MS Modernisation Services UK, Ltd. - Limited company accounts 22.3

REGISTERED NUMBER: 04283023 (England and Wales)

for

Page

Company Information  

1

Strategic Report  

2

Report of the Directors  

4

Report of the Independent Auditors  

6

Income Statement  

9

Other Comprehensive Income  

10

Statement of Financial Position  

11

Statement of Changes in Equity  

12

Notes to the Financial Statements

13

DIRECTORS:

G J Wilson

R J Kerr

REGISTERED OFFICE:

The Mailbox Level 3

101 Wharfside Street

Birmingham

B1 1RF

REGISTERED NUMBER:

04283023 (England and Wales)

SENIOR STATUTORY AUDITOR:

Jeremy Harrod FCCA

AUDITORS:

Grant Harrod Lerman Davis LLP

Chartered Accountants

Statutory Auditor

1st Floor

Healthaid House

Marlborough Hill

Harrow

Middlesex

HA1 1UD

The directors present their strategic report together with their report and the audited financial statements of MS Modernisation Service UK, Ltd. (the "Company") for the year ended 28 February 2022.

PRINCIPAL ACTIVITIES & OBJECTIVES

The Company operates within the Application Modernisation sector of the wider Advanced group of companies (details of which are provided in note 16 to the financial statements).

The Company operates within the information technology market, specifically in modernisation solutions.  It develops and markets enterprise legacy migration solutions and provides tools and professional services to allow business to migrate from their legacy mainframe and distributed information technology infrastructures to modern environments and programming languages.

REVIEW OF BUSINESS

The results for the year and financial position of the Company are shown in the financial statements.

During the year the company had revenue of £843,227 (2021: £532,276) and recorded an operating profit and profit before taxation of £76,179 (2021: loss of £238,339), both of which are considered to represent key performance measures of the Company.

The average monthly number of employees during the year was 1 (2021: 5). As part of the wider group's rationalisation strategy, after March 2021 all employees of the Company had their employment transferred to another group company.

PRINCIPAL RISKS AND UNCERTAINTIES

Below are details of the Company's principal risks and the mitigating activities in place to address them.

Liquidity risk

Liquidity risk is the risk that the Company cannot meet financial liabilities when they fall due. The Company's policy for managing liquidity risk is to ensure that the business has enough financial resource to meet its day-today activities at any point in time. The Company has received confirmation from its intermediate parent undertaking, Aston Midco Limited, that it will provide sufficient resources to enable the Company to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements.

Macroeconomic risk

A prime risk and area of uncertainty facing the Company is demand within its marketplace. Global market uncertainty, and national issues including the focus on national debt, have a direct or indirect impact on the organisations and businesses with which the Company trades. The Directors seek to manage these risks by development of the Company's portfolio of market offerings, which enable it to leverage new revenue streams from new and existing customers..

Innovation risk

The IT market is subject to rapid, and often unpredictable, change. As a result, the Company's products and services might become unattractive to its customer base. The Company monitors technology and market developments and invests to keep its existing offerings up-to-date as well as seeking out new opportunities and initiatives.

SECTION 172(1) STATEMENT

Under Section 172 of the UK Companies Act 2006 ("Section 172") directors must act in a way they consider, in good faith, would be most likely to promote the success of their company.  In doing so, our directors must have regard to stakeholders and the other matters set out in Section 172.  These disclosures have been made at group level and incorporated within the Annual Report and consolidated financial statements of Aston Midco Limited.  These disclosures cover the rest of the group as well as the Company.  The consolidated financial statements of Aston Midco Limited are available to the public from Companies House.

FUTURE DEVELOPMENTS

The Director continues to look for opportunities for the company and hopes to expand the business in the coming year. These opportunities include gaining new customers, new potential geographical areas, and new potential industries.

ON BEHALF OF THE BOARD:

G J Wilson - Director

24 March 2023

The Director presents their report together with the audited financial statements for the Company for the year ended 28 February 2022.

Reporting requirements on the Company's principal activities and future developments, its principal risks and uncertainties and its key performance indicators can be found in the Strategic Report.

DIVIDENDS

The director does not recommend the payment of a dividend (2021: £NIL).

DIRECTORS

G J Wilson has held office during the whole of the period from 1 March 2021 to the date of this report.

Other changes in directors holding office are as follows:

A W Hicks - resigned 1 February 2022

R J Kerr - appointed 1 February 2022

R J Kerr resigned from office on 10 February 2023.

The directors in place during the year and also at the date of approval of the financial statements benefit from qualifying third party indemnity provisions provided by the parent undertaking.

GOING CONCERN

The Company has net current liabilities of £1,567,298 (2021: £1,643,666) and therefore has received confirmation from its intermediate parent undertaking, Aston Midco Limited, that it will provide sufficient resources to enable the Company to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements. The director has reviewed the cash flow forecasts of the Company and the wider Group, including additional funding commitments from the Group's shareholders if required, and considers that there are sufficient resources to allow the Company to meet its obligations for the foreseeable future (being a period of not less than twelve months from the date of signing the financial statements). Therefore, the director has considered it is appropriate to adopt the going concern basis in preparing the annual financial statements.

In reaching this position, a downside severe scenario has been reviewed for the Aston Midco Limited group of companies. The assumptions modelled in this scenario are based on estimated potential downside trading impacts (including the acquisition and renewal of software contracts, the success of obtaining professional services assignments and the ability to achieve price increases) and interest rates being higher than the current forward projections.

Consideration was also given to the potential mitigating actions that could be taken by the Group over the next 12 months, specifically those matters which are wholly within management's control. These could include reductions to discretionary spend, delaying recruitment and reducing other controllable spend, although no such responses are currently anticipated to be required. Management have assessed that any mitigations are not considered to have a significant impact on customer experience.

EMPLOYMENT POLICIES

The Company is committed to offering equal employment opportunities and its policies are designed to attract, retain, and motivate the best staff regardless of gender, sexual orientation, race, religion, age or disability.

The Company encourages the participation of all employees in the operation and development of the business and has a policy of regular communications. The Company incentivises its employees and senior management through the payment of bonuses linked to performance objectives.

The Company has a wide range of other written policies, designed to ensure that it operates in a legal and ethical manner. These include policies related to health and safety, "whistle blowing", anti-bribery and corruption, business gifts, grievance, career planning, parental leave, systems and network security. All the Company's policies are published internally.

DIRECTORS' RESPONSIBILITIES STATEMENT

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

AUDITORS

The auditors,  Grant Harrod Lerman Davis LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

G J Wilson - Director

24 March 2023

Opinion

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 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 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 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 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 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 company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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, or returns adequate for our audit have not been received from branches not visited by us; or

-

the 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; or

-

the directors were not entitled to take advantage of the small companies' exemption from the requirement to prepare a Strategic Report.

Responsibilities of directors

As explained more fully in the Directors' Responsibilities Statement set out on pages four and 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 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.

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:

We have obtained an understanding of the legal and regulatory frameworks applicable to the Company and the industry it operates. We determined that the following laws and regulations were most significant: FRS102/FRS102 Section 1A,Companies Act 2006, Health and Safety.

We obtained an understanding of how the Company is complying with those legal and regulatory frameworks by making enquiries of management, those responsible for legal and compliance procedures and the company secretary. Our findings were corroborated by review of the board minutes and papers prepared by the board of directors.

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

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

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

- Identifying and testing journal entries, with a focus on entries made with unusual accounting combinations.

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

We did not identify any key audit matters relating to irregularities, including fraud.

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.

Jeremy Harrod FCCA (Senior Statutory Auditor)

for and on behalf of Grant Harrod Lerman Davis LLP

Chartered Accountants

Statutory Auditor

1st Floor

Healthaid House

Marlborough Hill

Harrow

Middlesex

HA1 1UD

24 March 2023

TURNOVER

4

843,227

532,276

Cost of sales

(708,475

)

(266,406

)

GROSS PROFIT

134,752

265,870

Administrative expenses

(58,573

)

(504,209

)

OPERATING PROFIT/(LOSS) and

PROFIT/(LOSS) BEFORE TAXATION

76,179

(238,339

)

Tax on profit/(loss)

7

-

-

PROFIT/(LOSS) FOR THE FINANCIAL

YEAR

76,179

(238,339

)

PROFIT/(LOSS) FOR THE YEAR

76,179

(238,339

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME

FOR THE YEAR

76,179

(238,339

)

FIXED ASSETS

Intangible assets

8

-

-

Tangible assets

9

-

189

-

189

CURRENT ASSETS

Debtors

10

625,440

181,697

Cash at bank

163,882

284,251

789,322

465,948

CREDITORS

Amounts falling due within one year

11

(2,356,620

)

(2,109,614

)

NET CURRENT LIABILITIES

(1,567,298

)

(1,643,666

)

TOTAL ASSETS LESS CURRENT

LIABILITIES

(1,567,298

)

(1,643,477

)

CAPITAL AND RESERVES

Called up share capital

12

2

2

Retained earnings

13

(1,567,300

)

(1,643,479

)

SHAREHOLDERS' DEFICIT

(1,567,298

)

(1,643,477

)

The financial statements were approved by the Board of Directors and authorised for issue on 24 March 2023 and were signed on its behalf by:

G J Wilson - Director

Called up

share

Retained

Total

capital

earnings

equity

£   

£   

£   

Balance at 1 March 2020

2

(1,405,140

)

(1,405,138

)

Changes in equity

Total comprehensive income

-

(238,339

)

(238,339

)

Balance at 28 February 2021

2

(1,643,479

)

(1,643,477

)

Changes in equity

Total comprehensive income

-

76,179

76,179

Balance at 28 February 2022

2

(1,567,300

)

(1,567,298

)

1.

STATUTORY INFORMATION

MS Modernisation Services UK, 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" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.  

Going concern

The Company has net current liabilities of £1,567,298 (2021: £1,643,666) and therefore has received confirmation from its intermediate parent undertaking, Aston Midco Limited, that it will provide sufficient resources to enable the Company to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements. The director has reviewed the cash flow forecasts of the Company and the wider Group, including additional funding commitments from the Group's shareholders if required, and considers that there are sufficient resources to allow the Company to meet its obligations for the foreseeable future (being a period of not less than twelve months from the date of signing the financial statements). Therefore, the director has considered it is appropriate to adopt the going concern basis in preparing the annual financial statements.

In reaching this position, a downside severe scenario has been reviewed for the Aston Midco Limited group of companies. The assumptions modelled in this scenario are based on estimated potential downside trading impacts (including the acquisition and renewal of software contracts, the success of obtaining professional services assignments and the ability to achieve price increases) and interest rates being higher than the current forward projections.

Consideration was also given to the potential mitigating actions that could be taken by the Group over the next 12 months, specifically those matters which are wholly within management's control. These could include reductions to discretionary spend, delaying recruitment and reducing other controllable spend, although no such responses are currently anticipated to be required. Management have assessed that any mitigations are not considered to have a significant impact on customer experience.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 3.17(d);

•

the requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and

11.48(c);

•

the requirements of paragraphs 12.26, 12.27, 12.29(a), 12.29(b) and 12.29A;

•

the requirement of paragraph 33.7.

This information is included in the consolidated financial statements of Aston Midco Limited as at 28 February 2022 and these financial statements may be obtained from Companies House.

Turnover

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:

- the significant risks and rewards of ownership have been transferred to the buyer;

- the company retains no continuing involvement or control over the goods;

- the amount of revenue can be measured reliably;

- it is probable that future economic benefits will flow to the company; and

- the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:

- the amount of revenue can be measured reliably;

- it is probable that future economic benefits will flow to the company;

- the stage of completion of the contract at the end of the reporting period can be measured reliably; and

- the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Subject to the revenue recognition conditions noted above being met, the company recognises revenue as follows:

-  Software licence fee income is recognised in full in the statement of comprehensive income on delivery of the licence and the issue of authorisation codes to activate the software.

-  Support and maintenance income is deferred at the date of invoicing and released to the statement of comprehensive income over the duration of the maintenance contract.

-  The balance of maintenance income not released to the statement of comprehensive income is carried in the balance sheet within deferred revenue.

-  Services income is recognised in the statement of comprehensive income in the month the services are performed.

-  Income from the sale of hardware is recognised in the statement of comprehensive income when the goods are shipped to the customer.

Goodwill

Intangible assets

Tangible fixed assets

Taxation

Deferred tax

Foreign currencies

Pension costs and other post-retirement benefits

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

3.

CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

4.

TURNOVER

5.

EMPLOYEES AND DIRECTORS

2022

2021

£   

£   

Wages and salaries

19,881

368,933

Social security costs

2,576

34,806

Other pension costs

1,882

-

24,339

403,739

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

2022

2021

Administrative

1

5

2022

2021

£   

£   

Directors' remuneration

-

-

6.

OPERATING PROFIT/(LOSS)

The operating profit (2021 - operating loss) is stated after charging:

2022

2021

£   

£   

Depreciation - owned assets

189

1,101

Foreign exchange differences

5,719

58,090

7.

TAXATION

Analysis of the tax charge

No liability to UK corporation tax arose for the year ended 28 February 2022 nor for the year ended 28 February 2021.

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2022

2021

£   

£   

Profit/(loss) before tax

76,179

(238,339

)

Profit/(loss) multiplied by the standard rate of corporation tax in the UK of

19% (2021 - 19%)  

14,474

(45,284

)

Effects of:

Utilisation of tax losses

(14,474

)

-

Losses in year  

-

45,284

Total tax charge

-

-

8.

INTANGIBLE FIXED ASSETS