EDNS Group Limited - Limited company accounts 20.1

REGISTERED NUMBER: 10698364 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2020

FOR

EDNS GROUP 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:

Mrs E M Drut

G J A Jessiman

REGISTERED OFFICE:

Corner Of Meadowsweet Close

Grand Drive

Raynes Park

London

SW20 9NA

REGISTERED NUMBER:

10698364 (England and Wales)

AUDITORS:

Butters Gates & Company

part of Pulp Fraction Limited

(Statutory Auditor)

107 Bell Street

London

NW1 6TL

The directors present their strategic report of the company and the group for the year ended 31 March 2020.

REVIEW OF BUSINESS

The results for the year and financial position of the Group are as shown in the annexed financial statements.

The period ended 31st March 2020 saw a small decrease in gross profit margin. The Group continues to remain profitable. The net assets of the company increased during the year by 2.70% to £5.39m. The key financial indicators that the directors use to monitor the performance of the business are turnover, gross profit and operating profit, details of which are set out in 'analysis of development and performance' below.

PRINCIPAL RISKS AND UNCERTAINTIES

The Group faces a number of risks and uncertainties due to competition, maintaining the reputation and quality of service together with satisfying the laws and regulations.

The business' principal financial instruments comprise bank balances and bank loans to the business. The main purpose of these instruments is to finance the business' operations.

In respect of bank balances, the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility. All of the business' cash balances are held in such a way that achieves a competitive rate of interest.

Loans comprise loans from financial institutions. The interest rate and monthly repayments on the loans are fixed to the bank's base rate. The business manages the liquidity risk by ensuring there are sufficient funds to meet the payments.

ANALYSIS OF DEVELOPMENT AND PERFORMANCE

31.03.20

31.03.19

Turnover

£8.86m

£8.39m

Gross profit margin

41.98%

43.01%

Operating profit

£1.20m

£954k

Profit before tax

£1,12m

£846k

FUTURE DEVELOPMENTS

The directors expect the 2020/21 profits of the group to be significantly reduced. This is mainly due to Covid-19 requiring the schools and hotel to close down temporarily. However, this is not expected to have a long-term effect on the trading of the group.

GOING CONCERN

The financial statements have been prepared on a going concern basis which the directors consider to be appropriate, for the following reasons.

On 11 March 2020, the World Health Organization declared the outbreak of Coronavirus COVID-19 a pandemic, due to its rapid spread throughout the world, having affected more than 110 countries at that time.This has led to the School having to follow the lockdown guidelines as required by the Government. The school was therefore shut during the months of April 2020 and May 2020. Thereafter classes reopened with limited children.

The directors reviewed the cash flow forecasts for the Group extending until 31 March 2022 . Management have modelled various cash flow scenarios, including a severe yet plausible downside scenario which indicates that the company will have sufficient funds, through its facility and operating cash flows, to meet its liabilities as they fall due for that period.

Consequently, the directors are confident that the company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

ON BEHALF OF THE BOARD:

G J A Jessiman - Director

29 March 2021

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

DIVIDENDS

The total distribution of dividends for the period ended 31 March 2020 was £720,000.

DIRECTORS

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

Mrs E M Drut

G J A Jessiman

Other changes in directors holding office are as follows:

Mrs M Keaveney-Jessiman ceased to be a director after 31 March 2020 but prior to the date of this report.

POLITICAL DONATIONS AND EXPENDITURE

There was political donation of £5,000 made to the Conservative party during the year.

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 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.

AUDITORS

The auditors, Butters Gates & Company, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

G J A Jessiman - Director

29 March 2021

Opinion

We have audited the financial statements of EDNS Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2020 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 March 2020 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

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the group or the company or to cease their operations, and as they have concluded that the group and the company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements ("the going concern period").

We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least a year from the date of approval of the financial statements. In our evaluation of the directors' conclusions, we considered the inherent risks to the group's business model and analysed how those risks might affect the group and company's financial resources or ability to continue operations over the going concern period. We have nothing to report in these respects.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the group or the company will continue in operation.

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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

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.

Jonathan R Butters (Senior Statutory Auditor)

for and on behalf of Butters Gates & Company

part of Pulp Fraction Limited

(Statutory Auditor)

107 Bell Street

London

NW1 6TL

30 March 2021

TURNOVER

8,865,389

8,397,861

Cost of sales

5,143,691

4,785,360

GROSS PROFIT

3,721,698

3,612,501

Administrative expenses

2,520,870

2,658,582

1,200,828

953,919

Other operating income

677

-

OPERATING PROFIT

4

1,201,505

953,919

Interest receivable and similar income

36,819

6,527

1,238,324

960,446

Interest payable and similar expenses

5

113,001

113,847

PROFIT BEFORE TAXATION

1,125,323

846,599

Tax on profit

6

263,387

206,348

PROFIT FOR THE FINANCIAL YEAR

861,936

640,251

Profit attributable to:

Owners of the parent

861,936

640,251

PROFIT FOR THE YEAR

861,936

640,251

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

861,936

640,251

Total comprehensive income attributable to:

Owners of the parent

861,936

640,251

FIXED ASSETS

Intangible assets

9

-

-

Tangible assets

10

7,761,743

7,505,417

Investments

11

3

3

7,761,746

7,505,420

CURRENT ASSETS

Stocks

12

2,600

2,600

Debtors

13

513,514

1,716,706

Cash at bank and in hand

2,214,326

1,443,921

2,730,440

3,163,227

CREDITORS

Amounts falling due within one year

14

1,806,086

1,833,016

NET CURRENT ASSETS

924,354

1,330,211

TOTAL ASSETS LESS CURRENT LIABILITIES

8,686,100

8,835,631

CREDITORS

Amounts falling due after more than one year

15

(3,282,249

)

(3,573,716

)

PROVISIONS FOR LIABILITIES

18

(18,463

)

(18,463

)

NET ASSETS

5,385,388

5,243,452

CAPITAL AND RESERVES

Called up share capital

19

1,000

1,000

Retained earnings

20

5,384,388

5,242,452

SHAREHOLDERS' FUNDS

5,385,388

5,243,452

The financial statements were approved by the Board of Directors and authorised for issue on 29 March 2021 and were signed on its behalf by:

G J A Jessiman - Director

FIXED ASSETS

Intangible assets

9

-

-

Tangible assets

10

14,776,829

14,459,441

Investments

11

200

200

14,777,029

14,459,641

CURRENT ASSETS

Debtors

13

449,883

1,450,430

Cash at bank

106,840

84,949

556,723

1,535,379

CREDITORS

Amounts falling due within one year

14

469,284

387,985

NET CURRENT ASSETS

87,439

1,147,394

TOTAL ASSETS LESS CURRENT LIABILITIES

14,864,468

15,607,035

CREDITORS

Amounts falling due after more than one year

15

3,282,249

3,573,716

NET ASSETS

11,582,219

12,033,319

CAPITAL AND RESERVES

Called up share capital

19

1,000

1,000

Retained earnings

20

11,581,219

12,032,319

SHAREHOLDERS' FUNDS

11,582,219

12,033,319

Company's profit for the financial year

268,899

12,152,319

The financial statements were approved by the Board of Directors and authorised for issue on 29 March 2021 and were signed on its behalf by:

G J A Jessiman - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2018

1,100

5,252,201

5,253,301

Changes in equity

Issue of share capital

(100

)

-

(100

)

Dividends

-

(650,000

)

(650,000

)

Total comprehensive income

-

640,251

640,251

Balance at 31 March 2019

1,000

5,242,452

5,243,452

Changes in equity

Dividends

-

(720,000

)

(720,000

)

Total comprehensive income

-

861,936

861,936

Balance at 31 March 2020

1,000

5,384,388

5,385,388

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2018

1,000

-

1,000

Changes in equity

Dividends

-

(120,000

)

(120,000

)

Total comprehensive income

-

12,152,319

12,152,319

Balance at 31 March 2019

1,000

12,032,319

12,033,319

Changes in equity

Dividends

-

(720,000

)

(720,000

)

Total comprehensive income

-

268,899

268,899

Balance at 31 March 2020

1,000

11,581,218

11,582,218

Cash flows from operating activities

Cash generated from operations

1

2,555,566

1,235,910

Interest paid

(113,001

)

(113,847

)

Tax paid

(214,676

)

(267,471

)

Net cash from operating activities

2,227,889

854,592

Cash flows from investing activities

Purchase of tangible fixed assets

(534,334

)

(16,201

)

Interest received

36,819

6,527

Net cash from investing activities

(497,515

)

(9,674

)

Cash flows from financing activities

New loans in year

-

3,858,298

Loan repayments in year

(255,839

)

(3,911,803

)

Amount introduced by directors

15,870

648,862

Amount withdrawn by directors

-

(2,371,946

)

Share issue

-

(100

)

Equity dividends paid

(720,000

)

(650,000

)

Net cash from financing activities

(959,969

)

(2,426,689

)

Increase/(decrease) in cash and cash equivalents

770,405

(1,581,771

)

Cash and cash equivalents at beginning of year

2

1,443,921

3,025,692

Cash and cash equivalents at end of year

2

2,214,326

1,443,921

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

31.3.20

31.3.19

£

£

Profit before taxation

1,125,323

846,599

Depreciation charges

278,008

281,972

Finance costs

113,001

113,847

Finance income

(36,819

)

(6,527

)

1,479,513

1,235,891

Decrease in trade and other debtors

1,203,192

24,970

Decrease in trade and other creditors

(127,139

)

(24,951

)

Cash generated from operations

2,555,566

1,235,910

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 March 2020

31.3.20

1.4.19

£

£

Cash and cash equivalents

2,214,326

1,443,921

Year ended 31 March 2019

31.3.19

1.4.18

£

£

Cash and cash equivalents

1,443,921

3,025,692

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.4.19

Cash flow

At 31.3.20

£

£

£

Net cash

Cash at bank and in hand

1,443,921

770,405

2,214,326

1,443,921

770,405

2,214,326

Debt

Debts falling due within 1 year

(284,582

)

(35,628

)

(320,210

)

Debts falling due after 1 year

(3,573,716

)

291,467

(3,282,249

)

(3,858,298

)

255,839

(3,602,459

)

Total

(2,414,377

)

1,026,244

(1,388,133

)

1.	STATUTORY INFORMATION

EDNS Group 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.

Basis of consolidation

The group financial statements include the financial statements of the company and all its subsidiary undertakings. The consolidated financial statements are based on financial statements that are coterminous with those of the parent company and using the same accounting policies.

A subsidiary is an entity that is controlled by the group. Control is the power to govern the financial and operating policies of an entity in order to gain the benefits from its activities and typically arises from owning in excess of 50% of the voting shares in an entity.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Turnover

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

Goodwill

Goodwill, being the amount paid in connection with acquisitions prior to merger is now fully amortised in the period.

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.

Freehold property

-

2% on cost

Fire safety equipment

-

20% on reducing balance and 20% on cost

Fixtures and fittings

-

Straight line over 10 years

Motor vehicles

-

20% on reducing balance

Office equipment

-

20% on reducing balance

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Taxation

Taxation for the year comprises current and deferred tax. 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.

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 group operates a defined contribution pension scheme. Contributions payable to the group'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 as follows:

31.03.20

31.03.19

Admin Staff

10

10

Management

7

4

Teachers and hotel staff

237

233

254

247

31.3.20

31.3.19

£

£

Directors' remuneration

32,248

34,992

Directors' pension contributions to money purchase schemes

351

249