Somerford Holdings Limited - Limited company accounts 23.2

REGISTERED NUMBER: 04855780 (England and Wales)

Group Strategic Report,

Report of the Directors and

Consolidated Financial Statements

for the Year Ended 31 December 2022

for

Somerford Holdings Limited

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Income Statement

9

Consolidated Other Comprehensive Income

10

Consolidated Balance Sheet

11

Company Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Cash Flow Statement

15

Notes to the Consolidated Cash Flow Statement

16

Notes to the Consolidated Financial Statements

17

DIRECTORS:

Mr A G Davies

Mr R B Viccajee

Mr C W Davies

SECRETARY:

Mrs R J Davies

REGISTERED OFFICE:

Park House

Church Place

Swindon

Wiltshire

SN1 5ED

REGISTERED NUMBER:

04855780 (England and Wales)

AUDITORS:

Andrew R Cook Chartered Accountants

Northfield House

Shurdington Road

Bentham

Cheltenham

Gloucestershire

GL51 4UA

The directors present their strategic report of the company and the group for the year ended 31 December 2022.

REVIEW OF BUSINESS

During 2022 we expanded our partnerships to continue supporting our customers in their cloud transformation journey. Our focus remains on the information security and IT/Ops Dev/Ops challenges that our customers experience in their transformation journey.

Whilst Revenues and EBIT reduced compared to 2021, we laid the foundations for future growth, which we expect to benefit from during 2023 and beyond. With this in mind, we continued with the expansion of our team during 2022, with operating costs rising by 11% compared to 2021. Whilst we have seen many technology vendors shedding staff during the second half of 2022, we have seen no reduction in demand from our customer base, and expect to continue our expansion in the second half of 2023.

We believe that our focus on cloud transformation provides a solid foundation for future growth. As the key drivers for many of our customers to embark on the cloud transformation journey are cost base flexibility and closer alignment to changing business drivers, we see this sector as, whilst not immune, certainly less impacted by wider economic challenges that the UK and global economy have experienced this year. We view this as a relatively resilient sector of the technology landscape.

PRINCIPAL RISKS AND UNCERTAINTIES

Our strategy continues to be to add value to our Customers software purchases by implementing projects utilising our own technical resources to accelerate our Customers time to value. This approach does require a significant investment in our team's education and vendor certifications, and we do expect to continue to invest in this way, even though it is a significant investment in both time and money. Whilst this investment generates short term costs for us as our staff follow their education and certification journeys, it does differentiate us from competitors as it positions us to sell and deliver new use cases, which generates new licence sales. We continue to develop strong working relationships with our partners to ensure we collaborate to maximise our resources for the benefit of our customers.

Employee related risks

During 2022 we continued with a remote working policy, with the office being available for staff members who wanted to work from the office. We do not mandate that any staff are required to work from the office on a full time basis. This approach has had no impact on our ability to provide services to our customers, and the vast majority of our services delivery were remote in 2022. We expect to see this trend continue during 2023, as the majority of our customers are still operating a work from home or part time office working policy. We will continue to monitor how our customers' staff strategies develop, and monitor our customers' requirements and amend our working practices accordingly.

Operational Risk

We regularly review our operating performance and ensure that we are utilising our resources effectively to deliver for our customers. We are continuing to see increased demand from our customers for our licences and services. In response to this we continue to ensure that our recruitment planning is aligned with our expected customer requirements.

We generate our revenues from a wide range of customers. In 2022 we had 41 sales above £100,000 in value, and 9 above £500,000, and 3 above £1,000,000. This spread means that we are not overly reliant on any one client for our revenues. We have a diverse customer base, including many large corporates and government agencies. A large proportion of our revenue is annual recurring in nature, which provides us with a firm foundation to estimate future revenue expectations.

We have no debt within the business, we generate positive cash flow and EBIT, and expect future growth to be funded from profits. We have invested to ensure that our management structure is in place to support our ongoing growth plans.

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Liquidity risk

The Company continues to generate positive cash flows that are utilised to fund future growth. The Directors expect to be able to continue to fund such future growth organically, without the requirement of external funds.

ON BEHALF OF THE BOARD:

Mr A G Davies - Director

4 July 2023

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2022.

PRINCIPAL ACTIVITY

The principal activity of the Group for the year under review was that of consultancy and the sale of third party software.

DIVIDENDS

The total distribution of dividends for the year ended 31 December 2022 will be £ 1,879,629 .

DIRECTORS

Mr A G Davies has 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:

Mrs R J Davies - resigned 8 March 2022

Mr R B Viccajee - appointed 8 March 2022

Mr C W Davies - appointed 8 March 2022

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Andrew R Cook Chartered Accountants, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mr A G Davies - Director

4 July 2023

Opinion

We have audited the financial statements of Somerford Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, 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 group's and of the parent company affairs as at 31 December 2022 and of the group's 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.

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 group 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 group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group 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 Group 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 Group Strategic Report and the Report of the Directors 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company 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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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:

Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISA's (UK).

- We obtained an understanding of the legal and regulatory requirements applicable to the company financial statements or that had a fundamental effect on the operations of the company. We determined that the most significant laws included UK GAAP, UK Companies Act 2006 and taxation laws;

- We understood how the company is complying with those legal and regulatory frameworks by making inquiries of management and those responsible for legal compliance procedures.

- We assessed the susceptibility of the company's financial statements to material misstatement including how fraud might occur. Audit procedures performed by the engagement team included:

- Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;

- understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process;-

- challenging assumptions and judgements made by management in its significant accounting estimates; and

- identifying and testing journal entries, in particular any journal entries with unusual characteristics.

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.

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.

Mr A R Cook (Senior Statutory Auditor)

for and on behalf of Andrew R Cook Chartered Accountants

Northfield House

Shurdington Road

Bentham

Cheltenham

Gloucestershire

GL51 4UA

4 July 2023

TURNOVER

20,146,541

25,798,149

Cost of sales

14,958,099

20,568,149

GROSS PROFIT

5,188,442

5,230,000

Administrative expenses

4,583,662

4,229,381

OPERATING PROFIT

4

604,780

1,000,619

Interest receivable and similar income

1,629

-

PROFIT BEFORE TAXATION

606,409

1,000,619

Tax on profit

5

115,698

189,997

PROFIT FOR THE FINANCIAL YEAR

490,711

810,622

Profit attributable to:

Owners of the parent

490,711

810,622

PROFIT FOR THE YEAR

490,711

810,622

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

490,711

810,622

Total comprehensive income attributable to:

Owners of the parent

490,711

810,622

FIXED ASSETS

Tangible assets

8

16,270

14,343

Investments

9

-

-

16,270

14,343

CURRENT ASSETS

Debtors

10

9,417,854

3,627,860

Cash at bank

1,042,315

3,533,402

10,460,169

7,161,262

CREDITORS

Amounts falling due within one year

11

8,723,522

4,036,537

NET CURRENT ASSETS

1,736,647

3,124,725

TOTAL ASSETS LESS CURRENT LIABILITIES

1,752,917

3,139,068

CREDITORS

Amounts falling due after more than one year

12

(48,889

)

(47,464

)

PROVISIONS FOR LIABILITIES

13

(4,068

)

(2,726

)

NET ASSETS

1,699,960

3,088,878

CAPITAL AND RESERVES

Called up share capital

14

2

2

Retained earnings

15

1,699,958

3,088,876

SHAREHOLDERS' FUNDS

1,699,960

3,088,878

The financial statements were approved by the Board of Directors and authorised for issue on 4 July 2023 and were signed on its behalf by:

Mr A G Davies - Director

FIXED ASSETS

Tangible assets

8

-

-

Investments

9

81,784

81,784

81,784

81,784

CURRENT ASSETS

Debtors

10

64

292

Cash at bank

205,623

570,565

205,687

570,857

CREDITORS

Amounts falling due within one year

11

4,656

3,191

NET CURRENT ASSETS

201,031

567,666

TOTAL ASSETS LESS CURRENT LIABILITIES

282,815

649,450

CAPITAL AND RESERVES

Called up share capital

14

2

2

Retained earnings

15

282,813

649,448

SHAREHOLDERS' FUNDS

282,815

649,450

Company's profit for the financial year

1,512,994

475,197

The financial statements were approved by the Board of Directors and authorised for issue on 4 July 2023 and were signed on its behalf by:

Mr A G Davies - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2021

2

2,495,298

2,495,300

Changes in equity

Dividends

-

(217,044

)

(217,044

)

Total comprehensive income

-

810,622

810,622

Balance at 31 December 2021

2

3,088,876

3,088,878

Changes in equity

Dividends

-

(1,879,629

)

(1,879,629

)

Total comprehensive income

-

490,711

490,711

Balance at 31 December 2022

2

1,699,958

1,699,960

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2021

2

391,295

391,297

Changes in equity

Dividends

-

(217,044

)

(217,044

)

Total comprehensive income

-

475,197

475,197

Balance at 31 December 2021

2

649,448

649,450

Changes in equity

Dividends

-

(1,879,629

)

(1,879,629

)

Total comprehensive income

-

1,512,994

1,512,994

Balance at 31 December 2022

2

282,813

282,815

Cash flows from operating activities

Cash generated from operations

1

(310,532

)

1,174,011

Tax paid

(290,419

)

(118,084

)

Net cash from operating activities

(600,951

)

1,055,927

Cash flows from investing activities

Purchase of tangible fixed assets

(12,045

)

(6,122

)

Interest received

1,629

-

Net cash from investing activities

(10,416

)

(6,122

)

Cash flows from financing activities

Amount introduced by directors

-

(2,553

)

Amount withdrawn by directors

(91

)

-

Equity dividends paid

(1,879,629

)

(217,044

)

Net cash from financing activities

(1,879,720

)

(219,597

)

(Decrease)/increase in cash and cash equivalents

(2,491,087

)

830,208

Cash and cash equivalents at beginning of year

2

3,533,402

2,703,194

Cash and cash equivalents at end of year

2

1,042,315

3,533,402

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

31.12.22

31.12.21

£

£

Profit before taxation

606,409

1,000,619

Depreciation charges

10,118

8,028

Finance income

(1,629

)

-

614,898

1,008,647

(Increase)/decrease in trade and other debtors

(5,789,994

)

848,623

Increase/(decrease) in trade and other creditors

4,864,564

(683,259

)

Cash generated from operations

(310,532

)

1,174,011

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2022

31.12.22

1.1.22

£

£

Cash and cash equivalents

1,042,315

3,533,402

Year ended 31 December 2021

31.12.21

1.1.21

£

£

Cash and cash equivalents

3,533,402

2,703,194

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.22

Cash flow

At 31.12.22

£

£

£

Net cash

Cash at bank

3,533,402

(2,491,087

)

1,042,315

3,533,402

(2,491,087

)

1,042,315

Total

3,533,402

(2,491,087

)

1,042,315

1.	STATUTORY INFORMATION

Somerford Holdings Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Turnover is measured at the fair value of the consideration received or receivable for services and software rendered, net of discounts and Value Added Tax, and in accordance with the guidelines laid out in FRS 102.

Revenue from the provision of third party software is measured when the significant risks and rewards of ownership have transferred to the buyer. Software licensing revenue is recognised (yearly in advance, as required) when the licence is dispatched to the customer and there are no ongoing obligations associated with the licence. Associated maintenance revenue is recognised in the month of sale only if there are no ongoing obligations which would require the revenue to be recognised over a longer period. Maintenance revenues are also fully recognised in the month of sale where full liability for maintenance rests with the third party provider. Any associated costs relating to the provision of the software licence and maintenance revenue are provided in full in the month of sale.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Fixtures and fittings

-

25% on reducing balance

Computer equipment

-

33% on cost

Taxation

Taxation for the year comprises current and deferred tax where material. Tax is recognised in the Consolidated 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.

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 currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable are charged to the profit and loss account in the period to which they relate.

Going concern

COVID 19 has had an impact on the business. However the directors have a reasonable expectation that each company within the Group has sufficient cash and reserves available to be able to continue in operational existence for a period of at least twelve months from the date of signing this report.

3.	EMPLOYEES AND DIRECTORS

31.12.22

31.12.21

£

£

Wages and salaries

3,588,781

3,459,371

Social security costs

418,296

393,545

Other pension costs

102,246

97,363

4,109,323

3,950,279

The average number of employees during the year was as follows:

31.12.22

31.12.21

Administrative

2

2

The average number of employees by undertakings that were proportionately consolidated during the year was 62 (2021 - 59 ) .

Total directors' emoluments during the year amounted to £251,448 (2021 - £234,482).

During the year retirement benefits were accruing to 3 directors (2021 - 2) in respect of defined contribution schemes.

Group company contributions to defined contribution pension schemes on behalf of the directors were £7,386 (2021 - £6,505).

The highest paid director in the Group received remuneration of £121,690 (2021 - £145,882).

The value of the Group company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £3,651 (2021 - £4,375).

4.	OPERATING PROFIT

The operating profit is stated after charging:

31.12.22

31.12.21

£

£

Depreciation - owned assets

10,118

8,029

Auditors' remuneration

14,475

12,850

5.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

31.12.22

31.12.21

£

£

Current tax:

UK corporation tax

114,356

190,359

Deferred tax

1,342

(362

)

Tax on profit

115,698

189,997

6.	INDIVIDUAL INCOME STATEMENT

As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements.

7.

DIVIDENDS

31.12.22

31.12.21

£

£

Interim

1,879,629

217,044

8.	TANGIBLE FIXED ASSETS

Group

Fixtures

and

Computer

fittings

equipment

Totals

£

£

£

COST

At 1 January 2022

12,496

27,946

40,442

Additions

83

11,962

12,045

Disposals

-

(9,784

)

(9,784

)

At 31 December 2022

12,579

30,124

42,703

DEPRECIATION

At 1 January 2022

9,679

16,420

26,099

Charge for year

716

9,402

10,118

Eliminated on disposal

-

(9,784

)

(9,784

)

At 31 December 2022

10,395

16,038

26,433

NET BOOK VALUE

At 31 December 2022

2,184

14,086

16,270

At 31 December 2021

2,817

11,526

14,343