Arcanum Information Security Limited - Accounts to registrar - small 17.2

REGISTERED NUMBER: 06567907 (England and Wales)

ARCANUM INFORMATION SECURITY LIMITED

UNAUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 APRIL 2017

Page

Company Information

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3

Balance Sheet

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Notes to the Financial Statements

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DIRECTORS:

L A Abercrombie

Mrs J A Chappell

SECRETARY:

Mrs J A Chappell

REGISTERED OFFICE:

Parc Y Brenin Cwrt Henri

Dryslwyn

Carmarthen

Dyfed

Wales

SA32 8SD

REGISTERED NUMBER:

06567907 (England and Wales)

ACCOUNTANTS:

Haines Watts (SEM) Limited

42 High Street

Flitwick

Bedfordshire

MK45 1DU

The directors present their strategic report for the year ended 30 April 2017.

CORPORATE STRUCTURE AND BUSINESS MODEL

Arcanum is a Limited Company registered in England and incorporated in 2008. The business WAS founded by three

retired military officers and still draws its ethos and most of its staff from the Armed Forces. The Management Board

comprises two Directors who are the shareholders; two Non-Executive Directors and the Managing Director supported

by a small management team. The business hires predominantly for cultural fit and specific skill sets. Arcanum

operates a consulting business model with highly experienced staff delivering security expertise to clients' short and

long term projects.

REVIEW OF BUSINESS

Arcanum's ongoing success has been achieved by delivering high quality security consultancy to the Government and

Defence Sectors. The company was recognised as a high growth SME Arcanum and selected to participate in

Goldman Sachs 10,000 Small Business Programme 2016. Analysis of Arcanum's revenues over the past three years

demonstrates a sustained annual increase in turnover of 25%.

Turnover for the year was £1,073,352 (2016 - £856,684). Gross profit margin, after adjusting for directors contributions

to output has been maintained at in excess of £30%.

Full time staff levels have increased to 11 (2016 - 9).

The directors consider the overall results for the year to be good.

BUSINESS STRATEGY AND OBJECTIVES

The long term company strategy is expansion into the private sector. The company business objective is to achieve

rapid growth over the next 3 years. This will be achieved in the short term by increasing business in the commercial

sector by 20% by end of the next financial year, increasing to of 40% in the following financial year (2019). In the

medium term the business aims to consolidate its presence in the markets it has recently identified and captured in its

Business Development and Marketing Plan.

MARKET OVERVIEW

According to UK TI, UK Defence, our major market area, is set to grow by approximately 10% per year until at least

2017 with the Defence Cyber sector growing by between 18% - 22% annually over the same period. The broader cyber

security market is estimated at achieving a Compound Annual Growth Rate of 10.6% an increase of .8% since 2015.

This links to Arcanum's strategy to broaden its client base.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board of Directors has carried out an assessment of the risks within the company and identified that the

dependency on one market sector is the principal business risk. Within the past 12 months Arcanum has promoted its

Cyber Security Services within the private sector so as to diversify its main client base from Defence to UK Enterprise.

In January 2016, Arcanum completed the acquisition of an established company that delivers digital forensic services

to law enforcement and Trading Standards authorities. This company is trading as Arcanum Digital Forensics Ltd,

based in the West Midlands.

GREENHOUSE EMISSIONS

Arcanum Digital Forensics occupies an office but does not have any physical manufacturing assets on its premises.

Employee business travel and commuting amounts to approximately 64,000 miles per year.

EMPLOYMENT POLICY

The company employment policy is detailed in the Arcanum Staff Handbook V5.0 2016. Arcanum is committed to

supporting employees who serve in the Reserve Forces and fully recognise and implement the requirements of The

Reserve Forces Act 1996. Arcanum holds a Silver award as a member of the Defence Employer Recognition Scheme.

ENVIRONMENTAL, SOCIAL AND HUMAN RIGHTS POLICY

Arcanum does not have a formal human rights policy so the Director's seek to conduct the Company's affairs

responsibly and are committed to conducting business with integrity and fairness.

INDEMNITY INSURANCE

Arcanum has taken out insurance to indemnify the Directors and employees of the company against third party

proceedings while employed by Arcanum. These indemnity policies subsist throughout the year and remain in place at

the date of this report.

GOING CONCERN

The Directors have a reasonable expectation that Arcanum has sufficient resources to continue in operational existence

for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report

and financial statements.

ON BEHALF OF THE BOARD:

Mrs J A Chappell - Director

31 July 2017

FIXED ASSETS

Tangible assets

4

21,386

4,333

Investments

5

30,000

-

51,386

4,333

CURRENT ASSETS

Debtors

6

253,391

232,833

Cash at bank

355,173

419,115

608,564

651,948

CREDITORS

Amounts falling due within one year

7

163,426

151,809

NET CURRENT ASSETS

445,138

500,139

TOTAL ASSETS LESS CURRENT LIABILITIES

496,524

504,472

PROVISIONS FOR LIABILITIES

8

4,063

867

NET ASSETS

492,461

503,605

CAPITAL AND RESERVES

Called up share capital

9

60

60

Capital redemption reserve

10

30

30

Retained earnings

10

492,371

503,515

SHAREHOLDERS' FUNDS

492,461

503,605

The company is entitled to exemption from audit under Section 477 of the Companies Act 2006 for the year ended 30 April 2017.

The members have not required the company to obtain an audit of its financial statements for the year ended 30 April 2017 in accordance with Section 476 of the Companies Act 2006.

The directors acknowledge their responsibilities for:

(a)	ensuring that the company keeps accounting records which comply with Sections 386 and 387 of the Companies Act 2006 and

(b)

preparing financial statements which give a true and fair view of the state of affairs of the company as at the end of each financial year and of its profit or loss for each financial year in accordance with the requirements of Sections 394 and 395 and which otherwise comply with the requirements of the Companies Act 2006 relating to financial statements, so far as applicable to the company.

The financial statements have been prepared and delivered in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies.

In accordance with Section 444 of the Companies Act 2006, the Income Statement has not been delivered.

The financial statements were approved by the Board of Directors on 31 July 2017 and were signed on its behalf by:

L A Abercrombie - Director

Mrs J A Chappell - Director

1.	STATUTORY INFORMATION

Arcanum Information Security Limited is a private company, limited by shares , registered in England and

Wales. The company's registered number and registered office address can be found on the Company

Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with the provisions of Section 1A "Small Entities" of 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.

There were no material departures from that standard.

Transition to FRS 102

These financial statements for the year ended 30 April 2017 are the first financial statements that comply with

FRS 102 Section 1A small entities. The date of transition is 1 May 2015.

The transition to FRS 102 Section 1A small entities has resulted in a small number of changes in accounting

policies to those used previously, however there has been no material impact on the financial statements.

Turnover

Turnover represents net invoiced sales of services, 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.

Fixtures & equipment

-

33% on cost

Motor vehicles

-

25% on reducing balance

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to

the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

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

balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different

from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and

laws that have been enacted or substantively enacted by the year end and that are expected to apply to the

reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the

lease.

Pension costs and other post-retirement benefits

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

pension scheme are charged to profit or loss in the period to which they relate.

3.	EMPLOYEES AND DIRECTORS

The average number of employees during the year was 11 .

4.	TANGIBLE FIXED ASSETS

Fixtures

Motor

& equipment

vehicles

Totals

£

£

£

COST

At 1 May 2016

14,382

-

14,382

Additions

1,315

24,208

25,523

At 30 April 2017

15,697

24,208

39,905

DEPRECIATION

At 1 May 2016

10,049

-

10,049

Charge for year

2,922

5,548

8,470

At 30 April 2017

12,971

5,548

18,519

NET BOOK VALUE

At 30 April 2017

2,726

18,660

21,386

At 30 April 2016

4,333

-

4,333

5.	FIXED ASSET INVESTMENTS

Shares in

group

undertakings

£

COST

Additions

30,000

At 30 April 2017

30,000

NET BOOK VALUE

At 30 April 2017

30,000

The company's investments at the Balance Sheet date in the share capital of companies include the following:

Arcanum Digital Forensics Ltd

Registered office: Parc Y Brenin, Cwrt Henri, Carmarthan, SA32 8SD

Nature of business: Digital forensics

%

Class of shares:

holding

Ordinary

100.00

31.3.17

31.3.16

£

£

Aggregate capital and reserves

260

2,000

Profit for the year

12,110

24,969

6.

DEBTORS

2017

2016

£

£

Amounts falling due within one year:

Trade debtors

227,660

232,462

Prepayments

731

371

228,391

232,833

Amounts falling due after more than one year:

Amounts owed by group undertakings

25,000

-

Aggregate amounts

253,391

232,833

7.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2017

2016

£

£

Trade creditors

15,901

-

Corporation tax

22,950

69,113

Social security and other taxes

16,651

10,444

VAT

78,491

52,813

Directors' current accounts

518

-

Accrued expenses

28,915

19,439

163,426

151,809

8.	PROVISIONS FOR LIABILITIES

2017

2016

£

£

Deferred tax

Accelerated capital allowances

4,063

867

Deferred

tax

£

Balance at 1 May 2016

867

Charge to Statement of Comprehensive Income during year

3,196

Balance at 30 April 2017

4,063

9.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2017

2016

value:

£

£

60

Ordinary

£1

60

60

10.

RESERVES

Capital

Retained

redemption

earnings

reserve

Totals

£

£

£

At 1 May 2016

503,515

30

503,545

Profit for the year

99,856

-

99,856

Dividends

(111,000

)

-

(111,000

)

At 30 April 2017

492,371

30

492,401

11.	ULTIMATE CONTROLLING PARTY

The directors each hold 50% of the ordinary share capital.

12.	FIRST YEAR ADOPTION

The company has adopted FRS 102 for the first time in the year ended 30 April 2017.

The effect of the transition from the previous financial reporting framework to FRS 102 has been considered.

There has been no material impact in relation to the following:

- changes in accounting policies

- changes in shareholders funds

- comparative year profit or loss

On that basis, no restatement has been undertaken.