division of services by turnover are as follows:
2014 2013
Security £11,376,649 £12,072,154
Cleaning £1,359,801 £1,450,530
Risk management consultancy £148,371 £246,294
The company continues to focus on reducing its liabilities and strengthening the balance sheet. This will be achieved by retaining future profits to reduce the reliance on the current finance facilities, the exposure to which has already reduced by 31% since the year ended 7 July 2013.
Principle risks and uncertainties
The company's principal financial instruments comprise bank balances, invoice discounting facilities and trade debtors, and trade creditors, and its approach to managing risks applicable to the financial instruments concerned is shown below:
In respect of bank balances the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of invoice discounting facilities with set rates of discounting charges. Invoice discounting is managed in tandem with trade debtors. The company manages the liquidity risk by ensuring there are sufficient funds to meet the payments.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.
Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.
In respect of bank balances the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of invoice discounting facilities with set rates of discounting charges. Invoice discounting is managed in tandem with trade debtors. The company manages the liquidity risk by ensuring there are sufficient funds to meet the payments.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.
Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.
On behalf of the board
Director
17 April 2015
DIRECTORS' REPORT
FOR THE YEAR ENDED 7 JULY 2014
- 2 -
The directors present their report and financial statements for the year ended 7 July 2014.
Results and dividends
The results for the year are set out on page 6.
Directors
The following directors have held office since 8 July 2013:
Employee involvement
Employee involvement is considered to be essential to the success of the organisation. The board values the contributions made by the company's employees, and facilitates this through the medium of monthly team meetings, appraisals, and staff surveys. The company distributes a monthly newsletter to keep employees informed of relevant organisational and industry news, specifically highlighting its appreciation of employee contributions to encourage further involvement.
Learning and development is key to supporting staff in the delivery of our objectives and the company encourages the use of internal and external courses for the achievement of relevant qualifications.
Learning and development is key to supporting staff in the delivery of our objectives and the company encourages the use of internal and external courses for the achievement of relevant qualifications.
Disabled persons
It is the company's policy to ensure that equality of opportunity is provided to all employees and those seeking employment and to provide opportunities and make all reasonable adjustments to support the employment, training and development and retention of those with a disability.
Statement of directors' responsibilities
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:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- 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.
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 7 JULY 2014
- 3 -
Statement of disclosure to auditors
On behalf of the board
Director
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF DARKSTORM TRADING LIMITED
- 4 -
We have audited the financial statements of Darkstorm Trading Limited for the year ended 7 July 2014 set out on pages 6 to 18. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
-
give a true and fair view of the state of the company's affairs as at 7 July 2014 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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF DARKSTORM TRADING LIMITED
- 5 -
Matters on which we are required to report by exception
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 directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
for and on behalf of Beavis Morgan Audit Limited
Chartered Accountants
Statutory Auditor
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 7 JULY 2014
- 6 -
2014
2013
Notes
£
£
Turnover
2
Cost of sales
(9,394,269 )
(10,099,116 )
Gross profit
Administrative expenses
(3,394,688 )
(3,696,526 )
Operating profit/(loss)
3
(26,664 )
Interest payable and similar charges
4
(52,317 )
(56,121 )
Profit/(loss) on ordinary activities before taxation
(82,785 )
Tax on profit/(loss) on ordinary activities
5
(7,081 )
Profit/(loss) for the year
15
(74,278 )
The profit and loss account has been prepared on the basis that all operations are continuing operations.
There are no recognised gains and losses other than those passing through the profit and loss account.
BALANCE SHEET
AS AT
7 JULY 2014
- 7 -
2014
2013
Notes
£
£
£
£
Fixed assets
Intangible assets
6
Tangible assets
7
Investments
8
-
Current assets
Stocks
9
Debtors
10
Cash at bank and in hand
Creditors: amounts falling due within one year
11
(3,310,781 )
(3,369,467 )
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
12
(34,589 )
(55,097 )
Capital and reserves
Called up share capital
14
Other reserves
15
-
Profit and loss account
15
(11,323 )
(47,389 )
Shareholders' funds
16
Approved by the Board and authorised for issue on 17 April 2015
Director
Company Registration No. 03771094
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
- 8 -
1
Accounting policies
1.1
Accounting convention
The company has taken advantage of the exemption in Financial Reporting Standard No 1 (Revised 1996) from the requirement to produce a cash flow statement on the grounds that it is a subsidiary undertaking where 90 percent or more of the voting rights are controlled within the group.
1.2
Compliance with accounting standards
The financial statements are prepared in accordance with applicable United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), which have been applied consistently.
1.3
Turnover
1.4
Goodwill
1.5
Tangible fixed assets and depreciation
Plant and machinery
Computer equipment
Fixtures, fittings & equipment
Motor vehicles
1.6
Leasing
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible assets and depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Rentals payable under operating leases are charged against income on a straight line basis over the lease term.
1.7
Investments
Fixed asset investments are stated at cost less provision for diminution in value.
1.8
Stock
Stock is valued at the lower of cost and net realisable value.
1.9
Pensions
The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
1
Accounting policies
(Continued)
- 9 -
1.10
Deferred taxation
Deferred taxation is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. The deferred tax balance has not been discounted.
1.11
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account.
1.12
Group accounts
The financial statements present information about the company as an individual undertaking and not about its group. The company has not prepared group accounts as it is exempt from the requirement to do so by section 400 of the Companies Act 2006 as it is a subsidiary undertaking of Darkstorm Trading Group Limited, a company incorporated in England and Wales, and is included in the consolidated accounts of that company.
1.13
Sales commissions
Sales commissions are payable on agreed percentages of total sales contract value on a contract by contract basis. Commissions are recognised in administrative expenses within the profit and loss account as contract activity progresses. Any sales commissions invoiced in advance are held within prepayments and are subject to clawback should sales contracts be terminated ahead of their expected contract term.
1.14
Going concern
The company's ability to continue trading as a going concern is dependent, to a large extent, on the continued availability of its debt factoring facility and the support of the ultimate controlling party to provide sufficient additional funds. The directors have concluded that the company will have sufficient funds to maintain its working capital requirements and enable it to settle its liabilities as and when they fall due for payment for the period of at least 12 months following the date of approval of these financial statements. Accordingly, the directors consider that it is appropriate to apply the going concern concept in preparing the financial statements.
2
Turnover
Geographical market
Turnover
2014
2013
£
£
UK
10,835,572
11,567,133
Rest of Europe
1,996,344
1,840,691
Asia
52,905
361,154
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
- 10 -
3
Operating profit/(loss)
2014
2013
£
£
Operating profit/(loss) is stated after charging:
Amortisation of intangible assets
Depreciation of tangible assets
Loss on foreign exchange transactions
-
Operating lease rentals
- Plant and machinery
15,273
18,857
- Other assets
61,653
74,269
Auditors' remuneration
Non-audit fees paid to auditors
19,097
23,804
and after crediting:
Profit on disposal of tangible assets
-
(7,024)
Profit on foreign exchange transactions
-
(2,557 )
4
Interest payable
2014
2013
£
£
On bank loans and overdrafts
On amounts payable to factors
51,377
51,688
Other interest
-
4,349
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
- 11 -
5
Taxation
2014
2013
£
£
Domestic current year tax
U.K. corporation tax
(8,738 )
Adjustment for prior years
-
Total current tax
(8,507 )
Factors affecting the tax charge for the year
Profit/(loss) on ordinary activities before taxation
(82,785 )
Profit/(loss) on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 23.00% (2013 - 20.00%)
(16,557 )
Effects of:
Non deductible expenses
Depreciation add back
14,603
9,738
Capital allowances
(11,330)
(5,032)
Use of tax losses
(8,624 )
Adjustments to previous periods
-
Chargeable disposals
-
(1,405)
Other tax adjustments
(1,062)
-
(2,935)
8,050
Current tax charge for the year
(8,507 )
The company has estimated losses of £ nil (2013 - £ 37,494) available for carry forward against future trading profits.
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
- 12 -
6
Intangible fixed assets
Goodwill
£
Cost
At 8 July 2013 & at 7 July 2014
Amortisation
At 8 July 2013
Charge for the year
At 7 July 2014
Net book value
At 7 July 2014
At 7 July 2013
7
Tangible fixed assets
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
Cost
At 8 July 2013
Additions
-
At 7 July 2014
Depreciation
At 8 July 2013
Charge for the year
At 7 July 2014
Net book value
At 7 July 2014
At 7 July 2013
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
7
Tangible fixed assets
(Continued)
- 13 -
Included above are assets held under finance leases or hire purchase contracts as follows:
Motor vehicles
£
Net book values
At 7 July 2014
At 7 July 2013
Depreciation charge for the year
At 7 July 2014
At 7 July 2013
8
Fixed asset investments
Shares in group undertakings and participating interests
£
Cost
At 8 July 2013
-
Additions
40,910
At 7 July 2014
40,910
Net book value
At 7 July 2014
Holdings of more than 20%
The company holds more than 20% of the share capital of the following companies:
Company
Country of registration or
Shares held
incorporation
Class
%
Subsidiary undertakings
Ordinary A
Ordinary A
Ordinary A
Ordinary A
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
8
Fixed asset investments
(Continued)
- 14 -
The aggregate amount of capital and reserves and the results of these undertakings for the last relevant financial year were as follows:
Capital and reserves
Profit/(loss) for the year
2014
2014
Principal activity
£
£
10,533
-
10,109
-
10,105
-
10,533
-
In addition to the Ordinary A shares that the company holds in each of Interr Security Limited, Interr Reception Limited, ICS Integrated Cleaning Services Limited and IRM Integrated Risk Management Limited, the company also holds 10,000 £1 preference shares in each of those companies. These preference shares are redeemable only at the decision of the companies in which the shares are held.
9
Stocks
2014
2013
£
£
Finished goods and goods for resale
10
Debtors
2014
2013
£
£
Trade debtors
Corporation tax
Other debtors
Prepayments and accrued income
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
- 15 -
11
Creditors: amounts falling due within one year
2014
2013
£
£
Net obligations under finance leases
Trade creditors
Amounts owed to subsidiary undertakings
-
Corporation tax
Other taxes and social security costs
Other creditors
Accruals and deferred income
Recourse debt factoring of £953,878 (2013 - £1,387,630), included in other creditors, is secured on the trade debtors of the company.
12
Creditors: amounts falling due after more than one year
2014
2013
£
£
Net obligations under finance leases
Net obligations under finance leases
Repayable within one year
20,164
20,164
Repayable between one and five years
34,589
55,097
54,753
75,261
Included in liabilities falling due within one year
(20,164 )
(20,164 )
34,589
55,097
13
Pension and other post-retirement benefit commitments
Defined contribution
2014
2013
£
£
Contributions payable by the company for the year
-
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
- 16 -
14
Share capital
2014
2013
£
£
Allotted, called up and fully paid
310,000
310,000
Allotted, called up and partly paid
1,000 Ordinary B shares of 10p each
-
100
1,000 Ordinary C shares of 10p each
-
100
1,000 Ordinary D shares of 10p each
-
100
1,000 Ordinary E shares of 10p each
-
100
Only A shares carry voting rights. Dividends can be paid on individual share classes without being due on all share classes.
The preference shares are redeemable at the discretion of the company. These shares carry a non-cumulative 7% coupon; however, payment thereof is at the discretion of the company.
On 22 October 2013, the B, C, D and E shares were bought back by the company at par.
The preference shares are redeemable at the discretion of the company. These shares carry a non-cumulative 7% coupon; however, payment thereof is at the discretion of the company.
On 22 October 2013, the B, C, D and E shares were bought back by the company at par.
15
Statement of movements on reserves
Other reserves
(see below)
(see below)
Profit and loss
account
account
£
£
Balance at 8 July 2013
-
(47,389)
Profit for the year
-
Movement during the year
400
(400)
Balance at 7 July 2014
(11,323 )
Other reserves
Capital redemption reserve
Capital redemption reserve movement
400
Balance at 7 July 2014
400
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
- 17 -
16
Reconciliation of movements in shareholders' funds
2014
2013
£
£
Profit/(Loss) for the financial year
(74,278 )
Purchase of own shares
(400)
-
Opening shareholders' funds
Closing shareholders' funds
17
Financial commitments
At 7 July 2014 the company was committed to making the following payments under non-cancellable operating leases in the year to 7 July 2015:
Land and buildings
2014
2013
£
£
Operating leases which expire:
Between two and five years
In over five years
-
18
Directors' remuneration
2014
2013
£
£
Remuneration for qualifying services
Company pension contributions to defined contribution schemes
-
Consultancy fees paid to third parties in respect of Director services
1,271,338
1,743,050
1,651,152
2,036,344
Remuneration disclosed above include the following amounts paid to the highest paid director:
Remuneration for qualifying services
BALANCE SHEET (CONTINUED)
AS AT 7 JULY 2014
- 18 -
19
Employees
Number of employees
The average monthly number of employees (including directors) during the year was:
2014
2013
Number
Number
Professional
338
321
Administration
28
29
366
350
Employment costs
2014
2013
£
£
Wages and salaries
6,231,267
6,471,863
Social security costs
Other pension costs
-
6,595,834
6,812,772
20
Control
The company's immediate parent undertaking is Darkstorm Trading Group Limited. Group accounts for Darkstorm Trading Group Limited can be obtained from Companies House.
Palace Road Limited (a company registered in the Isle of Man) was the ultimate parent company.
In the opinion of the directors the company has no ultimate controlling party.
Palace Road Limited (a company registered in the Isle of Man) was the ultimate parent company.
In the opinion of the directors the company has no ultimate controlling party.
21
Related party relationships and transactions
At the year end the company owed Interr Security Limited £10,500 (2013 - £nil), ICS Integrated Cleaning Management Limited £10,400 (2013 - £nil) and IRM Integrated Risk Management Limited £10,100 (2013 - £nil). All three are subsidiaries of the company.
At the year end, Jewelfield Associates Limited owed Darkstorm Trading Limited £36,384 (2013 - £34,980). J Ritter is the director of Jewelfield Associates Limited.
At the year end, J Ritter owed the company £188,056 (2013 - £181,340), C Dean owed the company £2,157 (2013 - £2,157) and A Sheath owed the company £1,155 (2013 - £1,155). Balances owed to the company do not bear interest. C Dean and A Sheath are directors of the company.
At the year end, Jewelfield Associates Limited owed Darkstorm Trading Limited £36,384 (2013 - £34,980). J Ritter is the director of Jewelfield Associates Limited.
At the year end, J Ritter owed the company £188,056 (2013 - £181,340), C Dean owed the company £2,157 (2013 - £2,157) and A Sheath owed the company £1,155 (2013 - £1,155). Balances owed to the company do not bear interest. C Dean and A Sheath are directors of the company.