Azule Limited - Limited company accounts 17.3

REGISTERED NUMBER: 03151043 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

FOR

AZULE LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

13

DIRECTORS:

P J Savage

D G Scott

R Price

REGISTERED OFFICE:

E3 The Premier Centre

Abbey Park

Romsey

Hampshire

SO51 9DG

REGISTERED NUMBER:

03151043 (England and Wales)

SENIOR STATUTORY AUDITOR:

Mandy White

AUDITORS:

TBW Accountancy Limited

Statutory Auditors

E3 The Premier Centre

Abbey Park

Romsey

Hampshire

SO51 9DG

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

REVIEW OF BUSINESS

Azule continues to be the predominant provider of finance for the Broadcast and Media Industries across Europe,

arranging just under £60 million of equipment finance during the year. The European market continues to be important

to our business and is where we set ourselves apart, and ahead, of our competitors with particular growth areas in Spain

and France. This has contributed to the addition of a number of industry named manufacturers who see the added value

that Azule can provide over and above our competitors.

The company has continued to invest significantly in the development of its own book lending. This continues to be the

largest lender by volume of all of its finance company options. This year we managed to lend on average over £1 million

a month, as such total own book lending increased from £9 million to £12 million. Brokerage lending was evenly spread

across the market with three lessors funding nearly £5 million each and the rest being financed with a further 32 lessors.

This shows, as previously commented upon, the diversity and options available in the asset finance market with interest

rates being driven down by too many finance companies looking for a UK volume that is not increasing at the same rate

as additional funds becoming available.

The company continued to increase its exposure to the fairground and attraction industry to an extent that the directors

have, post year end, introduced a cap on the business so it will not exceed 30% of the total capital balance outstanding.

The own book portfolio on both sectors continues to perform above expectation with minimal bad debt.

The return on capital has dropped to 15.2% from 20.3%, which reflects the squeeze in interest rates throughout the

business sector we operate in. Nevertheless, the company has seen an increase in profit before tax to £838,169 from last

year's result of £685,613, representing an increase of 22.2%. These great results are not only achieved by the increased

volumes as mentioned above but also by the excellent performance of a dedicated team of staff to which we extend our

thanks.

The company continues to trade with no formal banking facility and is still well supported by its panel of block

discounters.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risk and uncertainties last year centred around the effect of UK passporting of financial services across

Europe and the possibility of a hard Brexit, though this seems less severe with the agreement in principle of transitional

status until December 2020. In addition we believe we are in strong position to mitigate any fall out as we operate with

individual Irish and Germany entities. Therefore the main risk remains around the performance of the UK economy and

its ability to maintain control of inflation with interest policies without causing an economic downturn. We currently

have the weakest economy of the G7 and as such any downturn would have a significant effect on the broadcast and

television industries.

ON BEHALF OF THE BOARD:

P J Savage - Director

28 March 2018

The directors present their report with the financial statements of the company for the year ended 30 June 2017.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the provision of hire purchase and leasing

arrangements.

DIVIDENDS

Interim dividends per share were paid as follows:

5

- 30 September 2016

5

- 30 December 2016

5

- 30 March 2017

5

- 30 June 2017

20

The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 30 June 2017 will be £ 200,000 .

FUTURE DEVELOPMENTS

Since the year end the company has agreed significant contracts with large manufactures, including the exclusive

provision of finance for Europe's largest distributor of audio visual equipment, a market that dwarfs that of Broadcast

and Television. These contracts will take time to produce results, however, initial forecasted volumes from the

manufacturers look promising and if this materialises, the directors are hopeful that the benefits to the company will be

significant.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 July 2016 to the date of this report.

P J Savage

D G Scott

R Price

FINANCIAL INSTRUMENTS

The company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities

which are conducted predominantly in sterling. The company does not enter into any formal hedging arrangements.

POLITICAL DONATIONS AND EXPENDITURE

No political donations were made by the company.

DISCLOSURE IN THE STRATEGIC REPORT

A review of business including the principal risks and uncertainties facing the company is described in the Strategic

Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, 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), including Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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

TBW will be deemed to continue in office under s487(2) of the Companies Act 2006.

ON BEHALF OF THE BOARD:

P J Savage - Director

28 March 2018

Opinion

We have audited the financial statements of Azule Limited (the 'company') for the year ended 30 June 2017 on pages

seven to twenty two. 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).

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.

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 30 June 2017 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 Auditors' responsibilities for the audit of the

financial statements section of our report. We are independent of the company in accordance with the ethical

requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard,

and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic

Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors

thereon.

Our opinion on the financial statements does not cover the other information and 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, 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.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit,

we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you

if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, the directors are responsible

for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such

internal control as the directors determine necessary to enable the preparation of financial statements that are free from

material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a

going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic

alternative but to do so.

Our responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs

(UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting

Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Mandy White (Senior Statutory Auditor)

for and on behalf of TBW Accountancy Limited

Statutory Auditors

E3 The Premier Centre

Abbey Park

Romsey

Hampshire

SO51 9DG

28 March 2018

TURNOVER

20,536,194

20,417,713

Cost of sales

17,854,866

18,217,693

GROSS PROFIT

2,681,328

2,200,020

Administrative expenses

1,350,292

1,156,854

1,331,036

1,043,166

Other operating income

3

41,429

56,436

OPERATING PROFIT

6

1,372,465

1,099,602

Interest receivable and similar income

7

282

1,053

1,372,747

1,100,655

Interest payable and similar expenses

8

534,578

415,042

PROFIT BEFORE TAXATION

838,169

685,613

Tax on profit

9

172,338

144,985

PROFIT FOR THE FINANCIAL YEAR

665,831

540,628

PROFIT FOR THE YEAR

665,831

540,628

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

665,831

540,628

FIXED ASSETS

Tangible assets

11

188,042

57,624

Investments

12

21,228

-

209,270

57,624

CURRENT ASSETS

Stocks

13

-

32,500

Debtors

14

16,742,217

11,898,651

Cash at bank and in hand

640,265

885,390

17,382,482

12,816,541

CREDITORS

Amounts falling due within one year

15

8,581,464

7,434,546

NET CURRENT ASSETS

8,801,018

5,381,995

TOTAL ASSETS LESS CURRENT LIABILITIES

9,010,288

5,439,619

CREDITORS

Amounts falling due after more than one year

16

6,536,059

3,431,221

NET ASSETS

2,474,229

2,008,398

CAPITAL AND RESERVES

Called up share capital

21

10,000

10,000

Retained earnings

22

2,464,229

1,998,398

SHAREHOLDERS' FUNDS

2,474,229

2,008,398

The financial statements were approved by the Board of Directors on 28 March 2018 and were signed on its behalf by:

D G Scott - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 July 2015

10,000

1,659,770

1,669,770

Changes in equity

Dividends

-

(202,000

)

(202,000

)

Total comprehensive income

-

540,628

540,628

Balance at 30 June 2016

10,000

1,998,398

2,008,398

Changes in equity

Dividends

-

(200,000

)

(200,000

)

Total comprehensive income

-

665,831

665,831

Balance at 30 June 2017

10,000

2,464,229

2,474,229

Cash flows from operating activities

Cash generated from operations

1

(4,063,870

)

35,168

Interest paid

(532,903

)

(415,042

)

Interest element of hire purchase payments paid

(1,675

)

-

Tax paid

(146,352

)

(149,217

)

Net cash from operating activities

(4,744,800

)

(529,091

)

Cash flows from investing activities

Purchase of tangible fixed assets

(160,690

)

(24,640

)

Purchase of fixed asset investments

(21,228

)

-

Sale of tangible fixed assets

250

-

Interest received

282

1,053

Net cash from investing activities

(181,386

)

(23,587

)

Cash flows from financing activities

Increase in block funding

4,922,893

958,848

Hire purchase agreements

125,645

-

Amount introduced by directors

(173,685

)

76,899

Amount withdrawn by directors

6,208

-

Equity dividends paid

(200,000

)

(202,000

)

Net cash from financing activities

4,681,061

833,747

(Decrease)/increase in cash and cash equivalents

(245,125

)

281,069

Cash and cash equivalents at beginning of year

2

885,390

604,321

Cash and cash equivalents at end of year

2

640,265

885,390

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2017

2016

£

£

Profit before taxation

838,169

685,613

Depreciation charges

30,272

16,790

Profit on disposal of fixed assets

(250

)

-

Finance costs

534,578

415,042

Finance income

(282

)

(1,053

)

1,402,487

1,116,392

Decrease/(increase) in stocks

32,500

(32,500

)

Increase in trade and other debtors

(4,643,651

)

(1,956,920

)

(Decrease)/increase in trade and other creditors

(855,206

)

908,196

Cash generated from operations

(4,063,870

)

35,168

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these

Balance Sheet amounts:

Year ended 30 June 2017

30.6.17

1.7.16

£

£

Cash and cash equivalents

640,265

885,390

Year ended 30 June 2016

30.6.16

1.7.15

£

£

Cash and cash equivalents

885,390

604,321

1.	STATUTORY INFORMATION

Azule 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 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.

Significant judgements and estimates

In the application of the company's accounting policies, the management is required to make judgements,

estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from

other sources. The estimates and underlying assumptions may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates

are recognised in the period in which the estimate is revised if the revision affects only that period, or in the

period of the revision and future periods if the revision affects both current and future periods.

The key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial

statements are described below.

Finance leases and advances to customers

The company reviews its own book debtors to assess impairment on a monthly basis, and makes a provision for

bad debt as necessary. In determining whether a provision is required the company makes judgements as to

whether there is any indication that any individual lease or loan agreement is likely to default. This involve the

review of any arrears or evidence of a deterioration of the customer's financial position. The value of any

security held and the value of the assets leased are also taken into account.

Turnover

Turnover represents net invoiced sale of goods, fees and commissions earned, and interest receivable from

finance leases and loans, excluding value added tax where applicable.

Fees and commissions are earned from services provided to clients. Fees and commissions earned on completion

of a transaction is recognised when the event occurs. Fees and commissions that are provided over a period of

time are recognised over the period in which the service is provided.

Tangible fixed assets

Depreciation is provided by the Company to write off the cost of fixed tangible assets over their estimated useful

economic lives on the straight line basis at the following rate:

Motor vehicle - 25%

Office equipment - 25%

Leased assets - length of leases

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow

moving items.

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.

Taxation

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.

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.

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.

Leases and loans receivables

Assets leased to customers under agreements which transfer substantially all the risks and rewards of ownership,

other than legal title, are classified as finance leases. Gross earnings receivable under finance leases are

allocated to accounting periods using the net investment method to give a constant periodic rate of return on the

company's net cash investment and are included in turnover. Finance lease receivable represent the company's

net investment in the leases.

All other leases are classified as operating leases. Rentals receivable under operating leases are recognised on a

straight line basis and are included in other operating income. Assets held for the purpose of operating leases are

capitalised and depreciated over the period of the lease.

Interest receivable from loan agreements is recognised using the effective interest rate method, using the rate as

stated in the terms of the agreement, adjusted for any premiums, discounts as well as fees and charges associated

with the loan.

Trade and other debtors

Trade and other debtors are initially recognised at the transaction price and thereafter stated at amortised cost

using the effective interest method, less impairment losses for bad and doubtful debts except where the effect of

discounting would be immaterial. In such cases, the receivables are stated at cost less impairment losses for bad

and doubtful debts.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets

are considered to be impaired when there is objective evidence that, as a result of one or more events that

occurred after the initial recognition of the financial asset, the estimated future cash flows of the investments

have been affected. Objective evidence of impairment could include:

- significant financial difficulties of the customer;

- breach of contract, such as a default or delinquency in interest or principal payments; or

- it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

Assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective

basis. Objective evidence of impairment for a portfolio of receivables could include the company's past

experience of collective payments, an increase in the number of delayed payments in the portfolio as well as

observable changes in the economic conditions that correlate the default on receivables.

For financial assets carried at amortised cost, the amount of impairment loss recognised is the difference between

the asset's carrying value and the present value of estimated future cash flows, discounted at the financial asset's

original effective interest rate. The impairment loss is recognised in the profit or loss. If in a subsequent period,

the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after

the impairment was recognised, the previous recognised impairment loss is reversed through the profit or loss to

the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what

the amortised cost would have been had the impairment not been recognised.

For financial assets carried at cost, the amount of impairment is measured as the difference between the asset's

carrying value and the present value of the estimated future cash flows discounted at the current market rate of

return for a similar financial asset. Such impairment would not be reversed in subsequent periods.

Trade and other creditors

Trade and other creditors are initially recognised at the transaction price and thereafter stated at amortised cost

using the effective interest method except where the effect of discounting would be immaterial, in which case,

they are state at cost.

Interest bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to

initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between the

initially recognised and redemption value being recognised in the statement of comprehensive income over the

period of the borrowings, together with any interest and fees payable, using the effective interest method.

3.	OTHER OPERATING INCOME

2017

2016

£

£

Operating lease rentals

-

26,342

Exchange gains

41,429

30,094

41,429

56,436

4.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

782,818

662,046

Social security costs

89,354

69,507

Other pension costs

41,522

40,332

913,694

771,885

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

2017

2016

Management

3

3

Sales & support

13

10

Administration & finance

5

3

21

16

5.	DIRECTORS' EMOLUMENTS

2017

2016

£

£

Directors' remuneration

245,611

248,325

Directors' pension contributions to money purchase schemes

28,716

18,750

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

3

3

Information regarding the highest paid director is as follows:

2017

2016

£

£

Emoluments etc

143,554

142,668

Pension contributions to money purchase schemes

1,422

900

6.	OPERATING PROFIT

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

2017

2016

£

£

Depreciation - owned assets

30,272

16,790

Profit on disposal of fixed assets

(250

)

-

Auditors' remuneration

12,876

8,500

Taxation compliance services

3,000

563

Foreign exchange differences

(41,429

)

(30,094

)

Income from HP, finance leases & loans

(1,344,220

)

(988,059

)

7.

INTEREST RECEIVABLE AND SIMILAR INCOME

2017

2016

£

£

Deposit account interest

282

1,053