Afiniti Limited - Limited company accounts 11.4

REGISTERED NUMBER: SC202137 (Scotland)

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2013

FOR

AFINITI LIMITED

Page

Company Information

1

Report of the Directors

2

Report of the Independent Auditors

4

Profit and Loss Account

6

Balance Sheet

7

Notes to the Financial Statements

8

DIRECTORS:

Ms C A Jorgensen

A J Carmichael

N Brauer

T R Small

T McCandless

SECRETARY:

Pinsent Masons Secretarial Limited

REGISTERED OFFICE:

13 Queen's Road

Aberdeen

Aberdeenshire

AB15 4YL

REGISTERED NUMBER:

SC202137 (Scotland)

AUDITORS:

Camfield Chapman Lowe

Registered Auditors

9 High Street

Woburn Sands

MILTON KEYNES

Buckinghamshire

MK17 8RF

BANKERS:

Bank of Scotland

39 Albyn Place

Aberdeen

AB10 1YN

SOLICITORS:

Pinsent Masons LLP

13 Queen's Road

Aberdeen

Aberdeenshire

AB15 4YL

The directors present their report with the financial statements of the company for the year ended 31 December 2013.

REVIEW OF BUSINESS

In 2013 the company results reflected our strategic intent to change the emphasis of the business - moving away from

transactional, volume sales in many clients and focusing on consulting led sales of higher value in more strategic change

engagements. This shift in business model resulted in more revenue generated from consulting engagements [with

corresponding higher value revenue] however overall reduced net revenue as we ceased the volume lower end revenue.

Whilst achieving solid margins comparable to the previous year, the costs of the changes resulted in lower EBIT. We

remain in a tough economic climate with competitors fighting hard to retain and gain revenue in accounts and with

several clients taking longer to decide to buy or buy at all - internal competition (i.e. in-house consulting capabilities)

also increased.

Business change achieved through people, process and systems transformation remains highly relevant in our target

market. Those companies who are involved in highly regulated, safety related activities with large numbers of people in

numerous locations and are asset intensive, need the types of services we deliver. The ability to shape, deliver and

embed change thus bringing more certainty to the client to achieve planned business benefits - making change stick - is

our value proposition.

We continued our investment in people through professional and personal development and with recruitment,

specifically bringing additional skills and competences to help us develop and grow the business. Engaged employees

make a real difference to our business, evidenced through our results, our client feedback, and the ingenuity and

creativity that is commonplace. And the 'can-do' culture we have exemplifies our values of really having client focus.

We are proud of our 'tools' and continue to use and improve them offering our clients real value add through innovation

in systems and processes such as our 6Lever™ change readiness tool and our project tools. We are proud of our

learning and development record as an organisation and we work hard to maintain line of sight from business plan

through to individual personal objectives.

The strategy in 2014 is to drive growth in new and existing strategic accounts increasing value delivered reflected in

average day rate and volume of revenue; continue to invest in our talent and retain and attract highly skilled and

competent consultants; move into one new market sector, likely to be pharmaceuticals; bring to life our value

proposition through new website, enhanced and enriched collateral and effective use of social media raising our brand

awareness.

The Directors are confident, positive and committed to achieving growth and maintaining margins in 2014.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2013 to the date of this

report.

Ms C A Jorgensen

A J Carmichael

N Brauer

T R Small

Other changes in directors holding office are as follows:

Ms N D Mair - resigned 3 June 2013

T McCandless was appointed as a director after 31 December 2013 but prior to the date of this report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Report of the Directors and the financial statements in accordance with

applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors

have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting

Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not

approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the

company and of the profit or loss of the company for that period. In preparing these financial statements, the directors

are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company's 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have

taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the

company's auditors are aware of that information.

AUDITORS

The auditors, Camfield Chapman Lowe, will be proposed for re-appointment at the forthcoming Annual General

Meeting.

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

to small companies.

ON BEHALF OF THE BOARD:

A J Carmichael - Director

25 September 2014

We have audited the financial statements of Afiniti Limited for the year ended 31 December 2013 on pages six to

thirteen. The financial reporting framework that has been applied in their preparation is applicable law and United

Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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.

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give

reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.

This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and

have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by

the directors; and the overall presentation of the financial statements. In addition, we read all the financial and

non-financial information in the Report of the Directors to identify material inconsistencies with the audited financial

statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent

with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material

misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2013 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.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Report of the Directors for the financial year for which the financial

statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

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 or in preparing the Report of the Directors.

Christopher Lowe (Senior Statutory Auditor)

for and on behalf of Camfield Chapman Lowe

Registered Auditors

9 High Street

Woburn Sands

MILTON KEYNES

Buckinghamshire

MK17 8RF

25 September 2014

TURNOVER

3,017,598

3,697,847

Cost of sales

1,629,563

1,895,014

GROSS PROFIT

1,388,035

1,802,833

Administrative expenses

1,259,816

1,307,809

OPERATING PROFIT

3

128,219

495,024

Interest receivable and similar income

8,459

3,258

136,678

498,282

Amounts written off investments

4

-

3,500

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

136,678

494,782

Tax on profit on ordinary activities

5

21,528

127,306

PROFIT FOR THE FINANCIAL YEAR

115,150

367,476

CONTINUING OPERATIONS

None of the company's activities were acquired or discontinued during the current year or previous year.

TOTAL RECOGNISED GAINS AND LOSSES

The company has no recognised gains or losses other than the profits for the current year or previous year.

FIXED ASSETS

Tangible assets

7

29,829

54,233

CURRENT ASSETS

Debtors

8

659,268

490,564

Cash at bank

711,884

855,735

1,371,152

1,346,299

CREDITORS

Amounts falling due within one year

9

580,915

445,475

NET CURRENT ASSETS

790,237

900,824

TOTAL ASSETS LESS CURRENT LIABILITIES

820,066

955,057

PROVISIONS FOR LIABILITIES

11

-

141

NET ASSETS

820,066

954,916

CAPITAL AND RESERVES

Called up share capital

12

1,055

1,055

Share premium

13

278,373

278,373

Capital redemption reserve

13

790

790

Profit and loss account

13

539,848

674,698

SHAREHOLDERS' FUNDS

16

820,066

954,916

The financial statements were approved by the Board of Directors on 25 September 2014 and were signed on its behalf by:

A J Carmichael - Director

1.	ACCOUNTING POLICIES

Accounting convention

The financial statements have been prepared under the historical cost convention.

Preparation of consolidated financial statements

The financial statements contain information about Afiniti Limited as an individual company and do not contain

consolidated financial information as the parent of a group. The company has taken the option under Section 398

of the Companies Act 2006 not to prepare consolidated financial statements.

Financial reporting standard number 1

Exemption has been taken from preparing a cash flow statement on the grounds that the company qualifies as a

small company.

Turnover

Turnover represents net invoiced sales of goods, excluding value added tax, except in respect of service contracts

where turnover is recognised when the company obtains the right to consideration.

Tangible fixed assets

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

Improvements to property

-

Straight line over the life of the lease

Website development

-

50% on cost

Fixtures and fittings

-

20% on cost

Computer equipment

-

50% on cost

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance

sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or

a right to pay less or to receive more, tax.

Deferred tax assets are recognised only to the extent that the director considers that it is more likely than not that

there will be suitable taxable profits from which the underlying timing differences can be deducted.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in

which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance

sheet date.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at

the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

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

period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension

scheme are charged to the profit and loss account in the period to which they relate.

Revenue recognition

Revenue from professional services is recognised when the service has been provided and all obligations to the

customers under the agreement have been fulfilled. For fixed price projects revenue is recognised on a

percentage of completion basis unless management has doubts as to the recoverability of fees.

2.	STAFF COSTS

2013

2012

£

£

Wages and salaries

1,331,801

1,346,588

Social security costs

152,910

171,843

Other pension costs

75,987

110,448

1,560,698

1,628,879

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

2013

2012

Consultants

24

22

Sales

2

5

Administrative

2

5

Marketing

1

1

29

33

3.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2013

2012

£

£

Hire of plant and machinery

56,933

66,884

Depreciation - owned assets

36,488

35,454

Auditors' remuneration

6,510

5,370

Foreign exchange differences

(165

)

499

Directors' remuneration

222,083

281,853

Information regarding the highest paid director is as follows:

2013

2012

£

£

Emoluments etc

107,883

118,233

4.	AMOUNTS WRITTEN OFF INVESTMENTS

2013

2012

£

£

Permanent diminution in value

-

3,500

5.

TAXATION

Analysis of the tax charge

The tax charge on the profit on ordinary activities for the year was as follows:

2013

2012

£

£

Current tax:

UK corporation tax

24,482

123,383

Deferred tax

(2,954

)

3,923

Tax on profit on ordinary activities

21,528

127,306

6.

DIVIDENDS

2013

2012

£

£

Ordinary shares of £0.00001 each

Interim paid

250,000

0

In accordance with the terms of the shareholders agreement, the Directors have proposed a final dividend of

£250,000 in respect of the year to 31st December 2013 and this was paid on the 22nd April 2014.

7.	TANGIBLE FIXED ASSETS

Improvements

Fixtures

to

Website

and

Computer

property

development

fittings

equipment

Totals

£

£

£

£

£

COST

At 1 January 2013

24,570

11,835

35,976

216,909

289,290

Additions

3,482

-

-

8,602

12,084

At 31 December 2013

28,052

11,835

35,976

225,511

301,374

DEPRECIATION

At 1 January 2013

9,297

3,660

35,012

187,088

235,057

Charge for year

5,779

5,354

613

24,742

36,488

At 31 December 2013

15,076

9,014

35,625

211,830

271,545

NET BOOK VALUE

At 31 December 2013

12,976

2,821

351

13,681

29,829

At 31 December 2012

15,273

8,175

964

29,821

54,233

8.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2013

2012

£

£

Trade debtors

363,492

229,071

Other debtors

289,365

257,895

Tax

3,598

3,598

Deferred tax asset

2,813

-

659,268

490,564

9.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2013

2012

£

£

Trade creditors

62,491

43,560

Tax

31,300

123,384

Social security and other taxes

133,276

138,410

Other creditors

353,848

140,121

580,915

445,475

10.	OPERATING LEASE COMMITMENTS

The following operating lease payments are committed to be paid within one year:

Land and buildings

2013

2012

£

£

Expiring:

Within one year

85,399

82,542

Between one and five years

36,119

5,674

121,518

88,216

11.	PROVISIONS FOR LIABILITIES

2012

£

Deferred tax

141

Deferred

tax

£

Balance at 1 January 2013

141

Accelerated capital allowance

(2,954

)

Balance at 31 December 2013

(2,813

)

12.	CALLED UP SHARE CAPITAL

2013

2012

£

£

Authorised

125,000,000 Ordinary of £0.00001 each

1,250

1,250

Allotted, called up and fully paid

105,453,164 Ordinary of £0.00001 each

1,055

1,055

13.

RESERVES

Profit

Capital

and loss

Share

redemption

account

premium

reserve

Totals

£

£

£

£

At 1 January 2013

674,698

278,373

790

953,861

Profit for the year

115,150

115,150

Dividends

(250,000

)

(250,000

)

At 31 December 2013

539,848

278,373

790

819,011

14.	RELATED PARTY DISCLOSURES

15.	ULTIMATE CONTROLLING PARTY

16.	RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

2013

2012

£

£

Profit for the financial year

115,150

367,476

Dividends

(250,000

)

-

(134,850

)

367,476

Allotment of shares

Purchase of own shares

-

(40,000

)

Net (reduction)/addition to shareholders' funds

(134,850

)

327,476

Opening shareholders' funds

954,916

627,440

Closing shareholders' funds

820,066

954,916

17.	SHARE-BASED PAYMENT TRANSACTIONS

On 6th August 2009 the company entered into a share option agreement under the Enterprise Management

Incentives Scheme with six employees. To date, three employees have left the company and their options lapsed.

One employee left the company during the year and their options lapsed on 6th December 2013. The agreement

grants the remaining holders the option to purchase up to a maximum of 3,127,294 (2012 - 5,003,670) shares in

the company at an option exercise price of £0.0132 per share. A total of 1,172,735 (2012 - 1,876,377) of these

share options may be exercised from the date of grant, the remainder of the share options may be exercised from

the second anniversary of the date of grant.

On 25th April 2012 the company entered into a share option agreement under the Enterprise Management

Incentives Scheme with one employee. The agreement grants the holder the option to purchase up to a maximum

of 2,752,019 shares in the company at an option exercise price of £0.0042 per share. A total of 1,376,010 of

these share options may be exercised from the date of grant, the remainder of the share options may be exercised

from the second anniversary of the date of grant.

On 13th December 2012 the company entered into a share option agreement under the Enterprise Management

Incentives Scheme with three employees. The agreement grants the holders the option to purchase up to a

maximum of 3,872,706 shares in the company at an option exercise price of £0.0055 per share. These share

options may be exercised from the first anniversary of the date of grant.