Redsquid Communications Ltd - Limited company accounts 20.1

REGISTERED NUMBER: 04968485 (England and Wales)

Report of the Directors and

Unaudited Financial Statements for the Year Ended 31st March 2020

for

REDSQUID COMMUNICATIONS LTD

Page

Company Information

1

Report of the Directors

2

Chartered Accountants' Report

3

Income Statement

4

Balance Sheet

5

Notes to the Financial Statements

7

DIRECTORS:

V Mignacca

S H Raithatha

SECRETARY:

Ms C Mignacca

REGISTERED OFFICE:

2 Burton House

Repton Place

White Lion Road

Amersham

Buckinghamshire

HP7 9LP

REGISTERED NUMBER:

04968485 (England and Wales)

ACCOUNTANTS:

Jacquards

2 Burton House

Repton Place

White Lion Road

Amersham

Buckinghamshire

HP7 9LP

The directors present their report with the financial statements of the company for the year ended 31st March 2020.

REVIEW OF BUSINESS

Due to market conditions the Company has seen revenue decline, however it continues to improve on

operational performance with gross margins increasing to over 50% in the current financial year and to the

improve the shareholder funds. The Company continues to grow its contracted revenue, increasing to £4.4m

by March 2020 and is continuing to focus it's strategy of combining organic and acquisitive growth. On the

10th October 2019 the Company completed the acquisition of Ridgeway Phones Ltd, a MSP of wholesale

fixed, unified comms, mobility, hosted telephony, data and connectivity solutions for businesses. This is a

significant step forward for the Company as it continues to diversify its proposition.

DIRECTORS

The directors shown below have held office during the whole of the period from 1st April 2019 to the date of

this report.

V Mignacca

S H Raithatha

This report has been prepared in accordance with the provisions of Part 15 of the Companies Act 2006

relating to small companies.

ON BEHALF OF THE BOARD:

V Mignacca - Director

10th July 2020

In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval

the financial statements of Redsquid Communications Ltd for the year ended 31st March 2020 which

comprise the Income Statement, Balance Sheet and the related notes from the company's accounting

records and from information and explanations you have given us.

As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed within the ICAEW's regulations and guidance at http://www.icaew.com/en/membership/regulations-standards-and-guidance.

This report is made solely to the Board of Directors of Redsquid Communications Ltd, as a body, in accordance with our terms of engagement. Our work has been undertaken solely to prepare for your approval the financial statements of Redsquid Communications Ltd and state those matters that we have agreed to state to the Board of Directors of Redsquid Communications Ltd, as a body, in this report in accordance with ICAEW Technical Release 07/16AAF. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Redsquid Communications Ltd and its Board of Directors, as a body, for our work or for this report.

It is your duty to ensure that Redsquid Communications Ltd has kept adequate accounting records and to prepare statutory financial statements that give a true and fair view of the assets, liabilities, financial position and profit of Redsquid Communications Ltd. You consider that Redsquid Communications Ltd is exempt from the statutory audit requirement for the year.

We have not been instructed to carry out an audit or a review of the financial statements of Redsquid Communications Ltd. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory financial statements.

Jacquards

2 Burton House

Repton Place

White Lion Road

Amersham

Buckinghamshire

HP7 9LP

10th July 2020

TURNOVER

4,199,335

4,443,366

Cost of sales

2,093,484

2,258,643

GROSS PROFIT

2,105,851

2,184,723

Administrative expenses

1,994,787

1,951,310

OPERATING PROFIT

4

111,064

233,413

Elimination of intercompany

balances

5

16,960

-

128,024

233,413

Interest payable and similar expenses

86,795

83,274

PROFIT BEFORE TAXATION

41,229

150,139

Tax on profit

6

(89,407

)

(164,039

)

PROFIT FOR THE FINANCIAL YEAR

130,636

314,178

FIXED ASSETS

Intangible assets

7

600,000

720,000

Tangible assets

8

20,328

37,246

Investments

9

778,620

-

1,398,948

757,246

CURRENT ASSETS

Debtors

10

1,190,824

1,217,417

Cash at bank

-

38

1,190,824

1,217,455

CREDITORS

Amounts falling due within one year

11

3,299,432

2,679,895

NET CURRENT LIABILITIES

(2,108,608

)

(1,462,440

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(709,660

)

(705,194

)

CREDITORS

Amounts falling due after more than one year

12

51,206

186,308

NET LIABILITIES

(760,866

)

(891,502

)

CAPITAL AND RESERVES

Called up share capital

100

100

Retained earnings

(760,966

)

(891,602

)

SHAREHOLDERS' FUNDS

(760,866

)

(891,502

)

The company is entitled to exemption from audit under Section 477 of the Companies Act 2006 for the year ended 31st March 2020.

The members have not required the company to obtain an audit of its financial statements for the year ended 31st March 2020 in accordance with Section 476 of the Companies Act 2006.

The directors acknowledge their responsibilities for:

(a)	ensuring that the company keeps accounting records which comply with Sections 386 and 387 of the Companies Act 2006 and

(b)

preparing financial statements which give a true and fair view of the state of affairs of the company as at the end of each financial year and of its profit or loss for each financial year in accordance with the requirements of Sections 394 and 395 and which otherwise comply with the requirements of the Companies Act 2006 relating to financial statements, so far as applicable to the company.

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the Board of Directors and authorised for issue on 10th July 2020 and were signed on its behalf by:

V Mignacca - Director

S H Raithatha - Director

1.	STATUTORY INFORMATION

Redsquid Communications Ltd 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 Company

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" including the provisions of Section 1A "Small Entities" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Preparation of consolidated financial statements

The financial statements contain information about Redsquid Communications Ltd as an individual

company and do not contain consolidated financial information as the parent of a group. The company

is exempt under Section 399(2A) of the Companies Act 2006 from the requirements to prepare

consolidated financial statements.

Related party exemption

The company has taken advantage of exemption, under the terms 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 represents net invoiced sales of goods and services, excluding value added tax, except in

respect of service contracts where turnover is recognised when the company obtains the right to

consideration.

Goodwill

Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over

the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of

the acquired business.

Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is

amortised on a straight line basis over its useful life. Where a reliable estimate of the useful life of

goodwill or intangible assets cannot be made, the life is presumed not to exceed ten years.

Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over

the useful life of that asset as follows:

Goodwill - over 10 years

If there is an indication that there has been a significant change in amortisation rate, useful life or

residual value of an intangible asset, the amortisation is revised prospectively to reflect the new

estimates.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured

at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

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

Plant and machinery etc

-

33% on cost

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Fixed asset investments are initially recorded at cost, and subsequently stated at cost less any

accumulated impairment losses.

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.

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.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the

period of the lease.

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.

3.	EMPLOYEES AND DIRECTORS

The average number of employees during the year was 38 (2019 - 39 ) .

4.	OPERATING PROFIT

The operating profit is stated after charging:

2020

2019

£

£

Depreciation - owned assets

16,918

18,973

Goodwill amortisation

120,000

120,000

5.	EXCEPTIONAL ITEMS

2020

2019

£

£

Elimination of intercompany

balances

16,960

-

6.

TAXATION

Analysis of the tax credit

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

2020

2019

£

£

Current tax:

UK corporation tax

-

(105,460

)

R&D credits

(89,407

)

(58,579

)

Tax on profit

(89,407

)

(164,039

)

7.	INTANGIBLE FIXED ASSETS

Goodwill

£

COST

At 1st April 2019

and 31st March 2020

1,200,000

AMORTISATION

At 1st April 2019

480,000

Charge for year

120,000

At 31st March 2020

600,000

NET BOOK VALUE

At 31st March 2020

600,000

At 31st March 2019

720,000

The company's policy upon acquisition of a subsidiary is to transfer the trade and net assets of the

newly-acquired subsidiary to the company at book value. The initial cost of the company's investment

in the subsidiary undertaking reflects the underlying fair value of its net assets and goodwill at the time

of its acquisition. As a result of the transfer, the value of the company's investment in the subsidiary

undertaking falls below the amount at which it is stated in the accounting records. The Companies Act

2006 requires that the investment be written down accordingly and that the amount be charged as a

loss in the company's income statement.

However, the directors consider that, as there has been no overall loss to the company, it would fail to

give a true and fair view to charge the diminution to the company's income statement and it should

instead be re-allocated to goodwill so as to recognise the effective cost to the company of those net

assets and goodwill.

The effect on the company's statement of financial position is to recognise goodwill at a value of

£1,200,000 (2019: £1,200,000). Given that the business concerned operates in a generally stable

market, the directors have concluded that the estimated economic life of the intangible asset is ten

years from the date that the transfer took place. The asset is reviewed annually for impairment. The

review in February 2020 indicated that no impairment had arisen.

8.	TANGIBLE FIXED ASSETS

Plant and

machinery

etc

£

COST

At 1st April 2019

and 31st March 2020

118,361

DEPRECIATION

At 1st April 2019

81,115

Charge for year

16,918

At 31st March 2020

98,033

NET BOOK VALUE

At 31st March 2020

20,328

At 31st March 2019

37,246

9.	FIXED ASSET INVESTMENTS

Shares in

group

undertakings

£

COST

Additions

778,620

At 31st March 2020

778,620

NET BOOK VALUE

At 31st March 2020

778,620

The company's investments at the Balance Sheet date in the share capital of companies include the

following:

Ridgeway Phones Limited

Registered office: Premiere House, Elstree Way, Borehamwood, WD6 1JH

Nature of business: Telecommunications

%

Class of shares:

holding

Ordinary

100.00

10.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2020

2019

£

£

Trade debtors

468,329

338,702

Other debtors

263,229

499,195

Directors' current accounts

149,512

116,777

Tax

82,164

37,953

Prepayments and accrued income

227,590

224,790

1,190,824

1,217,417

The directors loan accounts are interest free with no repayment terms attaching.

11.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2020

2019

£

£

Bank loans and overdrafts

54,886

133,521

Other loans

455,401

9,400

Finance leases

286,991

629,334

Trade creditors

573,941

497,170

Amounts owed to group undertakings

140,629

54,778

Corporation tax

-

37,953

Social security and other taxes

29,479

23,216

VAT

145,263

72,157

Other creditors

398,285

13,653

Directors' current accounts

-

25,915

Accruals and deferred income

1,214,557

1,182,798

3,299,432

2,679,895

The directors' current accounts consist of short term advances which are interest free and unsecured.

There are no fixed repayment terms.

12.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

2020

2019

£

£

Finance leases

51,206

186,308

13.	DIRECTORS' ADVANCES, CREDITS AND GUARANTEES

The following advances and credits to directors subsisted during the years ended 31st March 2020 and

31st March 2019:

2020

2019

£

£

V Mignacca

Balance outstanding at start of year

(25,915

)

(61,048

)

Amounts advanced

70,600

35,133

Amounts repaid

-

-

Amounts written off

-

-

Amounts waived

-

-

Balance outstanding at end of year

44,685

(25,915

)

S H Raithatha

Balance outstanding at start of year

116,777

43,802

Amounts advanced

28,050

116,777

Amounts repaid

-

(43,802

)

Amounts written off

(40,000

)

-

Amounts waived

-

-

Balance outstanding at end of year

104,827

116,777

Amounts advanced to directors have no interest or repayment terms attaching. Directors' credits are

interest free and unsecured, with no fixed repayment terms. The outstanding balances were formally

fully written off on 31st May 2020.

14.	RELATED PARTY DISCLOSURES

At the year end there were short term advances from/to the Directors with balances of:

Mr V Mignacca £44,685 owed to company (2019: owed to director £25,915)

Mr S Raithatha £104,827 owed to company (2019: owed to company £116,777)

15.	ULTIMATE CONTROLLING PARTY

The company is controlled by Mr V Mignacca and Mr S Raithatha, directors and each owners of 50%

of the issued share capital of the company.