Quadrangle Research Group Limited
Annual Report and Financial Statements
For the year ended 31 December 2018
Company Registration No. 08064640 (England and Wales)
Quadrangle Research Group Limited
Company Information
Directors
Alison Camps
John Gambles
Christine Hastings
Daniel Leaman
Alexander Lewis
Benjamin Skelton
Company number
08064640
Registered office
The Butlers Wharf Building
36 Shad Thames
London
SE1 2YE
Auditors
Kingston Smith LLP
Devonshire House
60 Goswell Road
London
EC1M 7AD
Quadrangle Research Group Limited
Contents
Page
Directors' report
1
Strategic report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of total comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 27
Quadrangle Research Group Limited
Directors' Report
For the year ended 31 December 2018
Page 1
The directors present their annual report and financial statements for the year ended 31 December 2018.
Principal activities
The principal activity of the business was that of management consultancy and research.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Alison Camps
John Gambles
Christine Hastings
Daniel Leaman
Alexander Lewis
Benjamin Skelton
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Auditor
In accordance with the company's articles, a resolution proposing that Kingston Smith LLP be reappointed as auditor of the company will be put at a General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
John Gambles
Director
16 July 2019
Quadrangle Research Group Limited
Strategic Report
For the year ended 31 December 2018
Page 2
The Directors present the Strategic Report, their Annual Report and the audited financial statements for the year ended 31 December 2018 (“the financial year” or "the year”).
Principal Activities
Quadrangle Research Group Limited (“the Company”) is one of the UK's leading, independent research and strategy consultancies. We have won multiple Awards for our work, which centres around helping brands understand, prioritise and play into what matters to customers. We describe this as Customer Consultancy.
There have not been any significant changes to the Company's principal activities in the period under review.
Future Developments
We expect to continue to draw on the five different sources of insight to share a wealth of information and insight with our clients as they deal with the challenges presented by digital. Digital changes what customers expect from Brands and we will refresh our well received 2018 post-digital customers report in 2019 to inform our clients about this ever-changing landscape and how best to play into this.
Business Review
During 2018 we capitalised on the investments made in 2017 to launch our Customer Consultancy proposition. We grew the business by 5% in the year whilst reducing our cost base and this resulted in a net profit before tax for the year of £331,610 (2017 loss before tax of £671,400) and Earnings before interest, tax, depreciation and amortisation of £881,293 (2017 loss before interest, tax, depreciation and amortisation was £67,497.
Key performance indicators (KPIs)
The Directors believe that, as a consultancy business, our Gross Profit and Employment Cost per Head are the Key Performance Indicators (KPIs) necessary and appropriate for an understanding not only of the performance of the Company, but also the progress made during the year.
In 2018, these KPIs were:
• Average Gross Profit per staff member in the year: £99,706 (2017: £79,604).
• Average Employment Cost per staff member in the year: £55,687 (2017: £54,325)
The Balance Sheet on page 9 of the financial statements shows that the Company's financial position at the year-end has, in net asset terms, remained broadly consistent over the period.
Principal risks and uncertainties
The Directors have assessed the principal risks and uncertainties facing the Company and the industry in which we operate. The risks are set out below. The Directors monitor these risks on a regular basis and take appropriate actions to mitigate each risk facing the Company.
Economic Risk
The Directors believe that the principal risk and uncertainty to be the economic conditions and other external factors, including Brexit, which could impact spending by brands on research and strategy consultancy services. However, this is the same risk faced by other companies within our industry.
To mitigate this, the Company continually seeks to secure long-term client relationships and new clients to diversify economic risk. We also review our cost base and performance against budget on a continuing basis, to ensure timely action can be taken, if needed.
Quadrangle Research Group Limited
Strategic Report (Continued)
For the year ended 31 December 2018
Page 3
Financial Risk Management
The Directors regularly review the financial requirements of the Company and the risks associated therewith and are satisfied with the financing arrangements for the Company.
Credit Risk
The Director regularly review the concentration and repayment of credit extended to clients of the Company and the risks associated herewith and are satisfied with the credit arrangements for the Company.
John Gambles
Chairman
16 July 2019
Quadrangle Research Group Limited
Directors' Responsibilities Statement
For the year ended 31 December 2018
Page 4
The directors are responsible 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:
-
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.
Quadrangle Research Group Limited
Independent Auditor's Report
To the Members of Quadrangle Research Group Limited
Page 5
Opinion
We have audited the financial statements of Quadrangle Research Group Limited
(the 'company')
for the year ended 31 December 2018 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Statement of Cash Flows 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 FRS 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 2018 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.
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
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
.
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.
Quadrangle Research Group Limited
Independent Auditor's Report (Continued)
To the Members of Quadrangle Research Group Limited
Page 6
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
-
the Strategic Report and the 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 the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
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 Directors' Responsibilities Statement, 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.
Quadrangle Research Group Limited
Independent Auditor's Report (Continued)
To the Members of Quadrangle Research Group Limited
Page 7
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
-
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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
for no purpose other than to draw to the attention of
the company’s members those matters we are required to
include
in an auditor's report
addressed to them.
To the fullest extent permitted by law, we do not accept or assume responsibility to
any party
other than the company and the company’s members as a body, for our work, for this report, or for the opinions we have formed.
Matthew Meadows (Senior Statutory Auditor)
for and on behalf of Kingston Smith LLP
19 July 2019
Chartered Accountants
Statutory Auditor
Devonshire House
60 Goswell Road
London
EC1M 7AD
Quadrangle Research Group Limited
Statement of Comprehensive Income
For the year ended 31 December 2018
Page 8
2018
2017
Notes
£
£
Turnover
3
9,017,341
8,539,339
Cost of sales
(2,835,536)
(3,046,652)
Gross profit
6,181,805
5,492,687
Administrative expenses
(5,848,949)
(6,215,238)
Other operating income
150
52,401
Operating profit/(loss)
4
333,006
(670,150)
Interest receivable and similar income
7
-
2
Interest payable and similar expenses
8
(1,396)
(1,252)
Profit/(loss) before taxation
331,610
(671,400)
Taxation
9
(59,101)
69,209
Profit/(loss) for the financial year
272,509
(602,191)
The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.
Quadrangle Research Group Limited
Balance Sheet
As at 31 December 2018
Page 9
2018
2017
Notes
£
£
£
£
Fixed assets
Goodwill
10
3,487,506
3,937,506
Tangible assets
11
189,004
182,350
3,676,510
4,119,856
Current assets
Debtors
13
2,101,015
1,991,237
Cash at bank and in hand
89,161
3,742
2,190,176
1,994,979
Creditors: amounts falling due within one year
14
(2,736,361)
(2,753,326)
Net current liabilities
(546,185)
(758,347)
Total assets less current liabilities
3,130,325
3,361,509
Provisions for liabilities
17
(24,214)
(21,549)
Net assets
3,106,111
3,339,960
Capital and reserves
Called up share capital
20
187,000
187,000
Other reserves
1,745,065
2,251,423
Profit and loss reserves
1,174,046
901,537
Total equity
3,106,111
3,339,960
The financial statements were approved by the board of directors and authorised for issue on 16 July 2019 and are signed on its behalf by:
John Gambles
Director
Company Registration No. 08064640
Quadrangle Research Group Limited
Statement of Changes in Equity
For the year ended 31 December 2018
Page 10
Share capital
Other reserves
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2017
187,000
2,654,516
1,503,728
4,345,244
Year ended 31 December 2017:
Loss and total comprehensive income for the year
-
-
(602,191)
(602,191)
Other movements
-
(403,093)
-
(403,093)
Balance at 31 December 2017
187,000
2,251,423
901,537
3,339,960
Year ended 31 December 2018:
Profit and total comprehensive income for the year
-
-
272,509
272,509
Other movements
-
(506,358)
-
(506,358)
Balance at 31 December 2018
187,000
1,745,065
1,174,046
3,106,111
Quadrangle Research Group Limited
Statement of Cash Flows
For the year ended 31 December 2018
Page 11
2018
2017
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
25
1,192,293
290,032
Interest paid
(1,396)
(1,252)
Income taxes refunded/(paid)
13,817
(13,817)
Net cash inflow from operating activities
1,204,714
274,963
Investing activities
Purchase of tangible fixed assets
(104,941)
(17,635)
Interest received
-
2
Net cash used in investing activities
(104,941)
(17,633)
Financing activities
Repayment of capital
(506,358)
(103,093)
Repayment of amounts due to shareholders
(300,000)
-
Payment of finance leases obligations
(2,593)
(20,386)
Net cash used in financing activities
(808,951)
(123,479)
Net increase in cash and cash equivalents
290,822
133,851
Cash and cash equivalents at beginning of year
(201,661)
(335,512)
Cash and cash equivalents at end of year
89,161
(201,661)
Relating to:
Cash at bank and in hand
89,161
3,742
Bank overdrafts included in creditors payable within one year
-
(205,403)
Quadrangle Research Group Limited
Notes to the Financial Statements
For the year ended 31 December 2018
Page 12
1
Accounting policies
Company information
Quadrangle Research Group Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
The Butlers Wharf Building, 36 Shad Thames, London, SE1 2YE.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest pound.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
A
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover represents amounts receivable for services net of VAT and trade discounts. Revenue is recognised as earned when, and to the extent that, the firm obtains the right to consideration in exchange for its performance under contracts. It is measured at the fair value of the right to consideration, which represents amounts chargeable to clients, including expenses and disbursements but excluding value added tax.
Revenue is generally recognised as contract activity progresses so that for incomplete contracts it reflects the partial performance of the contractual obligations. For such contracts the amount of revenue reflects the accrual of the right to consideration by reference to the value of work performed. Revenue not billed to clients is included in debtors and payments on account in excess of the relevant amount of revenue are included in creditors.
Fee income that is contingent on events outside the control of the firm is recognised when the contingent event occurs.
1.4
Intangible fixed assets - goodwill
Acquired goodwill is written off in equal annual installments over its estimated useful economic life (currently estimated to be 14 years
from the date of acquisition
).
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
1
Accounting policies
(Continued)
Page 13
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
20% straight line/ 25% reducing balance
Fixtures and fittings
25% reducing balance
Computer equipment
25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.6
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
1.7
Cash at bank and in hand
Cash at bank and in hand
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
The Company only has basic financial instruments measured at amortised cost, with no financial instruments classified as other or basic instruments measured at fair value.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
1
Accounting policies
(Continued)
Page 14
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where 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 have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
1
Accounting policies
(Continued)
Page 15
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
1
Accounting policies
(Continued)
Page 16
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases,
including
any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.
1.14
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
Page 17
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant
effect on amounts recognised in the financial statements.
Revenue recognition
Revenue is recognised in the financial statements according to the stage of completion of contracts
.
Recoverability of debtors
The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See note
13
for the net carrying amount of the debtors and associated impairment provision.
Share based payments
Judgement and estimation is required in determining the fair value of shares at the date of award. The fair value is estimated using valuation techniques which take into account the awards’ term, the risk-free interest rate and the expected volatility of the market price of the Company’s shares. Details of share-based payments and the assumptions applied are disclosed in
the
note
s
to the accounts.
Depreciation and useful economic life of tangible assets
The annual depreciation charge for property, plant and equipment is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 11 for the carrying amount of the property, plant and equipment and note 1.5 for the useful economic lives for each class of asset.
Amortisation and useful economic life of intangible assets
The annual amortisation charge for intangible assets is sensitive to changes in the estimated lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. Goodwill impairment reviews are also performed annually. These reviews require an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the cash generating unit and a suitable discount rate to calculate present value. See note 10 for the carrying amount of the intangible assets and notes 1.4 for the useful economic lives for each class of asset.
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
Page 18
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2018
2017
£
£
Turnover analysed by class of business
Turnover
9,017,341
8,539,339
2018
2017
£
£
Turnover analysed by geographical market
International research
2,469,978
1,482,013
U.K. Research
6,547,363
7,057,326
9,017,341
8,539,339
4
Operating profit/(loss)
2018
2017
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Exchange loss
1,351
996
Fees payable to the company's auditors
17,250
16,500
Depreciation of owned tangible fixed assets
98,287
149,755
Depreciation of tangible fixed assets held under finance leases
-
2,898
Amortisation of intangible assets
450,000
450,000
Operating lease charges
386,306
426,003
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2018
2017
Number
Number
Data collection and processing
18
19
Customer consultancy and insight
36
42
Business support and administration
8
8
62
69
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
5
Employees
(Continued)
Page 19
Their aggregate remuneration comprised:
2018
2017
£
£
Wages and salaries
3,028,693
3,218,572
Social security costs
333,843
367,169
Pension costs
110,247
120,991
3,472,783
3,706,732
Redundancy payments made or committed
-
41,684
6
Directors' remuneration
2018
2017
£
£
Remuneration for qualifying services
525,415
466,012
Company pension contributions to defined contribution schemes
36,899
31,273
562,314
497,285
Remuneration disclosed above include the following amounts paid to the highest paid director:
2018
2017
£
£
Remuneration for qualifying services
148,178
121,752
7
Interest receivable and similar income
2018
2017
£
£
Interest income
Interest on bank deposits
-
2
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
Page 20
8
Interest payable and similar expenses
2018
2017
£
£
Interest on financial liabilities measured at amortised cost:
Interest on finance leases and hire purchase contracts
39
1,252
Other finance costs:
Other interest
1,357
-
1,396
1,252
9
Taxation
2018
2017
£
£
Current tax
Adjustments in respect of prior periods
-
(13,817)
Deferred tax
Origination and reversal of timing differences
59,101
(55,392)
Total tax charge
59,101
(69,209)
The applicable UK Corporation tax rate has remained at 19%.
A reduction in the UK Corporation tax rate from 19% to 17% (effective from 1 April 2020) was
substantively enacted on 6 September 2016, which will reduce the company's future current tax charge
accordingly.
The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2018
2017
£
£
Profit/(loss) before taxation
331,610
(671,400)
Expected tax charge based on a corporation tax rate of 19.00% (2017 - 19.00.25%)
63,006
(129,245)
Tax effect of expenses that are not deductible in determining taxable profit
647
3,611
Tax effect of utilisation of tax losses not previously recognised
-
13,300
Change in unrecognised deferred tax assets
-
241
Adjustments in respect of prior years
-
(13,999)
Effect of change in corporation tax rate
-
912
Permanent capital allowances in excess of depreciation
-
40,402
Depreciation on assets not qualifying for tax allowances
2,580
8,968
Effect of deferred tax recognised at the future tax rate
(7,132)
6,601
Tax charge for the year
59,101
(69,209)
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
Page 21
10
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2018 and 31 December 2018
6,360,726
Amortisation and impairment
At 1 January 2018
2,423,220
Amortisation charged for the year
450,000
At 31 December 2018
2,873,220
Carrying amount
At 31 December 2018
3,487,506
At 31 December 2017
3,937,506
11
Tangible fixed assets
Leasehold improvements
Fixtures and fittings
Computer equipment
Total
£
£
£
£
Cost
At 1 January 2018
317,553
50,999
401,301
769,853
Additions
-
-
104,941
104,941
At 31 December 2018
317,553
50,999
506,242
874,794
Depreciation and impairment
At 1 January 2018
270,507
43,659
273,337
587,503
Depreciation charged in the year
38,415
1,861
58,011
98,287
At 31 December 2018
308,922
45,520
331,348
685,790
Carrying amount
At 31 December 2018
8,631
5,479
174,894
189,004
At 31 December 2017
47,046
7,340
127,964
182,350
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2018
2017
£
£
Fixtures and fittings
-
5,884
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
Page 22
12
Financial instruments
2018
2017
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
1,740,141
1,572,598
Carrying amount of financial liabilities
Measured at amortised cost
1,025,502
1,519,654
13
Debtors
2018
2017
Amounts falling due within one year:
£
£
Trade debtors
1,451,701
1,373,938
Gross amounts due from contract customers
271,130
195,411
Corporation tax recoverable
-
13,817
Other debtors
17,310
3,249
Prepayments and accrued income
340,369
327,881
2,080,510
1,914,296
Deferred tax asset (note 18)
20,505
76,941
2,101,015
1,991,237
14
Creditors: amounts falling due within one year
2018
2017
Notes
£
£
Bank loans and overdrafts
15
-
205,403
Obligations under finance leases
16
-
2,593
Other borrowings
15
-
300,000
Trade creditors
852,462
797,808
Amounts due to group undertakings
1,805
1,805
Other taxation and social security
512,191
400,373
Other creditors
28,291
25,097
Accruals and deferred income
1,341,612
1,020,247
2,736,361
2,753,326
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
Page 23
15
Loans and overdrafts
2018
2017
£
£
Bank overdrafts
-
205,403
Other loans
-
300,000
-
505,403
Payable within one year
-
505,403
There is a fixed and floating charge over all the assets of the company secured on the overdraft facility.
16
Finance lease obligations
2018
2017
Future minimum lease payments due under finance leases:
£
£
Within one year
-
2,593
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets.
17
Provisions for liabilities
2018
2017
Notes
£
£
Deferred tax liabilities
18
24,214
21,549
18
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
Assets
Assets
2018
2017
2018
2017
Balances:
£
£
£
£
ACAs
24,214
21,331
-
-
Tax losses
-
-
19,959
76,505
Timing differences on provisions
-
-
546
218
24,214
21,331
20,505
76,723
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
18
Deferred taxation
(Continued)
Page 24
2018
Movements in the year:
£
Liability/(Asset) at 1 January 2018
(55,392)
Charge to profit or loss
59,101
Liability at 31 December 2018
3,709
The deferred tax asset set out above is expected to reverse and relates to the utilisation of tax losses against future expected profits of the same period. The deferred tax liability set out above is expected to reverse and relates to accelerated capital allowances and timing differences on provisions.
19
Retirement benefit schemes
2018
2017
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
110,247
120,991
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2018
2017
£
£
Ordinary share capital
Issued and fully paid
1,870,000 ordinary shares of 10p each
187,000
187,000
187,000
187,000
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
Page 25
21
Share-based payment transactions
Number of share options
Weighted average exercise price
2018
2017
2018
2017
Number
Number
£
£
Outstanding at 1 January
318,235
182,876
0.10
0.10
Granted
167,081
162,859
0.10
0.10
Forfeited
(7,500)
(27,500)
0.10
0.10
Outstanding at 31 December
477,816
318,235
0.10
0.10
Exercisable at 31 December
477,816
318,235
0.10
0.10
The estimated fair value was calculated by applying a Black-Scholes option pricing model. The calculated fair value of the share options has not been charged to the profit and loss account as it is not material to the accounts.
Inputs were as follows:
2018
2017
Weighted average share price (£)
0.11
0.12
Weighted average exercise price (£)
0.10
0.10
Expected volatility (%)
35.00
35.00
Expected life (Yrs)
10.00
10.00
Risk free rate (%)
1.25
1.25
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
Page 26
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2018
2017
£
£
Within one year
290,364
292,308
Between two and five years
847,919
1,125,085
1,138,283
1,417,393
23
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2018
2017
£
£
Aggregate compensation
562,314
497,285
In the year, the company paid £995,912 (2017: £1,144,517) to FQ Partnership Ltd, a company in which John Gambles is a director.
At the balance sheet date, an amount of £6,979 was owed to the FQ Partnership Ltd (2017: £10,011).
The balance due to Quadrangle Group LLP at the year end was £1,805 (2017: £1,805) an LLP controlled by the shareholders of the company.
Quadrangle Research Group Limited
Notes to the Financial Statements (Continued)
For the year ended 31 December 2018
Page 27
24
Directors' transactions
The following included in other reserves are due to the directors of the business. These amounts arose from the acquisition of the trade and assets of Quadrangle Group LLP by Quadrangle Research Group Limited.
Opening balance
Amounts repaid
Closing balance
£
£
£
A Wieldon
281,284
48,042
233,242
B Skelton
82,029
45,112
36,917
C Hastings
795,665
168,311
627,354
J Gambles
824,799
168,622
656,177
A Camps
267,879
76,509
191,370
2,251,656
506,596
1,745,060
During the prior year directors loaned the company £200,000, and was included within other creditors due within one year. The loans were given to assist with the working capital of the company and were repaid within the current year.
25
Cash generated from operations
2018
2017
£
£
Profit/(loss) for the year
272,509
(602,191)
Adjustments for:
Income tax expense
59,101
(69,209)
Finance costs
1,396
1,252
Investment income
-
(2)
Operating profit/(loss)
333,006
(670,150)
Amortisation and impairment of intangible assets
450,000
450,000
Depreciation and impairment of tangible fixed assets
98,287
152,653
Movements in working capital:
(Increase)/decrease in debtors
(180,031)
367,569
Increase/(decrease) in creditors
491,031
(10,040)
Cash generated from operations
1,192,293
290,032
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