OCS_CONSULTING_PLC - Accounts
OCS_CONSULTING_PLC - Accounts
The directors present the strategic report for the year ended 31 March 2021.
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The principal activity of the group in the year under review was the provision of IT services to major international businesses, local national businesses and government agencies. No significant change in the nature of these activities occurred during the year.
Turnover for the year ending 2021 was £9,308,165 and has decreased by £537,848 from 2020. Net profit before tax for the group was £530,786 which was a decline from a profit of £790,605 in 2020. The Net Assets are £2,796,341 and this continues to reflect the groups on-going strength.
The group meets its day to day working capital requirements through self-financing. The company's forecasts and projections, taking account of potential changes in trading performance, show that the company is able to operate within the level of its current liquidity.
Entering the 2020/2021 financial year the business faced the challenges associated with re-organisation following the loss of one of its senior managers, dealing with the business uncertainty associated with Covid-19 and reverting to a fully virtual operation for all staff, sales and delivery operation in lockdown.
During the first half of 2020/2021 the company moved into an emergency operational footing as (a) a number of key clients had to close their doors or where deeply affected by lockdown (b) all management and staff processes had to move to a virtual operation (c) New regulatory and economic initiatives were launched by the government and (d) New organisational structure, reporting schedules and communication plans were rapidly implemented and (e) Budgets and plans were reassessed and modified. The major objectives moved to a position of protecting the business and staff in the light of significant future uncertainty.
Thanks to the amazing commitment and effort of all staff from senior management, through central services and all consultants the company was able to rapidly adapt to the new operating model quickly and with minimal possible disruption to all business functions, sales, marketing and delivery,
As the year progressed, the initial concern related to business volumes began to subside. Although initial half year showed a decline of revenues of between 20-25%, the effect of the revenue decline on profitability was greatly mitigated by the significant reduction in costs caused by virtual working and aided by the governments employment retention schemes, such that losses were minimised. The second half the year started to show a recovery in business activity as unaffected clients maintained and grew their levels business and new client acquisition progressed. By the final quarter business levels had begun to return to normal levels and with the continued benefit of lower costs the final outcome for the year turned positive.
In the UK, the core services business has recovered to pre-pandemic levels and strong new client acquisition in the second half has created a solid foundation for 2021/2022. The organisational re-structure undertaken at the start of year has proven to be very successful and is developing strongly.
In Holland, different parts of the business were affected at different times due to direct and indirect effects of the pandemic. As the year has progressed, performance has recovered in line with other parts of the business and a strong finish to year reflects a return to pre-pandemic performance levels
It was decided early in the year that the international focus on Switzerland and Belgium would be reduced due to restrictions and activity has continued opportunistically only.
Once again the Board would like to thank all staff for their efforts during what has been a most difficult and unusual year and all clients who have supported the business with their commitment.
For the coming year OCS has reviewed its strategy and operations and is directing its focus towards (a) Continued careful management of the business through the pandemic (b) Restoration of pre-pandemic levels of revenue and growth (c) Continued focus on Succession planning and (d) Continued review of International development plans
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In Holland, the business has had strong revenue and profit generation during the year showing excellent recovery from the challenges of the previous period, and returned to expected business performance.
In Cash Management, the business had a steady year. At the end of the year a significant divestment by its largest client has led to potential opportunities going forward
In Switzerland, following strong customer delivery in the previous period a significant new client win increased international revenue and margin for the year.
In Belgium, early promise including the recruitment of its first staff member was put on hold during the 2nd half due to the overtrading of Senior Management in the light of events.
This year, operational activities have centred around 1. Improvement of Revenue and Margins of the Group 2. Development of Sales and Marketing activities in the UK. 3. Stabilisation of our BV Life Sciences operation and return to growth. 4 The identification of European opportunities for UK and BV services outside core geographic markets.
For the coming year and in the light of the effects of Covid-19 on markets, OCS has reviewed its strategy and operations and is directing its focus towards careful management of the business through the pandemic in order to insure a strong foundation for the future.
Due to the impact of Covid-19 the forecast for the coming years is difficult to predict. At this stage the Group looks to be operating steadily despite the early impact from Covid-19. The Groups strong balance sheet, low debtor levels and strong continued client revenue streams mean that navigating the current problems will be successful leading to a strong platform for continued future growth.
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The management of the business and the execution of our strategy are subject to a number of risks. The following section comprises a summary of the main risks which we believe could potentially impact upon our operating and financial performance.
People Significant changes in in the lives and working arrangements of staff over the last year have presented many challenges and opportunities. It is difficult to assess the longer term implications of these changes post-pandemic and indeed as life returns to normal in the short/medium term to what extent people may decide to change their view on future career direction. Potential problems could arise as staff are requested to re-attend offices.
Staff Costs During the last year there has been major fluctuations in the availability and cost of staff and as with above it is difficult to assess the immediate impact of a return to normal on staff costs. Furthermore, legislative changes in the UK relating contract working IR35 has had the potential for changing the dynamics of the market place for staff however as with everything the true effect is yet to be seen.
Client revenue distribution OCS have a well distributed client base in terms of Industry, Services and Geography and this has been a great strength during the last year. However, the company still operates with a relatively small number of large clients delivering 80% of revenues and should any of these client’s cease working with OCS there would be an adverse impact on Company performance.
Macroeconomic environment IT Services as an industry suffers through the economic cycle, generally from the markets propensity to invest in new systems. Fortunately, during the last year demand has remained strong for IT services from those companies unaffected by the pandemic. Going forward the emerging risks associated with Brexit, Recession and challengesof the market economic recovery may result in more general risks
Legal The company is subject to varying UK and EEC legal and compliance regulations. The company takes its responsibilities seriously and ensures that its policies, systems and procedures are continually updated and comply with the legal requirements in all the sectors in which we operate.
The profile of the company staff at year end is 2 Directors, 11 Senior Managers and 120 + staff.
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On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2021.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 11.
No dividends have been paid.
It is the directors' intention to continue to finance the activities and development of the group from retained earnings and company funds. The directors will maintain the current strong balance sheet position and operate the group in a conservative fashion, maintaining their focus on both profitability and cash flow.
The directors manage daily the income and costs and are comfortable with the current arrangements in place.
There is no interest rate risk.
The group operates in both Sterling (UK Trading Businesses) and Euro (BV Trading Business). As sales are well balanced the company has limited exposure to currency fluctuation.
Due to the large corporate client base and credit history, the directors feel that current credit risk is manageable.
The group operates a non-discrimination policy for all staff covering sex, disability and race.
The group operates the following activities aimed at communicating with, incentivising and involving staff. namely:
regular company information emails
regular company newsletter
regular company meetings
incentive schemes for managers and appropriate staff
long service awards and share option scheme.
The group re-affirms its commitment to running ethical and environmentally friendly policies as well as updating and maintaining its policies and procedures to comply with regulation. The nature of the business which is Professional Services typically creates a small carbon footprint.
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Apart from the on-going Covid-19 situation no other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the group, the results of these operations or the state of affairs of the group in the financial year subsequent to the year ended 31 March 2021.
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OCS consulting has been operating as an IT Services for 30 years, delivering a range of services covering Consultancy, Managed Services and supply of resources to our clients. Since 2004 operated a wholly client centric approach to its market focussed on the needs of its clients.
In the light of the on-going Covid-19 situation and the companies focus on succession planning following last years re-organisation, the company’s strategy for the forthcoming year is to continue to concentrate on the development of the organisation and securing of on-going business operations to provide a secure foundation for the future.
In order to meet the objectives for the year OCS’ commitment for the next year will be:
At a group level, the company will continue to invest in the development of Group Management Activities, covering Finance, Business Planning. To this end, Succession Planning and the development of staff to take greater cross group responsibilities has become the most important objective.
The company will continue to investigate opportunities for geographic diversification through client relationships and sales and marketing activities for both the UK and BV core businesses. Investment in the development of the wider geographic markets that OCS operate in, such as Belgium and Switzerland will continue, however due to Covid-19 travel restrictions this activity will remain opportunistic.
In the UK, the focus will be the continued development of the UK Service delivery organisation and Marketing and Sales activities as commenced last year. Building on a strong end of year sales pipeline the aim is in recovering revenue levels to pre-Covid-19 levels.
Following the broad re-organisation of the UK Sales and delivery structure the focus for this year will be the development of the BV organisation to create clear succession plan which will support future growth. Operationally, the aim will be to recover revenue and profitability to pre-pandemic levels whilst being cognisant of the continued risks associated with Covid-19.
The cash management solutions business will continue to focus on operational efficiency, management of its diverse client base and the organic growth of its product estate following the divestment by our core client of a major part of its European estate last year and the recent divestment of its UK businesses.
Due to the continued uncertainty related to the impact of Covid-19 the forecast for the coming years remains difficult to predict. However, a promising end to 2021 bodes well for 2022 and budgets reflect an ambition to return to pre-pandemic client revenue levels whilst retaining improved margins achieved. The Groups strong balance sheet, low debtor levels and strong continued client revenue streams a strong platform for continued future growth.
In accordance with the company's articles, a resolution proposing that CBW Audit Limited be reappointed as auditor of the group will be put at a General Meeting.
select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ; prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
We have audited the financial statements of OCS Consulting Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2021 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
give a true and fair view of the state of the group's and the parent company's affairs as at 31 March 2021 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company 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 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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 strategic report and the directors' report.
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.
As explained more fully in the directors' responsibilities statement, 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 is 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 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 company or to cease operations, or have no realistic alternative but to do so.
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 an auditor's report 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.
We ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations. The laws and regulations applicable to the group were identified through discussions with directors and other management, and from our commercial knowledge and experience of the software services industry.
Of these laws and regulations, we focused on those that we considered may have a direct material effect on the financial statements or the operations of the group, including compliance with employment law, furlough regulations, health and safety laws and accounting regulations. The extent of compliance with these laws and regulations identified above was assessed through making enquiries of management and inspecting legal correspondence, as well as review of furlough claims. The 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 the susceptibility of the group'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;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the group's remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 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;
reviewing communications with with the parent company or legal team;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators and the company’s legal advisors;
review of furlough claim calculations.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. 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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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 an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £16,655 (2020 - £651,353 profit).
OCS Consulting Plc (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 66 Prescot Street, London, E1 8NN. The business address is as displayed within the company information page.
The group consists of OCS Consulting Plc and all of its subsidiaries.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £16,655 (2020 - £651,353 profit).
The consolidated financial statements incorporate those of OCS Consulting Plc and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 March 2021. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The financial statements of foreign subsidiaries are translated into sterling at closing rates of exchange and the differences arising from the translation of the opening net investment in subsidiaries at the closing rate are taken directly to reserves.
The financial statements of foreign subsidiaries are translated into sterling at closing rates of exchange and the differences arising from the translation of the opening net investment in subsidiaries at the closing rate are taken directly to reserves.
Shares under option are held by an ESOP trust. In accordance with the requirements of UITF abstract 38, Accounting for ESOP Trusts, the consideration paid for the company's own shares held by the ESOP trust is deducted in arriving at shareholders' funds. A provision against shares under option at less than cost is carried in other reserves. An amount representing the realised loss for the year, calculated as the difference between the purchase price of the shares and the proceeds receivable from employees, allocated over the vesting period, is transferred to the profit and loss account.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
An analysis of the group's turnover is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2020 - 1).
Investment income includes the following:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The company has estimated losses of £147,153 (2020: £266,082) available for carry forward against future trading profits.
The standard UK corporation tax rate of 19% has been used in the reconciliation of the current tax charge above.
No deferred tax asset is recognised in the financial statements in the absence of persuasive and reliable evidence that suitable taxable profits will be generated in the future.
Details of the company's subsidiaries at 31 March 2021 are as follows:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The options outstanding at 31 March 2021 had an exercise price ranging from 2p to 4p, and a remaining contractual life of 10 years.
The directors consider that it is not possible to estimate reliably the fair value of options granted and have therefore adopted the intrinsic value method to account for the cost of share-based payments. The intrinsic value of the options at the reporting date is calculated as the difference between the option price and the estimated market value of the shares based on agreed values for the purpose of further grants of options or other available information, Based on past experience the directors have estimated that 37% of option holders will leave the company between the date of grant and the earliest exercise date.
As a result of an option price equal to the market value of the shares at the date of grant, the fairly static share price and the small number of options granted the intrinsic value of the options granted is very small and no expense has been recognised in either the current or previous accounting year. The intrinsic value of the options granted during the year is £nil (2020: £nil).
The company has established the OCS Consulting plc ESOP Trust to hold shares in respect of an executive share option scheme. The Trustees purchase the company's ordinary shares at market value as they become available and in accordance with anticipated requirements.
At the year end the trust held 834,000 (2020: 480,167) ordinary 1p shares at a cost of £124,200 (2020: £124,500) and an estimated market value of £24,350 (2020: £10,000). The trust has waived its entitlement to dividends.
At the year end options had been granted over 860,000 (2020: 870,000) shares.
Where the shares are under option at below cost the difference between the purchase price and the proceeds receivable from employees is treated as becoming a realised loss over the vesting period.
The Company and Group are exempt from disclosing related party transactions with companies that are wholly owned within the group. There are no transactions to disclose with related parties which are not wholly owned within the same group.