Sword IT Solutions Limited - Period Ending 2022-12-31
Sword IT Solutions Limited - Period Ending 2022-12-31
Registration number:
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Sword IT Solutions Limited
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Brebners
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Sword IT Solutions Limited
Contents
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Company Information |
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Strategic Report |
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Directors' Report |
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Statement of Directors' Responsibilities |
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Independent Auditor's Report |
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Statement of Income and Retained Earnings |
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Statement of Financial Position |
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Notes to the Financial Statements |
Sword IT Solutions Limited
Company Information
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Directors |
D Bruce P Norgate J D Innes J F Mottard |
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Registered office |
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Auditor |
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Sword IT Solutions Limited
Strategic Report for the Year Ended 31 December 2022
The directors present their strategic report for the year ended 31 December 2022.
Principal activity
The principal activity of the company is the provision of IT business solutions and services.
Fair review of the business
The directors are satisfied that the performance of the company for the year ended 31 December 2022 is in line with management's expectations. An increase of the oil price in FY2022 due to geopolitical events has had a positive impact which has resulted in increased growth of both existing accounts as well as the signature of contracts with new clients during the year. Part of the increase in revenue and profit in the year has arisen from the hive in of two business units at the beginning of the year. This in turn has led to improved cash generation and a strong balance sheet.
The company seeks to ensure that responsible business practices are fully integrated into the management of all of its operations and into the culture of all parts of its business. It believes that the consistent adoption of responsible business practice is essential for operational excellence, which in turn, ensures the delivery of its core objectives of sustained real growth in revenue and profitability.
At 1 January 2023, the trade, assets and liabilities of Codify Ltd., a fellow subsidiary undertaking, was transferred to Sword IT Solutions at their market value. At 1 April 2023, the trade, assets and liabilities of Phusion IM Limited, a fellow subsidiary undertaking, was transferred to Sword IT Solutions at their market value.
The company's key financial and other performance indicators during the year were as follows:
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Financial KPIs |
Unit |
2022 |
2021 |
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Turnover |
£ |
46,192,528 |
29,507,023 |
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Gross margin |
% |
57 |
72 |
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Profit before tax |
£ |
5,681,417 |
3,511,239 |
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Net assets |
£ |
13,098,884 |
8,408,639 |
Turnover in 2022 was substantially higher than the previous year due mainly to the transfer of trade on 1 January 2022 of 2 fellow subsidiaries. This accounted for approximately £16m of the increase in turnover. The remainder of the company’s turnover remained consistent with 2021. The company continues to invest in developing new business opportunities and along with the consolidation of 2 more fellow subsidiaries in 2023 expect turnover to increase again in 2023.
The company significantly increased its net assets in the year as a result of its increased profitability from increased turnover. This is reflected within increased amounts recoverable within debtors. With these significant financial resources, the directors believe that the company remains well placed to exploit future opportunities as and when they arise.
Non-Financial Key performance indicators
The company seeks to ensure that responsible business practice is fully integrated into the management of all its operations and into the culture of all parts of its business. It believes that the consistent adoption of responsible business practise is essential for operational excellence, which in turn, ensures the delivery of its core objectives of sustained real growth in turnover and profitability.
Given the company’s size and diversity, the directors consider there are collectively numerous non-financial performance indicators but no individual indicator is more important than any other and take a wide range of non-financial performance indicators into account.
Sword IT Solutions Limited
Strategic Report for the Year Ended 31 December 2022
Principal risks and uncertainties
The company trades within the IT sector, specialising in the provision of IT Business Solutions and services. The company faces the business risks of the individual industries within which our clients operate and to specific business risks around the IT industry, such as technological changes. Management monitor these risks to ensure continuity of trade and to assist our clients to succeed within their own industry sectors. The company's results and strengthening statement of financial position from the retention of profits provide a good base to react to any risks that the company faces.
The company performed robustly during the COVID pandemic and has continued to perform robustly during a period of economic uncertainty and high inflation, the company has generated strong profits, revenue growth and cashflow which means it is in a strong position to continue its growth journey.
Our strategy of ensuring a strong element of annuity based recurring revenue has ensured that the underlying business has remained stable and our risk relating to projects being deferred during times of uncertainty has been minimized.
The company operates in competitive markets and has a number of key competitors. The company manages this risk by providing high quality IT solutions to its clients that meets their initial and future requirements.
Financial instruments
Objectives and policies
The company uses basic financial instruments, other than derivatives, comprising bank balances, and various other items such as trade debtors and trade creditors. The main purpose of these instruments is to raise funds for and finance the company's operations.
It is and has been throughout the year under review, the company’s policy that no trade in non-basic financial instruments shall be undertaken.
The company does not enter into any formal hedging arrangements.
Price risk, credit risk, liquidity risk and cash flow risk
Liquidity, credit, price and cash flow risks are managed by the directors on a constant basis to ensure the company maintains adequate cash flows to serve its working capital requirements.
The company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities which are largely conducted in sterling.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for that other party by failing to discharge an obligation. Company policies are aimed at minimising such losses by authorisation of credit terms to customers who demonstrate an appropriate payment history and satisfy credit worthiness procedures.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The company aims to mitigate liquidity risk by managing cash generation by its operations and ensuring regular monitoring of amounts outstanding for both time and credit limits in trade debtors.
Cash flow risk is the risk of exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability such as future interest payments on a variable rate debt. The company manages this risk, where significant, and does not maintain any derivatives or complex financial instruments as explained above.
Sword IT Solutions Limited
Strategic Report for the Year Ended 31 December 2022
Section 172(1) statement
The Companies (Miscellaneous Reporting) Regulations 2018 require the directors to explain how they considered the interest of key stakeholders as set out in sections 172(1) (A) to (F) of the Companies Act 2006 when performing their duty to promote the success of the company. The following paragraphs summarise how the directors fulfil their duties.
Long term decision making
In light of the kind of activities undertaken by the company and the type of contracts it implements, the company has been structurally adapted to streamline its operational management.
• Organised into profit centres: the company has been structured as specialized, autonomous business units, each with its own management. Each specialized business unit is a profit centre and is responsible for its own operational management and financial performance,
• Project knowledge and expertise: managers in charge of specialized business units have technical training in computer sciences and all have extensive experience in IT project management. Most of them are experts in their own field of competence,
• Technical management: each business unit relies on its own internal technical competencies as well as being able to call upon specialist technical competencies elsewhere in the group if necessary.
• A specialist commercial approach: the sales force tend to have a strong technical background and are specialists in the field in which the Business Unit operates. This allows them to propose sound technical solutions which address our clients real business problems.
Looking after people and the company's employees
Most of the company’s employees and sub-contractors have strong professional qualifications. The company provides its staff members with a wide range of tools and training to facilitate the continued development of the staff.
The company has many centralised knowledge sharing repositories that allow teams from across the organisation to independently access relevant information and the right specialists where appropriate.
Facilities available across the group:
• Laptops for mobile workers, with external access to the Sword information system; all staff members have one or two additional monitors for their laptops to ensure greater comfort when working,
• State-of-the-art collaborative tools (e-mail messaging, instant messaging, collaborative spaces, standardized document reference systems, professional HR tools, customer relationship management tools, each Group site is equipped with video conference rooms), and
• Quality work environment: Offices are organized into small project teams. Access to management is also ensured by the geographic proximity of offices.
The company operates a very flat hierarchy ensuring all employees are involved in the day to day activities of the business as well as its future strategy. Monthly meetings are held at the Business Unit level in order to discuss and share:
• Results and outlook for the individual Business Unit and the entire Group along with its strategical direction,
• Current and future sales opportunities and forward looking strategy, and
• A comprehensive review of current projects, difficulties encountered and successes.
The company is a specialised IT Services and Software company.
The companies most valuable asset is its people, their expertise, training and knowledge.
Sword IT Solutions Limited
Strategic Report for the Year Ended 31 December 2022
The company has people at the centre of its culture and ethos and pays special attention to fostering an environment in which the employees feel valued and motivated to further their own personal and professional development. Internal strategies have been put in place to ensure the company can:
• Maintain skills and pool knowledge through the implementation of training and knowledge capitalisation and sharing processes. These processes are consistent with the specific features of each of our business units and make it possible to ‘grow’ our staff members to become specialists in their field. To do this, the various educational means provided by the company include:
- Specialized and general documentary assets,
- Tutorial references for each speciality,
- Support for new staff members in the form of mentoring and sponsorship, and
- Implementation of on-line or external training, implementation of certification programs.
• Maintaining team motivation throughout the term of a contract based primarily on an organization in small-size business units, strong involvement by management in the business unit, internal mobility and personalized training plans,
• Change management: induction and departure of a new staff member in a team taking account of the project’s constraints and objectives.
As such, the company is constantly investing in training with a large proportion of its employees having undergone internal or external training.
The company offers a number of facilities to enable staff members to develop a better balance between work, family commitments and leisure time.
• The possibility for staff members to access sports facilities,
• Flexible working practices,
• Geographic mobility and opportunities to travel if desired, and
• Sword's international presence also allows staff members to be offered international opportunities.
Fostering relationships with suppliers, customers and others
To meet the strategic challenges of its clients, the requirements of adapting their technological environments and the needs of evolving business processes, the company is structured into specialised Business Units.
The company provides its customers with proximity, high added-value specialist know-how and an optimised economic approach.
This is a company with strong, sustainable and profitable growth, which is pursuing an expansion approach based on specialization, proximity and the quality of its expertise and services.
In working with carefully selected organisations, the company continues to deliver innovative ideas to its customers while maintaining its business knowledge, technical expertise and ability to innovate.
The company requires all of its stakeholders and partners to comply strictly with the laws and regulations in force in the countries in which they operate, as well as a commitment to collaborate with the Group in implementing compliance with the principles set out in the Group’s Ethics Charter, and if necessary, to take any appropriate corrective measures as part of a continuous improvement process. The company expects its stakeholders and partners to take all reasonable steps to ensure that its own suppliers and subcontractors comply with the terms of this Charter. Sword Group undertakes to comply with this responsible purchasing charter for suppliers, subcontractors and independent contractors and to promote transparency and dialogue with its partners.
The on-going pursuit of excellence and leadership by Sword is developed in line with the company and group’s founding values: respect, rigour and involvement.
Sword IT Solutions Limited
Strategic Report for the Year Ended 31 December 2022
Impact on the community and the environment
Sword Group's Social Responsibility is to consider the company not only as a place of production and a profit centre, but also as having a responsibility for the community and the environment.
The company is committed to:
• Applying the precautionary approach to environmental problems,
• Undertaking initiatives to promote greater environmental responsibility, and
• Promoting the development and dissemination of environmentally friendly technologies.
This general framework is applied through various actions adapted to the specificities of the Sword Group, its businesses, its employees and its subsidiaries.
The group’s investment is not restricted to staff training; it also takes the form of outreach to universities and engineering schools throughout the world and especially presentations and partnerships in the United Kingdom with the University of Aberdeen, the Robert Gordon University, the University of Strathclyde.
Maintaining reputation for high standards of business conduct
In 2011, the Sword Group joined the United Nations Global Compact, committing to 10 principles related to human and labour rights, the environment and corruption.
Through this membership, the company wishes to show that it is a good corporate citizen in the global economy. The choice of the Global Compact was made because it guarantees a globally recognised framework and sustainability. Sword Group ensures that the 10 principles of the United Nations Global Compact are respected:
Universal Declaration of Human Rights:
• Businesses should support and respect the protection of international human rights law within their sphere of influence, and
• make sure that their own companies are not complicit in human rights abuses.
International Labour Organisation Declaration on Fundamental Principles and Rights at Work:
• Companies should respect the freedom of association and recognise the right to collective bargaining,
• The elimination of all forms of forced or compulsory labour,
• The effective abolition of child labour, and
• The elimination of discrimination in employment and occupation.
Rio Declaration on Environment and Development:
• Apply the precautionary approach to environmental problems,
• Undertake initiatives to promote greater environmental responsibility, and
• Promote the development and dissemination of environmentally friendly technologies.
United Nations Convention against Corruption:
• Companies are urged to take action against corruption in all its forms, including extortion and bribery.
The company is committed to transforming its organisation to improve its environmental policy, its social and societal commitments, and the protection and security of its data (RGPD, BCR, BCP).
The Board of Directors at ultimate parent level was strengthened and will continue to evolve to move towards greater parity and to increase the proportion of independent members.
The company has a policy on Sustainable Development and Corporate Responsibility which is consistent with the Sword Group's commitments to human rights, international labour standards, the environment and the fight against corruption.
Sword IT Solutions Limited
Strategic Report for the Year Ended 31 December 2022
The need to act fairly as between members of the company
The company has taken steps to empower managers and business unit directors across the company by giving them accountability and control over their respective areas and to ensure that they are rewarded for their achievements.
Future developments
The company continues to be well positioned in its market place and offers tailored solutions to its customers. The directors do not anticipate any changes in the company’s principal activities and trading performance which is expected to remain consistent for the foreseeable future. The company will continue to work within the Sword world-wide group to ensure that the group operates with good synergies that enable improved service offerings to customers.
Approved by the
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Director
Sword IT Solutions Limited
Directors' Report for the Year Ended 31 December 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
Directors of the company
The directors who held office during the year were as follows:
Employee involvement
The company's policy is to consult and discuss with employees, through meetings, on matters likely to affect employees' interests, or matters of concern to them.
Information on matters of concern to employees is communicated internally to achieve a common awareness of the financial and economic factors affecting the performance of the company.
Employment of disabled persons
The company's policy is to offer equal opportunities to all persons, including disabled persons, applying for vacancies having regard to their aptitudes and abilities in relation to the jobs for which they apply. The opportunity also exists for continuing employment and appropriate training for such employees including those who become disabled during their employment with the company.
Disclosure of information in the Strategic Report
The company has chosen in accordance with s.414C(11) Companies Act 2006 to set out in the company's Strategic Report information required by Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 to be contained in the Directors' Report. It has done so in respect of future developments and financial instruments.
Disclosure of information to the auditor
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.
Approved by the director on
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P Norgate
Director
Sword IT Solutions Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities for preparing the Annual Report 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 of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
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select suitable accounting policies and apply them consistently; |
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make judgements and accounting estimates that are reasonable and prudent; |
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state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and |
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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 transactions and disclose with reasonable accuracy at any time the financial position of the company 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Sword IT Solutions Limited
Independent Auditor's Report to the Members of Sword IT Solutions Limited
for the Year Ended 31 December 2022
Opinion
We have audited the financial statements of Sword IT Solutions Limited (the 'company') for the year ended 31 December 2022, which comprise the Statement of Income and Retained Earnings, Statement of Financial Position, and 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 company's affairs as at 31 December 2022 and of its 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 director's 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 original financial statements were 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 included in the annual report, other than the financial statements and our auditor’s report 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.
Sword IT Solutions Limited
Independent Auditor's Report to the Members of Sword IT Solutions Limited
for the Year Ended 31 December 2022
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
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the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
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the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our 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 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, 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. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities (set out on page 9), 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 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.
Auditor’s 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 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.
Sword IT Solutions Limited
Independent Auditor's Report to the Members of Sword IT Solutions Limited
for the Year Ended 31 December 2022
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:
Based on our understanding of the company and the industry in which it operates, we determined that the principle risks of non-compliance with laws and regulations related to the reporting framework (FRS 102 and the Companies Act 2006), UK corporate taxation laws, health and safety legislation and data protection legislation. These risks were communicated to our audit team and we remained alert to any indications of non-compliance throughout our audit.
We understood how the company is complying with relevant legislation by making enquiries of management. We also considered the results of our audit procedures and to what extent these corroborate this understanding and assessed the susceptibility of the company's financial statements to material misstatement. This included consideration of how fraud might occur and evaluation of management's incentives and opportunities for fraudulent manipulation of the financial statements.
We designed our audit procedures to identify any non-compliance with laws and regulations. Such procedures included, but were not limited to, inspection of any regulatory or legal correspondence; challenging assumptions and judgements made by management; identifying and testing journal entries with a focus on large or unusual transactions as determined based on our understanding of the business; and identifying and assessing the effectiveness of controls in place to prevent and detect fraud.
Owing to the inherent limitations of an audit, there remains a risk that a material misstatement may not have been detected, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance with laws and regulations and cannot be expected to detect all instances of non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
The primary responsibility for the detection and prevention of fraud rests with those responsible for governance and management. The further removed non-compliance with laws and regulations is from the events reflected in the financial statements, the less likely the auditor will become aware of it.
The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment, collusion, omission, misrepresentation or forgery.
Sword IT Solutions Limited
Independent Auditor's Report to the Members of Sword IT Solutions Limited
for the Year Ended 31 December 2022
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.
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For and on behalf of
130 Shaftesbury Avenue
London
W1D 5AR
Sword IT Solutions Limited
Statement of Income and Retained Earnings for the Year Ended 31 December 2022
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Note |
2022 |
2021 |
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Turnover |
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Cost of sales |
( |
( |
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Gross profit |
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Administrative expenses |
( |
( |
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Other operating income |
- |
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Operating profit |
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Other interest receivable and similar income |
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Interest payable and similar charges |
( |
( |
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(19,078) |
4,520 |
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Profit before tax |
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Taxation |
( |
( |
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Profit for the financial year |
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Retained earnings brought forward |
5,150,044 |
2,396,267 |
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Retained earnings carried forward |
9,840,289 |
5,150,044 |
Sword IT Solutions Limited
Statement of Financial Position as at 31 December 2022
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Note |
2022 |
2021 |
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Fixed assets |
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Tangible assets |
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Investments |
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- |
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Current assets |
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Debtors |
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Cash at bank and in hand |
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Creditors: Amounts falling due within one year |
( |
( |
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Net current assets |
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Total assets less current liabilities |
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Provisions for liabilities |
( |
( |
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Net assets |
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Capital and reserves |
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Called up share capital |
515,645 |
515,644 |
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Share premium reserve |
2,742,950 |
2,742,951 |
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Profit and loss account |
9,840,289 |
5,150,044 |
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Shareholders' funds |
13,098,884 |
8,408,639 |
Approved and authorised by the
......................................................................
P Norgate
Director
Company registration number: 03165591
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
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General information |
The company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is:
United Kingdom
The principal activity of the company is the provision of consultancy services which help clients to improve business performance and create new business opportunities through the effective application of information technology.
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Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
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.
Basis of preparation
These financial statements have been prepared using the historical cost convention except any items disclosed in the accounting policies as being shown at fair value and are presented in sterling, which is the functional currency of the entity.
Summary of disclosure exemptions
The entity satisfies the criteria of being a qualified entity as defined in FRS 102. Its financial statements are consolidated into the financial statement of Sword Group SE, which can be obtained from sword-group.com/en/investors. As such, advantage has been taken of the following disclosure exemptions available under paragraph 1.12 of FRS 102:
(a) No cash flow statement has been presented for the company.
(b) Disclosures in respect of financial instruments have not been presented.
(c) No disclosure has been given for the aggregate remuneration of key management personnel.
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Going concern
The company made a profit after tax for the year ended 31 December 2022 and had net assets of £13,098,884 at that date.
During the year our business has proven extremely robust and has performed well during this period, our cashflow has remained strong, our pipeline of opportunities has also remained robust and our profitability has actually increased during this period.
Our underlying strategy of ensuring a strong element of annuity based recurring revenue has ensured that the underlying business has remained stable and our risk relating to projects being deferred during these uncertain times has therefore been minimized.
As such, having made enquiries, the directors have a reasonable expectation that the company has adequate resources to continue operating for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.
Consolidation
The entity has taken advantage of the exemption from preparing consolidated financial statements contained in Section 401 of the Companies Act 2006 and its financial statements are consolidated into the financial statements of Sword Group SE, which can be obtained from sword-group.com/en/investors.
Judgements and key sources of estimation uncertainties
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. Key assumptions and other estimation uncertainty may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. |
Judgements and estimates that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in the financial statements are as follows: |
Onerous lease provision
The onerous lease provision is calculated based on management's estimates of lease payments, business rates, occupancy, subject to future events and are reviewed annually.
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Revenue recognition
Turnover represents the fair value of consideration received in respect of sales of software, professional services and support services to external customers, net of Value Added Tax.
The company generates revenues from sales of its own software products directly to end users, sales of consultancy services, and customer support services.
Revenues from the sale of the company's own perpetual software licences are recognised where there is persuasive evidence of an agreement with a customer, delivery of the software has taken place, revenue collection is probable, the fee is fixed and determinable and all contingencies relating to the sale have been resolved. Periodic software licences are recognised over the period to which they relate.
Revenues from consultancy services are normally recognised as services are performed, on a time and materials basis. Occasionally consultancy projects are sold on a fixed price basis. In these cases, the profitability of the project is measured on a monthly basis and any loss is recognised immediately in the profit and loss account. If the project to date is profitable then revenue is recognised on a percentage completion basis of consultant hours worked against total estimated hours to complete the fixed price contract.
Revenues from support contracts are recognised rateably over the term of the contract. Revenues from hosting activities are recognised over the period of usage.
Revenues from multi component contracts are broken down based upon the contractual terms and rates set out in the contracts, derived from the standalone sales prices published in the company price list. Revenues from each component is then recognised based upon the accounting policies stated above.
Government grants
Government grants have been recognised when there is reasonable assurance that the entity will comply with the conditions attaching to them and that the grants will be received. The grants have been recognised based on the accrual model as a grant relating to revenue, which has been recognised in other operating income in the period in which it becomes receivable.
Foreign currency transactions and balances
Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the financial statements.
Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.
Tangible assets
Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
|
Asset class |
Depreciation method and rate |
|
Fixtures and fittings |
15% straight line |
|
Computer equipment |
3 years straight line |
Investments
Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.
Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Trade debtors
Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Provisions
Provisions are recognised when the company has an obligation at the reporting date as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
Leases
Operating leases are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term on a straight-line basis.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due.
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
|
Turnover |
The analysis of the company's revenue for the year from continuing operations is as follows:
|
2022 |
2021 |
|
|
Rendering of services |
|
|
The analysis of the company's turnover for the year by market is as follows:
|
2022 |
2021 |
|
|
UK |
|
|
|
Europe |
|
|
|
Rest of world |
|
- |
|
|
|
|
Other operating income |
The analysis of the company's other operating income for the year is as follows:
|
2022 |
2021 |
|
|
Government grants |
- |
|
|
Operating profit |
Arrived at after charging/(crediting)
|
2022 |
2021 |
|
|
Depreciation expense |
|
|
|
Foreign exchange (gains)/losses |
( |
|
|
Other interest receivable and similar income |
|
2022 |
2021 |
|
|
Other interest receivable |
|
|
|
Interest payable and similar expenses |
|
2022 |
2021 |
|
|
Interest on bank overdrafts and borrowings |
|
- |
|
Interest expense on other finance liabilities |
|
|
|
|
|
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
|
2022 |
2021 |
|
|
Wages and salaries |
|
|
|
Social security costs |
|
|
|
Pension costs, defined contribution scheme |
|
|
|
Other employee expense |
|
|
|
|
|
The average number of persons employed by the company during the year, analysed by category was as follows:
|
2022 |
2021 |
|
|
Administration and support |
|
|
|
Directors' remuneration |
The directors' remuneration for the year was as follows:
|
2022 |
2021 |
|
|
Remuneration |
|
|
|
Contributions paid to money purchase schemes |
|
|
|
274,793 |
271,500 |
During the year the number of directors who were receiving benefits was as follows:
|
2022 |
2021 |
|
|
Accruing benefits under money purchase pension scheme |
|
|
In respect of the highest paid director:
|
2022 |
2021 |
|
|
Remuneration |
|
|
|
Company contributions to money purchase pension schemes |
|
|
|
117,233 |
115,500 |
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
|
Auditors' remuneration |
|
2022 |
2021 |
|
|
Audit of the financial statements |
|
|
|
Non-audit fees |
||
|
Non-audit services |
|
|
|
Auditors remuneration |
39,450 |
31,700 |
|
Taxation |
Tax charged/(credited) in the income statement
|
2022 |
2021 |
|
|
Current taxation |
||
|
UK corporation tax |
|
|
|
UK corporation tax adjustment to prior periods |
( |
|
|
1,055,496 |
725,725 |
|
|
Deferred taxation |
||
|
Arising from previously unrecognised tax loss, tax credit or temporary difference of prior periods |
(64,324) |
31,737 |
|
Tax expense in the income statement |
|
|
The tax on profit before tax for the year is lower than the standard rate of corporation tax in the UK (2021 - higher than the standard rate of corporation tax in the UK) of
The differences are reconciled below:
|
2022 |
2021 |
|
|
Profit before tax |
|
|
|
Corporation tax at standard rate |
|
|
|
Tax (decrease)/increase from effect of capital allowances and depreciation |
( |
|
|
Over provision of corporation tax in prior period |
( |
|
|
Other tax effects for reconciliation between accounting profit and tax expense (income) |
( |
|
|
Total tax charge |
|
|
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Deferred tax
Deferred tax assets and liabilities
|
2022 |
Asset |
Liability |
|
Accelerated depreciation over capital allowances |
|
- |
|
Pension accrual |
|
- |
|
|
- |
Included in the 2022 deferred tax asset are liabilities of £11,061 hived up from fellow group undertakings on 1st January 2022.
|
2021 |
Asset |
Liability |
|
Accelerated depreciation over capital allowances |
|
- |
|
Pension accrual |
|
- |
|
|
- |
|
Tangible assets |
|
Furniture, fittings and equipment |
Total |
|
|
Cost or valuation |
||
|
At 1 January 2022 |
|
|
|
Additions |
|
|
|
At 31 December 2022 |
|
|
|
Depreciation |
||
|
At 1 January 2022 |
|
|
|
Charge for the year |
|
|
|
At 31 December 2022 |
|
|
|
Carrying amount |
||
|
At 31 December 2022 |
|
|
|
At 31 December 2021 |
|
|
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
|
Investments |
|
2022 |
2021 |
|
|
Investments in subsidiaries |
|
- |
|
Subsidiaries |
£ |
|
Cost or valuation |
|
|
At 1 January 2022 |
- |
|
Additions |
|
|
At 31 December 2022 |
|
|
Carrying amount |
|
|
At 31 December 2022 |
|
|
At 31 December 2021 |
- |
Details of undertakings
Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:
|
Undertaking |
Registered office |
Holding |
Proportion of voting rights and shares held |
|
|
2022 |
2021 |
|||
|
Subsidiary undertakings |
||||
|
|
Monfor Offices, Sir Winston Churchillaan 299a, 2288, DEC RIJSWIJK Netherlands |
|
100% |
|
|
|
100 Great West Road, Brentford, TW8 9DW England and Wales |
|
100% |
|
|
|
1020W. 23rd Street, Houston, Texas, 77008 USA |
|
100% |
|
The principal activity of all subsidiaries is data processing, hosting and related activities
The company is not required to disclose the aggregate capital and reserves, and the profit and loss account under the Companies Act 2006 for the principal subsidiary undertakings as it is exempt by virtue of Section 401 of the Companies Act 2006 from preparing group accounts as it is part of a larger group preparing consolidated accounts. The information in the financial statements is for the company only.
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
|
Debtors |
|
2022 |
2021 |
|
|
Trade debtors |
|
|
|
Amounts owed by group undertakings |
|
|
|
Other debtors |
|
|
|
Prepayments and accrued income |
|
|
|
Deferred tax assets |
|
|
|
Total current trade and other debtors |
|
|
|
Cash and cash equivalents |
|
2022 |
2021 |
|
|
Cash at bank |
|
|
|
Creditors |
|
2022 |
2021 |
|
|
Due within one year |
||
|
Trade creditors |
|
|
|
Amounts due to group undertakings |
|
|
|
Social security and other taxes |
|
|
|
Other payables |
|
|
|
Accruals and deferred income |
|
|
|
Corporation tax liability |
11,943 |
58,613 |
|
|
|
|
Provisions |
|
Onerous contracts |
|
|
At 1 January 2022 |
|
|
Provision movement in the year |
( |
|
At 31 December 2022 |
|
|
|
|
This provision relates to an onerous lease contract on the company's main premises. This lease has 6 years remaining and lease payments are expected to be made throughout the lease term. There is some uncertainty over the amount of payments relating to future business rates. The rates predicted by the provision are compared to the actual rates charged each year to ensure no adjustments to the provision are required. No reimbursements are expected.
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
|
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £
|
Pension commitments |
Included within the balance sheet are pension commitments amounting to £159,996 (2021 - £84,483).
|
Share capital |
Allotted, called up and fully paid shares
|
2022 |
2021 |
|||
|
No. |
£ |
No. |
£ |
|
|
|
|
515,644 |
|
515,644 |
|
Reserves |
The share premium account contains the premium arising on the issue of equity shares, net of issue expenses.
The profit and loss account includes all current and prior retained earnings and accumulated losses.
|
Obligations under leases and hire purchase contracts |
Operating leases
The total of future minimum lease payments is as follows:
|
2022 |
2021 |
|
|
Not later than one year |
|
|
|
Later than one year and not later than five years |
|
|
|
Later than five years |
|
|
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Sword IT Solutions Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
|
Related party transactions |
Amounts due to and from group undertakings at 31st December 2022 are aggregated as permitted by FRS 102 and shown separately in debtors and creditors.
In accordance with FRS 102 paragraph 33.1A, exemption is taken not to disclose transactions in the year between wholly owned group undertakings.
During the year management charges payable to parent undertakings, Sword Group SE and Sword SA, amounted to £895,602 (2021: £549,412).
|
Parent and ultimate parent undertaking |
The company's immediate parent is
Ultimate control vests with
Sword Group SE, whose registered office is situated at Route d'Arlon 2-4, L-8399 Windhof, Luxembourg, is the parent of the largest and smallest group preparing consolidated financial statements incorporating the results of the company.