The directors present the strategic report for the year ended 31 August 2019.
The group provides an end-to-end solution to mobile network operators and infrastructure owners in the telecoms sector. This includes acquisition, design and deployment of sites across the UK.
Business review and results
The results are as shown in the profit and loss account on page 9. Turnover increased significantly to £38.6m (2018: £31.9m) however gross profit reduced to £1.6m (2018: £1.7m) due to adjustments in relation to work in progress and revenue recognition as detailed further below. The loss for the year after taxation was £3.1m (2018: £3.2m) and no dividends were declared or paid in the year (2018: £nil).
During the year the directors remained focussed on expanding the customer base to reduce reliance on a limited number of customers and make the group more resilient. Progress against this objective is demonstrated by two significant new customers being added in the year who are expected to deliver revenue growth over the next 12 months. Throughout the period the group continued to deliver a high quality of service to key customers whilst monitoring, and where possible reducing, our cost to serve. The directors believe this leaves the group well positioned to meet the growth in activity we anticipate over the next 3 years resulting from the roll out of 5G and removal of Huawei kit from the network.
Whilst the group has performed well against its strategic objectives, the financial result for the year was disappointing. Following the work in progress review undertaken on a limited number of projects in the previous financial year, the directors extended the exercise to incorporate all projects in the group. The review resulted in a negative adjustment to brought forward reserves of £9.3m of which £1.5m relates to the financial year ended 31 August 2018. As part of the review, the directors also reassessed the revenue recognition policies which resulted in a negative adjustment to brought forward reserves of £2.6m of which £0.2m relates to the financial year ended 31 August 2018. The directors also reassessed the accounting treatment of A Ordinary Shares issued by the company which are now considered to represent a compound financial instrument under FRS 102. As a result, accounting treatment has been amended resulting in a negative adjustment to brought forward reserves of £1.1m of which £0.2m relates to the financial year ended 31 August 2018. As a result of these adjustments, the comparative figures for 2018 in the financial statements are restated. Whilst the negative impact of these adjustments was disappointing, the directors are satisfied the remaining work in progress balance will be recovered in full and the revenue recognition policies are appropriate for the group’s operations.
The group is exposed to the risk of a downturn in activity within the telecommunications service sector. The group manages this risk by focusing on the range and quality of the services it provides to its customers while identifying and pursuing new or additional opportunities.
The telecoms sector, and therefore the group, is not immune to the risks and uncertainties posed by operational and technological changes and by financial pressures within its customers and markets. However, the directors believe that major factors such as the completion of the spectrum auctions and the development of 5G plans will enable the group to trade profitably over the medium term and develop a strong pipeline of work.
The group is exposed to the risk of default by its trade debtors. The directors consider this risk to be minimised due to the customer base being largely blue-chip organisation s with whom the company has a long-term trading relationship combined with exercising strong credit control. The trade debtors presented in the balance sheet are stated net of provision for doubtful debts. Provision is made where the directors consider there to be a risk that the full amount of the outstanding receivable will not be recoverable.
In order to maintain liquidity and ensure that sufficient funds are available for ongoing operations and future developments, the group uses a mixture of long-term and short-term finance. Short term finance is available through bank facilities which renew periodically and are repayable on demand and long-term finance is provided through equity investor loans. Forward looking cash flow projections are prepared on a regular basis to assess funding requirements. The credit risk on liquid funds is limited because the counterparties are banks with credit ratings assigned by international credit rating agencies.
Future developments
The roll out of 5G has been slower than initially anticipated however the directors remain confident that this represents a significant opportunity for the group over the next 24 months. In addition, the confirmation by the UK government that all Huawei kit must be removed from the network by 2027 is expected to result in a significant increase in demand for services in the coming years.
The directors consider the key performance indicators to be those that reflect the underlying trading
performance of the company. The directors consider that turnover, gross profit and EBITDA provide the most
representative measures of the company’s performance.
|
2019 |
2018 |
Turnover |
£38.6m |
£31.9m |
Gross profit |
£1.6m |
£1.7m |
EBITDA |
(£1.3m) |
(£1.7m) |
In addition to the financial KPIs, the directors monitor a suite of operational KPIs relating to health & safety,
productivity and quality. Further details of these KPIs are not published due to their commercial sensitivity.
This report was approved by the Board and signed on its behalf by:
The directors present their annual report and financial statements for the year ended 31 August 2019.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The occurrence of the global outbreak of COVID-19 subsequent to the year-end has resulted in an elevated level of uncertainty within the UK economy.
Whilst the sector in which the group operates has been categorised as “critical” by the UK Government and therefore services may continue during lockdown periods, the directors would still expect the pandemic to have an indirect impact on productivity. However, at this time the directors believe there to be no quantifiable impact on the carrying value of assets in the balance sheet that results in either an adjusting or non-adjusting post balance sheet event.
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The d irectors are required to prepare the statutory financial statements on the going concern basis unless it is inappropriate to presume that the g roup and p arent c ompany will continue in business. In satisfaction of this responsibility the d irectors have considered the g roup’s ability to meet its liabilities as they fall due.
The g roup’s business activities, together with the factors likely to affect future development and performance are set out in the G roup Strategic Report, including management of liquidity and credit risk.
The g roup meets its day to day working capital requirements through existing short term bank working capital facilities which renew periodically and are repayable on demand. Longer term funding is met through equity investor loans. Management information tools including budgets and cashflow forecasts are used to monitor and manage current and future liquidity. The directors acknowledge there is a level of uncertainty in the general economic environment which may impact on the trading position of its customers and suppliers.
The d irectors have undertaken a recent and thorough review of the g roup’s forecasts and the associated risks. These forecasts extend for a period beyond twelve months from the date of approval of these financial statements. The extent of this review and the forecasts reflect the current improved operating performance of the g roup, the anticipated customer order book and have been duly sensitised to illustrate the impact of variations in key assumptions including sales, working capital and operating costs. The d irectors are satisfied that the forecasts demonstrate that the g roup will continue to operate within its existing working capital facilities.
The d irectors fully expect the short-term working capital facilities from their b ank to be extended at each renewal point over the next 12 months as has been the case for the previous 9 years. However, should the deterioration in the wider economy caused by Covid-19 result in a reduction in the available short-term working capital facilities from their bank, the group would be reliant on the support of its equity investors. Further assurance has been received from the equity investor that capital and interest repayments due on their existing debt will not be called for a period of at least twelve months from the date of approval of these financial statements with an offer having been made to the d irectors that the existing debt is converted to equity.
The d irectors acknowledge that the continued support of the equity investor is material to their assessment of the group ’s ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business.
As such, after making the enquiries referred to above, the d irectors believe there is a reasonable expectation that the group and parent company will have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing this report and the statutory financial statements.
We have audited the financial statements of Mono Global Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 August 2019 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard , and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter - risks and uncertainties relating to going concern
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 group's or the parent 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 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.
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' r eport 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.
In the light of the knowledge and understanding of the group and the parent 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' r eport .
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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
As explained more fully in the directors' r esponsibilities s tatement, 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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s loss for the year was £12,747,736 (2018 - £2,325,251 loss).
Mono Global Group Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is Culzean House, 36 Renfield Street, Glasgow, G2 1LU.
The group consists of Mono Global Group Limited and all of its subsidiaries.
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 £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated financial statements incorporate those of Mono Global Group Limited and all of its subsidiaries (ie entities that the g roup controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 August 2019 . Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the g roup.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The d irectors are required to prepare the statutory financial statements on the going concern basis unless it is inappropriate to presume that the g roup and p arent c ompany will continue in business. In satisfaction of this responsibility the d irectors have considered the g roup’s ability to meet its liabilities as they fall due.
The g roup’s business activities, together with the factors likely to affect future development and performance are set out in the Group Strategic Report, including management of liquidity and credit risk.
The g roup meets its day to day working capital requirements through existing short term bank working capital facilities which renew periodically and are repayable on demand. Longer term funding is met through equity investor loans. Management information tools including budgets and cashflow forecasts are used to monitor and manage current and future liquidity. The d irectors acknowledge there is a level of uncertainty in the general economic environment which may impact on the trading position of its customers and suppliers.
The d irectors have undertaken a recent and thorough review of the g roup’s forecasts and the associated risks. These forecasts extend for a period beyond twelve months from the date of approval of these financial statements. The extent of this review and the forecasts reflect the current improved operating performance of the g roup, the anticipated customer order book and have been duly sensitised to illustrate the impact of variations in key assumptions including sales, working capital and operating costs. The d irectors are satisfied that the forecasts demonstrate that the g roup will continue to operate within its existing working capital facilities.
The d irectors fully expect the short term working capital facilities from their Bank to be extended at each renewal point over the next 12 months as has been the case for the previous 5 financial years. However, should the deterioration in the wider economy caused by Covid-19 result in a reduction in the available facilities , the g roup would be reliant on the support of its equity investors. Further assurance has been received from the equity investor that capital and interest repayments due on their existing debt will not be called for a period of at least twelve months from the date of approval of these financial statements with an offer having been made to the d irectors that the existing debt is converted to equity.
The d irectors acknowledge that the continued support of the equity investor is material to their assessment of the g roup’s ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business.
As such, after making the enquiries referred to above, the d irectors believe there is a reasonable expectation that the g roup and parent company will have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing this report and the statutory financial statements.
Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow into the company.
Revenue comprises the invoiced value of goods sold and services provided to customers, net of VAT. Revenue is recognised as service milestones are accepted by customers.
Revenue and profit before taxation are attributable to the principal activity of the company.
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 recognised in the profit and loss account.
Equity in vest ments are measured at fair value through profit or loss , except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably , which are recognised at cost less impairment until a reliable measure of fair value becomes available.
I n the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group 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.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
The component parts of compound instruments issued by the group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity net of income tax effects and is not subsequently remeasured.
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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its 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. Amounts 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The group grants equity settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss 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 d asset are consumed.
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 in the period are included in profit or loss.
Accounting for The Mono Global Group Employee Benefit Trust
Mono Global Group Limited, as the sponsoring entity of The Mono Global Group Employee Benefit Trust, recognises the assets and liabilities of the Employee Benefit Trust in the Group's accounts as it has deemed control under the guidance of Section 9 of FRS 102. The Group and Company accounts for the Employee Benefit Trust as follows:
- Until such time as the Company's own shares held by the Employee Benefit Trust vest unconditionally in employees, the consideration paid for the shares is deducted from equity.
- Consideration paid or received for the purchase or sale of the Company's own shares in the Employee Benefit Trust is shown as a separate amount in the Statement of Changes in Equity.
- Other assets and liabilities of the Employee Benefit Trust are recognised as assets and liabilities of the Group and Company.
- No gain or loss is recognised in the Income Statement or Other Comprehensive Income on the purchase, sale, issue or cancellation of the Company's own shares.
- Finance costs and administration expenses are charged as they accrue.
- Any dividend income arising on the Company's own shares is excluded from the Statement of Comprehensive Income and deducted from the aggregate of dividends paid.
In the application of the group’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.
The company makes estimates and assumptions confirming the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that will have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are addressed below.
Work in progress is carried at the lower of cost and net realisable value. Calculation of net realisable value requires management to measure actual and projected profit recovery on contracts. Measurement of projected profit recovery is inherently uncertain.
Vesting period and fair value at grant date in respect of share options granted require estimation.
F air value at issue in respect of debt-like element of A Ordinary shares requires estimation.
Turnover is attributable to the one principal activity of the group and all turnover is derived in the United Kingdom .
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2018 - 5).
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 August 2019 are as follows:
The registered office address for the above subsidiaries is Culzean House, 36 Renfield Street, Glasgow, G2 1LU. Copies of the financial statements of each subsidiary are available from the registered office.
* The investments in Mono Consultants (Southern) Limited and Mono Electrical Services Limited are held through Mono Consultants Limited.
** The investment in Mono Scotland Limited is held through Mono Global Limited.
The group has banking arrangements in place for a £4,500,000 overdraft facility. As at 31 August 2019, the overdraft facility utilised totalled £3,121,018 (2018: £3,636,383). The group has contingent liabilities in respect of guarantees on its overdraft facility which are secured by a floating charge held over all assets of the following group members; Mono Consultants Limited, Mono Global Group Limited, Mono Global Limited, Mono Scotland Limited and Tracklift Limited.
The following are the deferred tax assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. At 31 August 2019, the company owed £60,599 (2018: £54,039) in respect of pension contributions.
The Group operates a Share Option Plan for certain employees. Details of the options in issue are as follows:
The company recognised total expenses of £94,788 relating to equity-settled share-based payment transactions in the year to 31 August 2019 (2018: £31,596). At 31 August 2019, the fair value of options granted was £315,961 (2018: £315,961).
The holders of Ordinary and Class A Ordinary are entitled to vote on any written resolution of the company. The preference shares do not hold any voting rights.
Class A Ordinary shares rank in priority to ordinary shares in relation to entitlement to receive a cumulative preferential net cash dividend.
The preference shares are non redeemable and carry no rights to any fixed dividends.
Other reserves of the Group and the company include the reserves of the Mono Global Group Employee Benefit Trust. There are restriction s on the parent Company's ability to distribute the reserves of the Employee Benefit Trust, while the realised profit of the Company is unaffected by the deduction from reserves for the own shares held by the Employee Benefit Trust .
The Mono Global Group Employee Benefit Trust was established by Trust Deed in January 2001 to act as a market for shares in Mono Global Group Limited or any other group company.
The Employee Benefit Trust holds 578,125 ordinary shares with a cost of £490,389 (2018: 578,125 ordinary shares with a cost of £490,389).
At the reporting date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The occurrence of the global outbreak of COVID-19 subsequent to the year-end has resulted in an elevated level of uncertainty within the UK economy.
Although a vaccine has now been identified, the on-going impact of the pandemic on the telecoms sector and wider UK economy remains uncertain. However the directors believe there to be no quantifiable impact on the carrying value of assets in the balance sheet that results in either an adjusting or non-adjusting post balance sheet event.
In management's view, key management personnel are those named directors of Mono Global Group Limited. Remuneration payable is disclosed at note 7.
The following amounts were outstanding at the reporting end date:
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.
Transactions between group entities which have been eliminated on consolidated are not disclosed within the financial statements.
During the year, Mono Global Group Limited was charged interest on a loan provided by a related party . The total interest charged during the period totalled £639,044 (201 8 : £ 361,111 ).
In the opinion of the directors there is no individual ultimate controlling party.
The group has restated its comparative figures in respect of a fixed return dividend due to the holders of the A Ordinary shares. The first payment of this dividend fell due in the year to 31 August 2019. Payment has been deferred at the request of the shareholder however, management consider these amounts to meet the definition of a compound financial instrument under FRS 102 resulting in the measurement and classification of the fair value of the debt-like element of the shares as a financial liability.
The group has restated its comparative figures in respect of aged work in progress balances which management considered to be irrecoverable in view of reassessment of contract recovery data in those prior periods
During the reassessment of work in progress, it was identified that the revenue recognition adopted on certain contracts was not fully in accordance with UK GAAP. As a result the group has restated its comparative figures