Virtua Holdings Limited - Limited company accounts 23.2

REGISTERED NUMBER: 08822163 (England and Wales)

VIRTUA HOLDINGS LIMITED

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

AUDITED

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH APRIL 2023

Page

Company Information

1

Group Strategic Report

2

to

4

Report of the Directors

5

to

6

Report of the Independent Auditors

7

to

9

Consolidated Statement of Comprehensive Income

10

Consolidated Statement of Financial Position

11

Company Statement of Financial Position

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Statement of Cash Flows

15

Notes to the Consolidated Statement of Cash Flows

16

Notes to the Consolidated Financial Statements

17

to

30

DIRECTORS:

Mr A J Richards

Mr G S Firth

Mr S Barham

Mr N P D Winks

Mrs K L Richards

REGISTERED OFFICE:

Unit 5 Wildmere Close

BANBURY

Oxfordshire

OX16 3TL

REGISTERED NUMBER:

08822163 (England and Wales)

AUDITORS:

Morris Owen

Statutory Auditors

43-45 Devizes Road

SWINDON

Wiltshire

SN1 4BG

BANKERS:

Barclays Bank Plc

15 Queen Square

BRISTOL

Avon

BS1 4NP

OUR MARKET PLACE AND BUSINESS MODEL

The group operates broadly across 4 markets:

- Broadcast

- RF Solutions/ In Building

- FTTx

- Network Solutions

Each part of the business interacts in order that the business can offer a one stop shop across these markets thereby increasing our offer to the market and de-risking reliance on any individual market sector.

STRATEGIC OBJECTIVES

The year to 30th April 2023 saw the group pull back from work within the Broadcast Division. Due to low margins and high risk the decision was taken to cease high mast work other than projects currently in progress. The FTTx division consolidated during the year with a decision taken to concentrate on higher margin work rather than volume. The group continued to only take on work at minimum acceptable margins in order to ensure ongoing profitability.

The ongoing objective is to continue to provide a wide offering across a range of working platforms and customers, providing a one stop turnkey solution, and building strategic partnerships within the industry. This ensures that the group is not reliant on any sector of the market or individual customer and can respond to changing priorities and trends within the marketplace.

PERFORMANCE

Sales decreased from £22.2m for the 12 months to 30th April 2022 to £18.5m for the year to 30th April 2023. This was mainly due to pulling back from Broadcast work and consolidating work within the FTTx division. Gross Profit Margins increased to 23.6% during the year compared to 23% in 2021. Broadcast margins were very poor at 8% but other Divisions performed in line with expectations.

PRINCIPAL RISKS AND UNCERTAINTIES

Risk

Impact

Mitigation

Over-reliance on too few customers

Risk of impact of loss of key accounts and contracts.

Increasing offer across several markets to increase customer base.

Seasonality

Creates peaks and troughs of work.

Diversifying into areas that are less seasonal in nature.

Risk of customer going into liquidation

Risk of amounts owed to the not group being paid.

Careful selection of customers to ensure credit-worthiness, and strict credit control procedures.

Cash impact of expansion

Additional cash requirement above current facility.

All new work is cash profiled to ensure that a cash positive situation is maintained.

Increased credit lines with suppliers

Additional cash requirement if credit limits not increased.

Maintain and develop good current relationships with suppliers. Improving profitability will increase also credit limits.

Ability to resource manpower required to maintain expansion

Inability to deliver new workstreams if resource is not available.

Continuing development of database of resource to call on in any situation.

Impact of Brexit

Potential Delays on imported goods.

Appointment of specialist import agent. Build in additional lead times into project timescales.

Impact of COVID 19/ Pandemics

Potential Disruption to work due to access issues and restrictions on working.

Implementation of robust and strict Health & Safety and working practices specifically around COVID 19/ Pandemic situations. Risk is also mitigated by the group activities generally encompassing work that has been permitted to continue during lock down.

KPI'S

The group expects the following minimum Gross Margins across the individual markets it operates in:

- RF Solutions/ In Building - 25%

- FTTx - 28%

- Network Solutions - 30%

The group does not expect the revenue with any one customer to exceed 20% of overall revenue.

The group expects to make a 3-4% EBITDA profit for the financial year 2022/23, a 4-5% EBITDA profit by 2023/24 and 7% by 2024/25.

LETTER FROM THE BOARD

The year to 30th April 2023 saw the group continuing to focus on work that attracts a minimum acceptable margin. Whilst the Gross Margin for the year was lower than expected overall this was mainly due to achieving only 8% margins in the Broadcast Division. Other Divisions achieved margins in line with expectations.

The group has a very a strong order book for 2024/25 onwards and anticipates achieving overall margins of at least 28%. This is underpinned by several long-term projects which provide ongoing reliable revenue streams into the foreseeable future.

The ongoing invoice discounting facility with Shawbrook Bank provides sufficient operating cash and with profits now being generated, the group is in a sound financial position.

FINANCIAL INSTRUMENTS

Debtors:

-

Trade Debtors are all within terms and no amounts outstanding are in dispute.

-

Amounts Recoverable on Contract have been recovered since year end.

-

Accrued Income has all been invoiced since the year end.

Creditors:

-

Trade Creditors are within terms and there are no outstanding disputes.

-

Other Creditors includes £1.44m owed for Sales Invoice Financing which is an ongoing facility available to the group.

-

All Social Security, Tax and VAT payments are up to date.

ON BEHALF OF THE BOARD:

Mr A J Richards - Director

25th January 2024

The directors present their report with the financial statements of the company and the group for the year ended 30th April 2023.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of telecommunications and network infrastructure solutions.

DIVIDENDS

No dividends will be distributed for the year ended 30th April 2023.

DIRECTORS

The directors shown below have held office during the whole of the period from 1st May 2022 to the date of this report.

Mr A J Richards

Mr G S Firth

Mr S Barham

Mr N P D Winks

Mrs K L Richards

DISCLOSURE IN THE STRATEGIC REPORT

A statement in respect of the group's future developments can be found in the Strategic Report.

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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 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 group's auditors are aware of that information.

ON BEHALF OF THE BOARD:

Mr A J Richards - Director

25th January 2024

Opinion

We have audited the financial statements of Virtua Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30th April 2023 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, 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 30th April 2023 and of the group's 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 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 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 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

-

the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations through the audit planning process;

-

we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company's industry;

-

we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act, taxation legislation, employment legislation, health and safety legislation;

-

we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

-

identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed this susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur by:

-

making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

-

considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

As a result of the group having a small management and finance team, we identified a risk of fraud through management bias and ability to override of controls, including lack of segregation of duties, which could lead to a misappropriation of cash and other assets. To address this we:

-

performed analytical procedures to identify any unusual or unexpected relationships;

-

tested journal entries and sales credit notes to identify unusual transactions;

-

assessed whether judgements and assumptions made in determining accounting estimates were indicative of potential bias; and

-

investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

-

agreeing financial statement disclosures to underlying supporting documentation;

-

enquiring of management as to actual and potential litigation and claims;

-

reviewing correspondence with HM Revenue & Customs (HMRC) and any legal correspondence;

-

making enquiries of the company's solicitors.

Due to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing fraud or non-compliance with laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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 Robert Andrew Beale (Senior Statutory Auditor)

for and on behalf of Morris Owen

Statutory Auditors

43-45 Devizes Road

SWINDON

Wiltshire

SN1 4BG

26th January 2024

REVENUE

4

18,529,619

22,152,282

Cost of sales

14,150,499

17,056,010

GROSS PROFIT

4,379,120

5,096,272

Administrative expenses

5,173,161

5,118,770

(794,041

)

(22,498

)

Other operating income

-

20,896

OPERATING LOSS

6

(794,041

)

(1,602

)

Interest payable and similar expenses

7

494,607

40,502

LOSS BEFORE TAXATION

(1,288,648

)

(42,104

)

Tax on loss

8

-

(334

)

LOSS FOR THE FINANCIAL YEAR

(1,288,648

)

(41,770

)

OTHER COMPREHENSIVE INCOME

Capital contribution

13,990

1,662,665

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

13,990

1,662,665

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(1,274,658

)

1,620,895

Loss attributable to:

Owners of the parent

(1,288,648

)

(41,770

)

Total comprehensive income attributable to:

Owners of the parent

(1,274,658

)

1,620,895

FIXED ASSETS

Property, plant and equipment

10

317,570

442,715

Investments

11

-

-

317,570

442,715

CURRENT ASSETS

Inventories

12

256,336

831,750

Debtors

13

3,715,635

5,405,909

Cash at bank and in hand

52,661

53,982

4,024,632

6,291,641

CREDITORS

Amounts falling due within one year

14

6,522,975

8,434,370

NET CURRENT LIABILITIES

(2,498,343

)

(2,142,729

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(2,180,773

)

(1,700,014

)

CREDITORS

Amounts falling due after more than one year

15

(3,859,810

)

(3,067,056

)

PROVISIONS FOR LIABILITIES

19

(4,000

)

(4,000

)

NET LIABILITIES

(6,044,583

)

(4,771,070

)

CAPITAL AND RESERVES

Called up share capital

20

35,683

34,538

Share premium

21

4,599,356

4,599,356

Merger relief reserve

21

3,587,257

3,587,257

Capital contribution reserve

21

1,363,108

1,694,855

Retained earnings

21

(15,629,987

)

(14,687,076

)

SHAREHOLDERS' FUNDS

(6,044,583

)

(4,771,070

)

The financial statements were approved and authorised for issue by the Board of Directors and authorised for issue on 25th January 2024 and were signed on its behalf by:

Mr A J Richards - Director

Mr G S Firth - Director

FIXED ASSETS

Property, plant and equipment

10

-

-

Investments

11

-

-

-

-

CURRENT ASSETS

Debtors

13

6,455,575

6,019,261

Cash at bank

712

742

6,456,287

6,020,003

CREDITORS

Amounts falling due within one year

14

600,040

594,231

NET CURRENT ASSETS

5,856,247

5,425,772

TOTAL ASSETS LESS CURRENT LIABILITIES

5,856,247

5,425,772

CREDITORS

Amounts falling due after more than one year

15

3,859,810

3,067,056

NET ASSETS

1,996,437

2,358,716

CAPITAL AND RESERVES

Called up share capital

20

35,683

34,538

Share premium

21

4,599,356

4,599,356

Capital contribution reserve

21

1,363,108

1,694,855

Retained earnings

21

(4,001,710

)

(3,970,033

)

SHAREHOLDERS' FUNDS

1,996,437

2,358,716

Company's (loss)/profit for the financial year

(377,414

)

44,704

The financial statements were approved and authorised for issue by the Board of Directors and authorised for issue on 25th January 2024 and were signed on its behalf by:

Mr A J Richards - Director

Mr G S Firth - Director

Called up

share

Retained

Share

capital

earnings

premium

£

£

£

Balance at 1st May 2021

34,538

(14,688,524

)

4,599,356

Changes in equity

Total comprehensive income

-

1,448

-

Balance at 30th April 2022

34,538

(14,687,076

)

4,599,356

Changes in equity

Issue of share capital

1,145

-

-

Total comprehensive income

-

(942,911

)

-

Balance at 30th April 2023

35,683

(15,629,987

)

4,599,356

Merger

Capital

relief

contribution

Total

reserve

reserve

equity

£

£

£

Balance at 1st May 2021

3,587,257

75,408

(6,391,965

)

Changes in equity

Total comprehensive income

-

1,619,447

1,620,895

Balance at 30th April 2022

3,587,257

1,694,855

(4,771,070

)

Changes in equity

Issue of share capital

-

-

1,145

Total comprehensive income

-

(331,747

)

(1,274,658

)

Balance at 30th April 2023

3,587,257

1,363,108

(6,044,583

)

Called up

Capital

share

Retained

Share

contribution

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1st May 2021

34,538

(4,057,955

)

4,599,356

75,408

651,347

Changes in equity

Total comprehensive income

-

87,922

-

1,619,447

1,707,369

Balance at 30th April 2022

34,538

(3,970,033

)

4,599,356

1,694,855

2,358,716

Changes in equity

Issue of share capital

1,145

-

-

-

1,145

Total comprehensive income

-

(31,677

)

-

(331,747

)

(363,424

)

Balance at 30th April 2023

35,683

(4,001,710

)

4,599,356

1,363,108

1,996,437

Cash flows from operating activities

Cash generated from operations

1

(171,262

)

(352,089

)

Interest paid

(36,076

)

(758

)

Interest element of finance lease payments paid

(5,568

)

(7,918

)

Tax refund

-

86,187

Net cash from operating activities

(212,906

)

(274,578

)

Cash flows from investing activities

Purchase of tangible fixed assets

(69,024

)

(180,005

)

Sale of tangible fixed assets

6,381

-

Net cash from investing activities

(62,643

)

(180,005

)

Cash flows from financing activities

New loans in year

500,000

-

Loan repayments in year

(170,000

)

(50,000

)

Movement on invoice financing facility

-

85,670

Capital repayments in year

(70,907

)

(100,809

)

Share issue

1,145

-

Capital contribution

13,990

-

Net cash from financing activities

274,228

(65,139

)

Decrease in cash and cash equivalents

(1,321

)

(519,722

)

Cash and cash equivalents at beginning of year

2

53,982

573,704

Cash and cash equivalents at end of year

2

52,661

53,982

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

2023

2022

£

£

Loss before taxation

(1,288,648

)

(42,104

)

Depreciation charges

190,049

210,242

(Profit)/loss on disposal of fixed assets

(2,260

)

591

Finance costs

494,607

40,502

(606,252

)

209,231

Decrease/(increase) in inventories

575,414

(788,403

)

Decrease/(increase) in trade and other debtors

1,690,274

(1,829,357

)

(Decrease)/increase in trade and other creditors

(1,830,698

)

2,056,440

Cash generated from operations

(171,262

)

(352,089

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 30th April 2023

30.4.23

1.5.22

£

£

Cash and cash equivalents

52,661

53,982

Year ended 30th April 2022

30.4.22

1.5.21

£

£

Cash and cash equivalents

53,982

573,704

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.5.22

Cash flow

At 30.4.23

£

£

£

Net cash

Cash at bank and in hand

53,982

(1,321

)

52,661

53,982

(1,321

)

52,661

Debt

Finance leases

(70,907

)

70,907

-

Debts falling due within 1 year

-

(330,000

)

(330,000

)

Debts falling due after 1 year

(2,074,854

)

(202,778

)

(2,277,632

)

(2,145,761

)

(461,871

)

(2,607,632

)

Total

(2,091,779

)

(463,192

)

(2,554,971

)

4.	MAJOR NON-CASH TRANSACTIONS

During the year interest charged on loan notes, accrued but unpaid, totalled £107,515 (2022: £699,863). In addition, the of terms of existing loan notes were renegotiated during the year resulting in a loan note interest credit totalling £711,175 being released to the income statement.