Case Study JULY 2023 Advance Information

CASE STUDY
JULY 2023
ADVANCE INFORMATION
This material is issued prior to the exam session on 19 July 2023.
You MAY bring this material with you to the Exam Centre.
It will also be available on your ICAEW Bookshelf.
@ICAEW2023
KEEP US ALL SAFE LIMITED: ADVANCE INFORMATION
This Advance Information is issued prior to the exam session so as to allow you to familiarise
yourself with the information provided and to undertake any other appropriate research and
analysis. The Advance Information is also published on the website: www.icaew.com/students
and it will also be available on your ICAEW Bookshelf.
You MAY bring this Advance Information with you to the Exam Centre, annotated if you
wish, together with any other notes of your preparatory work. You must carry out sufficient and
appropriate analysis work of your own in order to have a detailed understanding of the
Advance Information. You should also undertake any additional research and analysis you feel
necessary to enhance your awareness of the industry and market context and to enable you to
clarify any technical terms or other issues of vocabulary. You will need to be able to refer back
quickly to the Advance Information and your notes during the exam; you are therefore unlikely
to benefit from taking large quantities of additional material with you into the Exam Centre.
At the start of the exam you will receive some additional material which will complete the
description of the case scenario and state the Case Study requirements. Your answer must be
submitted on the software provided by ICAEW in the Exam Centre.
Assessment of the Case Study
The marks in the Case Study are awarded for professional skills, allocated broadly as follows:
Range
• Assimilating and using information 20% to 30%
• Structuring problems and solutions 20% to 30%
• Applying judgement 20% to 30%
• Drawing conclusions and making recommendations 15% to 20%
• Demonstrating integrative and multidisciplinary skills, Around 15%
including Executive Summary
Of the total marks available, approximately 10% are awarded for the relevant discussion of
ethical issues within your answer to the requirements. Ethical issues do not form a specific
requirement but, within a requirement, may cover such topics as:
• Lack of professional independence or objectivity

• Conflicts of interest among stakeholders
• Doubtful accounting or commercial practice
• Inappropriate pressure to achieve a reported result.
You should be clear that marks are awarded for demonstrating your professional skills, not for
reproducing facts from the case. In order to be successful, you will need to:
• Demonstrate your knowledge of the case material and make use of your preparatory work;
• Carry out relevant analysis of the problems and structure your proposed solutions;
• Apply your judgement on the basis of the analysis that you have carried out; and
• Draw conclusions from your analysis and judgement, and develop them into practical
commercial recommendations.
Omitting any one of these elements will have a significantly detrimental effect on your
chances of success.
ICAEW\CS\J23 Page 2 of 36 Back to contents page

July 2023 Case Study: Keep Us All Safe Limited (KUAS)
List of exhibits
1 About you (Laurie Reece), your employer (Spindle Turner Chartered Accountants) and
your client (Keep Us All Safe Limited)
2 The UK security systems industry: An introduction
3 Keep Us All Safe Limited (KUAS): An introduction
4 KUAS: Review of the management accounts for the three years ended 30 June 2022
5 KUAS: Management accounts for the three years ended 30 June 2022
6 KUAS: Key features of the business
7 KUAS: Example tender – Nile
8 KUAS: Client case studies
9 KUAS: Product development and technology
10 Email dated 19 January 2023 from Eleanor O’Farrell to Adam Menzies: Industry research
11 Top Commercial Security Systems in 2022 (‘Be My Guide’, January 2023)
12 KUAS: Strategic summary
13 KUAS: Report on SSAA audit visit (April 2023)
14 Recent media coverage

EXHIBIT 1
About you (Laurie Reece), your employer (Spindle Turner Chartered Accountants) and
your client (Keep Us All Safe Limited)
You are Laurie Reece, a final-year trainee ICAEW Chartered Accountant, based in the business
advisory unit at Spindle Turner Chartered Accountants, a firm of ICAEW Chartered Accountants in
Oxford, around 100 kilometres north-west of London. One of your clients is Keep Us All Safe Limited
(KUAS), a company based in Oxford. KUAS installs, monitors and maintains electronic security
systems – primarily intruder alarms, closed circuit television (CCTV) and access control (entry
systems) – for businesses across England. You report to Andrea Wallace, a partner in the business
advisory unit. Your work has included the following:
• Reviewing clients’ financial and operating performance with a view to making value-added
recommendations
• Understanding the links between clients’ financial and non-financial benchmarks
• Using probabilities, sensitivity analysis and other numerical techniques to add value to your
financial analysis
• Ensuring that commercial decisions take account of relevant ethical and business trust issues
• Explaining the appropriateness of assumptions underpinning new business proposals
• Understanding how technological developments can enhance clients’ operations, balancing the
financial and operational benefits that they bring with the risks attached to them
• Modelling a range of scenarios to help evaluate the viability of proposed initiatives for clients

EXHIBIT 2
The UK security systems industry: An introduction
Overview
The security systems market can be segmented into four broad product types:
1. Electronic security systems (intruder alarms; CCTV; access control)

2. Physical security equipment (locks, safes, vaults and physical barriers)
3. Vehicle security systems (locks; mechanical devices; tracking systems; immobilisers and alarms)
4. Fire protection equipment (detection systems; extinguishers).
Companies in the sector install, monitor and maintain these products. (Monitoring involves viewing intruder
alarm and CCTV systems remotely and responding to activations.) The four largest – ADT, MITIE, G4S and
Securitas – are collectively estimated to account for over 50% of UK market revenue. They operate across all
four product types, and other parts of the wider security industry too, such as manned guarding (the use of
security guards to protect locations from unauthorised access, theft and damage) and cybersecurity – as well as
other areas of facilities management, such as cleaning and catering. This gives them notable economies of scale.
There are also many medium-sized and small security companies: some operate across all four product types;
others focus on one or two. The large companies have international reach; medium-sized ones may cover the
whole of the UK or several parts of it and small ones may focus on one region or town.
Around 46% of security systems revenue is earned from public authority clients, 40% from commercial/industrial
clients; and 14% from residential clients (homeowners). ‘Public authority’ refers to locations overseen by national
and local government, such as schools, universities, hospitals and prisons. ‘Commercial/industrial’ covers a wide
range of venues, including offices, shops, warehouses, construction sites, airports, trains, banks and leisure
venues. The large security companies serve all three client types. Medium-sized and small companies may serve
only commercial/industrial and/or residential clients.
The current market environment
The perception of continuing growth in crime leads to public unease and increases the demand for security.
Demand also partly depends on construction activity as building projects typically require intensive security.
With a strong construction sector, and despite a subdued economy, security systems revenue is expected to
grow by 3% from 2022 to 2023 after a dip in the preceding years. This estimate would be higher but customers
are increasingly focusing their security spend on cybersecurity, where they view the greatest threat to be.
Security is essential for many businesses to comply with their insurance policies. They pay lower premiums if
they have a history of few security problems and good systems.
How security systems companies make money
Once a system has been installed, it generally remains in place for a number of years, allowing the supplier to
generate a recurring stream of revenue from add-on services (monitoring and maintenance), potentially well
into the future, as most clients let their agreements renew automatically each year. Moreover, depending on
how the client contract is structured, the add-on services can earn significant profits as the security company
will be collecting fees for just one or two routine visits per year. The key to success, therefore, lies in winning
as much installation work as possible.
In a competitive and concentrated market, companies must differentiate themselves through the quality of
their work and their reputation, achieved through creating and maintaining a trusted brand name. This
enables them to win tenders, at the same time as benefiting from recommendations and repeat business.

Technology
Most security systems comprise both hardware and software. Hardware components are relatively
straightforward and, to some extent, commodity products: it is the power of the software that makes a real
difference.
New technology, often incorporating artificial intelligence (AI) and machine learning techniques, is being
introduced at a rapid rate. There is a heightened emphasis on prevention rather than detection of security
breaches, through advances such as video analytics. Collaboration is key: alliances are increasingly being
formed to optimise opportunities (such as between ADT and Google to create a fully integrated set of devices,
software and services for the secure smart home). As technology evolves, some manual labour is gradually
being displaced by AI-enabled machines or robots. However, most work – especially installation and
maintenance – still requires competent, technically skilled people, eg, designers, developers, engineers and
electricians. To gain extra insight into the challenges of security, some companies employ former police
officers or even reformed criminals.
The inexorable rise in tracking of people and their possessions may enhance safety, but at the cost of privacy.
Regulation can help. For example, UK businesses, if using CCTV cameras, must operate them responsibly and
adhere to data protection law. Businesses must have a legitimate reason for using CCTV cameras, take care not
to invade privacy and ensure the safety of the recorded data. They must tell everyone in the area that they are
being recorded: this is best achieved with clear signage or direct communication. Breaking these laws can lead
to criminal charges or large fines for the owners, who also risk losing the trust of customers and employees.
Sustainability
There is growing pressure on security systems companies to have products repaired, upgraded and recycled
rather than just thrown away. This presents a challenge in an industry in which products fast become obsolete.
However, as the quantity of hardware reduces, being increasingly replaced by wireless systems, the physical
volume of items to be disposed of also reduces. Sometimes it is the software that becomes obsolete as the
developer no longer supports it. There is also an overlap between sustainability and privacy: the recycling of
security equipment might require the deletion of sensitive or confidential data.
Certification
There are a number of independent certification bodies for the UK security systems sector. Between them,
they conduct mandatory audits on thousands of security companies each year to verify compliance with
relevant standards and codes of practice. By using a certified provider, a client can demonstrate to its insurers
that in the event of a security breach, it took all reasonable precautions to mitigate risk.

EXHIBIT 3
Keep Us All Safe (KUAS): An introduction
Overview
Keep Us All Safe (KUAS) installs, monitors and maintains electronic security systems – primarily
intruder alarms, CCTV and access control (see Exhibit 6). Installation includes both initial
implementation and any necessary upgrades. At present, just under 80% of its revenue is derived from
installation work (including upgrades). Monitoring and maintenance are governed by renewable annual
client contracts.
As a business-to-business (B2B) company, KUAS does not sell to homeowners, preferring to focus
on the commercial/industrial sector, with its higher-value contracts, whether for organisations with
multiple sites or for those with just one or two. KUAS employs over 300 people, across a range of
business areas. It also uses subcontractors if specialists in particular fields are required and also
when additional personnel are needed to meet tight client timetables. Revenue was £23.1 million in
the year to 30 June 2022.
KUAS: Revenue breakdown

25,000
20,000 Maintenance
and monitoring
£000
15,000
Installation:
construction
10,000
Installation:
upgrades
5,000
Installation:
0 other
2020 2021 2022
Axis Title
History and development
Since early childhood, Adam Menzies had been fascinated by how everyday objects worked – taking
them apart and putting them together again – and by how business worked. It was therefore natural
that he should choose to develop his twin hobbies into a career. The security market in 2005 was
expanding, giving plenty of opportunity for him to pursue his interests. After serving as apprentice to a
leading locksmith, Adam founded Menzies Alarms Ltd (MA) in 2007. Based at a small shop in Oxford,
MA provided basic lock installation and repair services for local shops and other businesses, as well
as installation, monitoring and maintenance of intruder alarms. It sourced all products from specialist
UK manufacturers of security equipment.
Adam recognised that in order to survive, MA needed to keep up with the fast-paced technological
developments in the sector. It began offering a wider range of security systems, including access
control and CCTV. Adam recruited an experienced ICAEW Chartered Accountant, Chang Yi, as
Finance Director; and a reformed burglar, Derek Gardner, initially as Head of Product Development.

In 2011, MA merged with a nearby security systems company, Conga Ltd. The combined entity was
named Keep Us All Safe Limited (KUAS). Conga had a good client base for access control systems
and CCTV, geographically away from MA’s own existing clients, enabling KUAS to grow and diversify.
Conga had been established by two former police officers, Eleanor O’Farrell and Orli Spitz, who joined
the KUAS board. There are now five directors, owning the shares equally:
• Adam Menzies (Managing Director)

• Derek Gardner (Technical Director)
• Chang Yi (Finance Director)
• Eleanor O’Farrell (Sales Director)
• Orli Spitz (Operations Director)
Chang’s responsibilities also include IT and human resources. Orli’s role covers all areas of operations,
including facilities, purchasing and supplier relationship management. She works closely with Derek,
who is the primary point of contact with KUAS’s strategic alliance partners (see below).
KUAS’s headquarters are in Oxford. These serve as its offices and also house an Alarm Receiving
Centre (ARC) to monitor alarms (see Exhibit 6). KUAS has three further ARCs in other cities.
Clients
KUAS’s operations span most of England. Its clients are in five broad categories:
• Construction: KUAS provides security for several construction companies, including a large UK
housebuilder.
• Retail: This covers a wide variety of businesses, including a large regional supermarket group, a
national chain of jewellers and a fast-growing group of fashion boutiques.
• Leisure: This includes a group of cinemas, a chain of gyms, a regional chain of popular fast food
outlets, a group of museums and numerous individual sports venues.
• Industrial: This mainly comprises warehouses and manufacturing plants.
• Other: This incorporates a variety of other locations, including offices and doctors’ surgeries.
Because of their scale, average installation revenue for construction sites is much higher than for other
client locations. However, unlike installations for most other clients, they do not directly give rise to
annual monitoring and maintenance work. This is because, after a period of months, the construction site
becomes a completed building that has its own different security needs. The installation fee includes
monitoring and, if applicable, maintenance for the duration of the construction project. In some cases,
KUAS provides the construction security for a client (eg, retailer) that is building new sites and then the
security for the completed building once it becomes operational. This can be an important source of
revenue growth and recurring revenue.
Most work comes from references, recommendations and repeat business, but KUAS wins a sizable
proportion of new business through commercial tenders. Most tenders are for single sites but they can
occasionally be for multiple sites (see Exhibit 7).
KUAS does not work with public sector organisations, whose tendering rules are strict and complex.
Public sector jobs tend to be won by bigger security companies with extensive experience of serving
the public sector.
Product development
KUAS has formed a number of strategic alliances with companies that specialise in developing security
technology products, such as CCTV analytics and anti-intruder fog (Exhibit 9).

EXHIBIT 4
KUAS: Review of the management accounts for the three years ended
30 June 2022 (prepared by Chang Yi, 18 July 2022)
I attach the management accounts for the three years ended 30 June 2022 (Exhibit 5). These are for
our internal use to enable us to manage the business, so are not required to be fully compliant with
applicable financial reporting standards. The review below covers the key issues arising in each year.
It is interspersed with graphs to illustrate important trends over the period.
KUAS operating results

25,000
20,000
15,000
£000
10,000
5,000
0
2020 2021 2022
Revenue Gross profit Operating profit
The company uses the following (financial and non-financial) business metrics in addition to
conventional accounting measures:
2022 2021 2020

Installations and agreements
New installations in year
Construction site installations 36 21 34
Other installations – with monitoring and maintenance agreements 663 539 635
Other installations – with maintenance agreements only 46 52 74
Upgrades in year 296 163 331
Monitoring and maintenance agreements terminated in year (sites) 113 87 101
Tenders
Number of tenders participated in 311 217 279
Number of tenders won 121 79 98
Value of tenders participated in (£000) – expected installation revenue 8,113 5,541 7,326
Value of tenders won (£000) – actual installation revenue 2,795 1,779 2,255
Other
Average response time to alarm calls (minutes) (Note 1) 113 104 125
% of false alarms in year (Note 2) 7.2% 9.0% 9.9%
Staff sickness (Note 3) 2.7% 2.4% 2.5%
Notes
1. Period between receipt of call and response being actioned
2. Number of false alarms ÷ total number of alarms (actual + false)
3. Number of days of absence ÷ total number of available working days

Year ended 30 June 2020 (2020)
Revenue in the year dipped by 6.0% to £20,971k, with many organisations being forced to delay new
installations and upgrades because of general industry and economic factors that arose in the last
quarter. Prior to that, we had been progressing well in our bid to grow our activities, through further
add-on sales and more ambitious pricing. Our new biometric access systems, jointly developed with
our strategic alliance partner Orca, generated some strong initial interest and encouraging early sales.
We were especially pleased to report some major client gains as well as upgrades for existing clients.
Independent market research conducted in the year showed that the KUAS name was well respected,
with an average rating of 9.1 out of 10 for the quality of our products and services. By using this in our
marketing, we saw our tender win rate increasing, by both volume and value. However, the difficult
economic environment meant that we could not, as would normally be the case, turn all of these wins
into immediate revenue: some clients, having appointed KUAS, chose to delay the start of the work. It
was especially frustrating that we could not exploit more of the new technology that we had been
jointly developing with our alliance partners. A further consequence was a fall in our profits and
associated margins: gross profit declined from £7,365k / 33.0% to £6,668k / 31.8% and operating
profit from £1,991k / 8.9% to £839k / 4.0% – in effect, more than halving from just under £2 million to
below £1 million.
The lull in the closing months also meant that we were carrying a little more year-end work-in-progress
in inventory than would normally be the case as some projects were left awaiting completion. There
was a fall in receivables days, from 42 to 39, and we paid our suppliers promptly under the terms of our
agreements with them. We took the decision to defer some planned capital investment. The overall
impact on cash was significant: by year end, we had replaced the small June 2019 overdraft with a
sizable positive balance.
KUAS: Cost of sales by cost area

10,000
8,000
6,000
£000
4,000
2,000
0
2020 2021 2022
Purchases of goods for installation and repairs

Total labour (direct and subcontracted)
The slowdown experienced towards the end of 2020 continued into 2021. As a result, revenue fell by
more than 20% to £16,578k, levels not seen since 2017. Clients continued to delay installations, as
well as systems upgrades. However, we were able to keep our monitoring and maintenance activities
running, carrying out visits to client sites as necessary, allowing us to benefit from our strong portfolio
of existing clients with annual contracts. There were two particularly pleasing operational statistics:
• A drop from 125 minutes to 104 minutes in average response time by ARCs. This was largely the
result of a new computer system designed to improve scheduling and communication.
• A fall from 9.9% to 9.0% in the level of false alarms. This was due to more reliable equipment from
a new supplier, together with fewer people visiting clients’ premises, meaning a general reduction
in alarm activations.

As the year went on, the situation began to improve. Installation revenue in the later months was very
strong, which boded well for 2022 and beyond. However, clients tended to scale back the scope of
installations, eg, by choosing a cheaper access control system, and this meant a lower average value
per installation. In particular, average revenue per construction site fell from £56.4k to £51.5k.
From one of our strategic alliances, with Sizzle, we began selling our new video analytics product to
clients. We aimed to launch a portfolio of other exciting new products when the time was right.
Our tender success rate improved. The average value of successful tenders was much higher than the
overall average revenue per new installation (£22.5k vs £18.0k), showing that it is generally the higher-
value jobs that are going out to tender. After the 2020 slowdown, turnaround time between winning
tenders and starting installation reverted to a more typical 1-2 months.
Even though the margins for both activities fell, overall gross margin improved to 32.3%. This outcome
was the result of a change in revenue mix towards monitoring and maintenance, with its much higher
margins. The lower margin on installations (28.1% vs 28.5%) was caused by price pressure and was
despite more efficient use of installers – reductions in both overtime working and use of subcontracted
labour, plus our decision not to replace staff who left or retired while the business was still recovering.
The lower monitoring and maintenance margin (44.8% vs 47.8%) was the result of extra call-outs,
especially to clients delaying the upgrade of ageing systems.
KUAS: Revenue mix by activity

100%
16.9% 25.1% 21.6%
80%
60%
40% 83.1% 74.9% 78.4%
20%
0%
2020 2021 2022
Installations and upgrades Monitoring and maintenance
With a high proportion of fixed staff costs, administrative expenses did not fall as much as revenue.
As a result, the gross profit improvement did not carry through to operating profit, which suffered a
further sharp decline, more than halving again to just £413k. Most cost categories were down in
absolute terms, but R&D costs went up as we continued to work with our strategic alliance partners.
It seemed only right in the circumstances to cut the dividend (paid out as always in June), and we
halved it to £250k. The directors also opted to take a small pay cut. By bringing in a new credit control
team and processes, we managed trade receivables effectively, but some clients struggled to pay.
We could no longer defer our capital expenditure programme: many assets were at the end of their
useful lives and we had been finding ourselves having to incur unplanned repair costs. We spent
£626k on leasehold improvements, the new computer system and other vital works. Despite the
various adverse factors, we managed to keep the cash position strong.
After two years of disruption, the release of pent-up demand led to a huge 39.5% increase in revenue,
taking it to a new high of £23,121k. The vast majority of clients once again opted for combined
monitoring/maintenance contracts. We also saw a high volume of new installations and a surge in
upgrades following a long period in which many clients had delayed them. The number of upgrades
almost doubled to 296, and their average value was also up, by 2.8% to £8.9k.

A particular feature was a return to previous levels of new construction contracts. These generate by
far the highest revenue per site for us, as well as good gross margins (typically 40%), and must remain
a key part of our future growth. The average fee per construction site was also up encouragingly, from
£51.5k to £54.0k (4.9%). The average fee on other new installations (ie, excluding upgrades) rose by
even more, from nearly £16.8k to £19.1k (13.8%). In addition, we achieved some major wins at the end
of 2022 (the impact of which is already being felt in the new financial year), indicating strong demand.
We saw exciting progress with our strategic alliances: we continued to roll out our video analytics
product from Sizzle, with ongoing development to refine the product and create new variants. We also
signed an agreement with another partner, GOF, for an anti-intruder fog, Mistify. The Sizzle and GOF
alliances helped achieve the average fee increases mentioned above but also meant that, along with
some early development work with other new partners, our R&D expenditure more than doubled, to
£465k. Our initial (2022) operating loss on the GOF agreement was £186k. This is in line with forecast
and we are confident that we will achieve the required breakeven by 30 June 2023 (see Exhibit 9).
The total number of tenders in which we participated was up by 43.3%, and their average value by
2.2%. Our success rate improved, from 36.4% to 38.9% by volume and from 32.1% to 34.5% by value.
In addition, we continued to win more work through references and recommendations. This may
become an ongoing trend.
KUAS: Tender performance summary
30 45%
38.9% 40%
25 36.4%
35.1%
35%
20 30%
25%
£000
15
20%
10 15%
10%
5
5%
0 0%
2020 2021 2022
Average tender value participated in (£000)
Average successful tender value (£000)
Win ratio: by volume (%)

We signed maintenance and/or monitoring contracts on 709 new sites (excluding construction), offset
by 113 terminations. The £837k increase in monitoring and maintenance revenue reflects the higher
proportion of clients that are now opting for both services, as well as price increases for existing
agreements. The increased number (in absolute terms) of terminations was mainly due to clients
going out of business, being sold to another company or closing down sites, but some told us that we
no longer gave good value for money. These trends could continue in 2023 and could also impact
future installation revenue if existing clients use other providers for installation work.
GP% was also at a new peak (33.3%). Installation and upgrade margin was down from 28.1% to
26.8%, but there was a huge increase in monitoring and maintenance margin, from 44.8% to 56.6%.
This was mainly the result of fewer non-routine maintenance call-outs and fewer false alarms (now
comfortably below the 10% industry average) as we upgraded clients’ old systems to more reliable
ones and saw the benefits of our strategic alliances.
A particular focus, as stability was restored, was the retention of key staff. All employees are important
to us, but we rely heavily on a significant number with specialist skills and we know that in a competitive
market these skills are much sought after. We took a number of steps to achieve this:
• Responding to the ongoing growth in the business, we expanded our installer/engineer workforce.
• Towards the end of the year, we modified our career structure to enable those demonstrating real
ability to be promoted and hence go on higher pay rates. This will initially impact around 20% of all
staff; we expect others to benefit over the coming years. The associated extra costs will inevitably
affect future operating profit but we view them as a vital investment in our medium-term future.
• In response to a small rise in staff sickness – which is now close to the national average – we
improved our conditions of employment, for example by introducing more flexible working.
• With the growing sophistication of our products, we began to revamp our training programme to
ensure that the product and service knowledge of all staff is regularly refreshed.
• There was also a rise in overtime working as more clients asked for installations to be done outside
regular hours.
The overall effect was a rise of almost 9% in average direct labour cost, from £26.2k to £28.5k. Head
Office headcount (excluding directors) increased from 88 to 93 as we continued to build the business
back up. Their average payroll cost went up by 4%, partly reflecting the early impact of some of the
above initiatives.
Trade receivables and receivables days both increased. Without the concerted efforts of our credit
control team, the situation could have been much worse. They spent much time and effort working
sympathetically with clients to devise payment plans that would allow them to clear historical balances,
while remaining confident that these clients would be able to fulfil regular monitoring and maintenance
commitments. The 2022 results include an increased impairment charge (up from £46k to £67k) to
reflect a more prudent assessment of receivables.
We further invested in PPE, replacing our outdated payroll system and carrying out a long-overdue
refurbishment of our Oxford headquarters. Depreciation was relatively constant at £327k: the charge on
new additions broadly offset the lower depreciation from assets, especially vans, nearing or reaching
the end of their useful lives. These vans also incurred higher vehicle repair costs – not a huge amount
in itself but indicative of general inefficiencies.
Marketing and advertising went back up by £178k (41.6%) to £606k. While this is still below 2020
levels, it reflects a growing concentration of our marketing effort on our strategic alliances as the
products developed under these alliances come to market. We are also seeing rivals spend more on
marketing as they seek to differentiate themselves in a competitive market.
After two years of sharp decline, operating profit more than quadrupled to an impressive £1,690k. This
was despite the opening loss on the GOF agreement. The strong growth in revenue and profits once
again translated into a steady year-end cash position.

EXHIBIT 5
KUAS: Management accounts for the three years ended 30 June 2022
Notes 2022 2021 2020
£000 £000 £000
Statement of profit or loss
Revenue 1 23,121 16,578 20,971

Cost of sales 1 (15,430) (11,224) (14,303)
Gross profit 1 7,691 5,354 6,668
Administrative expenses 2 (6,001) (4,941) (5,829)
Operating profit 1,690 413 839
Net finance income 16 14 7
Profit before tax 1,706 427 846
Taxation (324) (81) (161)
Profit for the year 1,382 346 685
Statement of financial position

Non-current assets
Property, plant & equipment (PPE) 3 2,461 2,444 2,153
2,461 2,444 2,153
Current assets
Inventories 4 179 133 179
Trade and other receivables 5 3,104 2,170 2,681
Cash and cash equivalents 762 667 466
4,045 2,970 3,326
TOTAL ASSETS 6,506 5,414 5,479
Equity
Ordinary shares 100 100 100
Retained earnings 4,435 3,553 3,457
4,535 3,653 3,557
Trade and other payables 6 1,971 1,761 1,922
TOTAL EQUITY AND LIABILITIES 6,506 5,414 5,479

Statement of cash flows 2022 2021 2020
£000 £000 £000
Cash flows from operating activities
Profit before tax for the period 1,706 427 846
Adjustments for:
(Profit)/loss on disposal of PPE - (5) 13
Depreciation 327 329 364
Finance income (16) (14) (7)
2,017 737 1,216
Change in inventories (46) 46 (17)
Change in trade and other receivables (934) 511 163
Change in trade and other payables (33) (81) 69
1,004 1,213 1,431
Income tax paid (81) (161) (378)
Net cash generated from operating activities 923 1,052 1,053
Cash flows from investing activities

Acquisition of PPE (344) (626) (61)
Proceeds from disposal of PPE - 11 7
Interest received 16 14 7
Net cash generated from investing activities (328) (601) (47)
Cash flows from financing activities

Dividends paid (500) (250) (500)
Net cash generated from financing activities (500) (250) (500)
Net change in cash and cash equivalents 95 201 506

Cash and cash equivalents at start of year 667 466 (40)
Cash and cash equivalents at end of year 762 667 466

Notes to the management accounts
Note 1: Segmental analysis 2022 2021 2020

£000 £000 £000
Revenue
By activity
Installations and upgrades 18,121 12,415 17,424
Monitoring and maintenance 5,000 4,163 3,547
23,121 16,578 20,971
Installations and upgrades comprise:
Construction site installations 1,944 1,082 1,918
Other installations 13,543 9,923 12,726
Upgrades 2,634 1,410 2,780
18,121 12,415 17,424
Cost of sales
By activity
15,430 11,224 14,303
By cost area
Purchases of goods for installation and repairs 6,732 4,678 5,946
Direct labour 7,376 6,349 7,232
Subcontracted labour 1,322 197 1,125
15,430 11,224 14,303
Gross profit
By activity
7,691 5,354 6,668
Note 2: Administrative expenses 2022 2021 2020

£000 £000 £000
By category
Head office staff 3,975 3,594 4,020
IT and premises, depreciation and other 955 690 913
Marketing and advertising 606 428 699
R&D 465 229 197
6,001 4,941 5,829
‘Head office staff’ includes directors’ salaries and
related costs: 540 470 520
‘Other’ includes:
Impairment loss allowances – trade receivables 67 46 22
Vehicle repair costs 36 24 13
‘R&D’ comprises KUAS’s share of development costs from its strategic alliances.

Note 3: Property, plant and equipment (PPE) 2022 2021 2020
£000 £000 £000
Opening carrying amount 2,444 2,153 2,476
Additions 344 626 61
Depreciation charge (327) (329) (364)
Disposals (carrying amount) - (6) (20)
Closing carrying amount 2,461 2,444 2,153
PPE comprises leasehold improvements, IT and other equipment, plant and machinery, and motor vehicles.
Depreciation is charged on a straight-line basis to write off the cost of these items over their estimated useful
lives, which vary between 3 and 20 years.
Note 4: Inventories 2022 2021 2020

£000 £000 £000
Work-in-progress 138 89 127
Spare parts 41 44 52
179 133 179
Note 5: Trade and other receivables 2022 2021 2020

£000 £000 £000
Trade receivables 2,411 1,637 2,249
Other receivables and prepayments 693 533 432
3,104 2,170 2,681
Trade receivables are stated after impairments for amounts considered irrecoverable (see note 2).
Note 6: Trade and other payables 2022 2021 2020

£000 £000 £000
Trade payables 833 592 690
Accruals and deferred income 564 771 622
Taxation 324 81 161
Other payables 250 317 449
1,971 1,761 1,922
Note 7: Staff 2022 2021 2020

Number Number Number
The average number of employees was:
Installers, engineers and monitoring operatives * 259 242 263
Head office ** 98 93 96
357 335 359
* Costs in cost of sales.
** Costs in administrative expenses. Head office staff include the directors.

EXHIBIT 6
KUAS: Key features of the business
Products
The products that KUAS provides to its clients typically comprise three types of system:
• Intruder alarms
• CCTV (video surveillance)
• Access control
Depending on their business needs and complexity, clients may choose one or more of these systems.
They typically opt for two or three. Within each of the three systems, there are numerous options, so
product selection can be quite involved.
Intruder alarms
Almost all clients opt for an intruder alarm system (it is usually a condition of their insurance policy).
KUAS does an initial risk assessment to determine the grade of protection required: industry standard
EN 50131 recognises four grades, based on perceived level of risk, ranging from Grade 1 (unlikely to
be targeted by intruders) to Grade 4 (very high risk of being targeted by organised criminals).
CCTV (video surveillance)
KUAS’s CCTV offerings comprise:
• High-definition CCTV: This uses the latest wireless technology to give clear images that are quick
and easy to retrieve and review, and with extensive storage capacity.
• Video analytics: Using algorithms, this detects people, vehicles or other objects via video images.
Access control
Access control systems let clients authorise entry to their building and know who is in it at any time.
They can be integrated with CCTV and intruder alarms for full security. KUAS offers three main types:
• Audio-video: Staff validate a visitor from an entryphone and/or camera before authorising entry.
• Card reader: A machine-readable card is issued to all authorised users.
• Biometrics: This uses any measurable unique physiological characteristic / personal trait (eg, iris of
the eye, fingerprint) as the unique credential. It is the securest level of access control.
Other
KUAS provides a range of other specialist products to clients, including security lights, product tagging
and panic buttons (see Exhibit 8), as well as anti-intruder fog (see Exhibit 9).
Services
KUAS earns most of its revenue from installing and upgrading these systems. It also offers two other
services, maintenance and monitoring, both of which it carries out solely for systems that it has
installed itself. These services are described below. There is no marked seasonality: clients approach
KUAS at any time in the year, possibly linked to the start or end of their own financial years, when
internal budgets are approved or need to be spent.

Initial risk assessment and system specification
Before installation can occur, KUAS assesses the risks and plans the installation. If the job has
been won through a tender (see below), this stage will likely have already taken place as part of
the tender process. However, where a client has approached KUAS or been referred, KUAS needs
to take the time to understand the client’s specific requirements, for example to ensure that CCTV
cameras are placed at key points.
Installation
Installations inevitably vary in their scope and scale and hence completion time. The simplest can be
done by one installer in a day; more complicated ones (such as those for large construction sites) may
need two weeks and a large team. In all cases, revenue is recognised on completion. As there are
incomplete installations at any given time, there is always some work-in-progress at each year end.
A challenge for clients is to schedule the work at a time when it will cause minimal disruption. For a
retailer, for example, it may not be practicable to keep a shop open to customers if there is constant
noise while holes are being drilled into walls, alarms are being tested or entrance gates are being fitted.
On the other hand, many clients cannot afford to close their premises for several days at a time and so
they may have to live with a short period of disturbance. Sometimes, in order to minimise disruption for
the client, KUAS agrees to carry out installation work overnight or at weekends, for which it pays its
staff overtime at a 50% premium and charges the client extra.
The client must provide the necessary Wi-Fi coverage, plus electricity for the equipment to operate
correctly and for ARC connections. If installation work is interrupted or delayed because of inadequate
electricity supply, limited access or other circumstances outside its control, KUAS may charge extra.
To cover the costs of its own outlay on equipment, KUAS requires clients to pay a small upfront deposit
on an installation (or upgrade: see below), before starting work, and the remaining fee within 30 or 60
days (depending on various factors, such as size of client, length of relationship and scale of work) of
the installation being completed. If a new client requests a different payment plan at the outset (eg, 6
instalments spread over 12 months), KUAS views this as indicating financial problems and generally
decides not to proceed with the work.
Under its standard installation contract terms, KUAS offers induction training to all client staff on the
importance of security and the need to be alert at all times and to understand how the systems
operate. This is partly to help reduce false alarms and ongoing costs of supporting the client.
Upgrades
For all systems, KUAS offers an upgrade, either when new technology becomes available or at the end
of a specified period after installation. As the work involved is generally more straightforward, the
upgrade fee is lower than the original installation fee (typically less than half). Construction sites do not
require upgrades as they are open for only a short finite period.

Monitoring and maintenance
Monitoring and maintenance are covered by renewable annual contracts starting from the date of the
installation. All non-construction clients now sign maintenance contracts; most clients additionally sign
monitoring contracts. (For construction clients, the installation fee includes monitoring and, if applicable,
maintenance for the duration of the construction project.) The fees for both services are tailored to the
client’s needs and may be subject to an inflationary increase on renewal. Most clients pay in monthly
instalments, and revenue is recognised over the 1-year term of the contract. Renewals reminders are
sent to clients 3 months before the scheduled date.
To give the required 24/7 cover, monitoring operatives work on a system of 8-hour shifts: 06:00-14:00,
14:00-22:00, 22:00-06:00. A typical operative works nine shifts in a two-week period. Wages are paid at
the same rate for all shifts but occasionally overtime is needed to cover staff absences and is paid at
the 50% premium. Where such internal staff cover is not available, subcontractors are used. The fee for
a client’s annual monitoring contract is based on KUAS’s estimate of hours to be spent by monitoring
operatives on the client.
Maintenance work generally takes place in standard business hours. Where a client needs it done
outside these times, engineers receive the 50% overtime premium, which is then reflected in the fee
charged to the client.
(a) Monitoring
Alarm systems are classified as ‘monitored’ or ‘unmonitored’. A monitored system costs more but offers
a much greater degree of reassurance. This means that the system is monitored by KUAS for 24 hours
a day and 7 days a week (‘24/7’) by its local ARCs. With an unmonitored system, the client is solely
responsible for deactivating the alarm and contacting the police when the alarm triggers, and hence the
overall security cost to the client could be greater, especially in view of the potential disruption involved.
How an ARC works
An ARC is a purpose-built facility that monitors multiple companies’ sites. It is staffed by a team of
monitoring operatives, who respond as necessary to any incoming alarms. They may also monitor
CCTV footage from client sites. The target response time is 120 minutes. When an alarm is triggered:
1. A signal is sent from the client’s system to the ARC. If it is within the client site’s working hours,
the operative checks with on-site client staff whether the alarm is genuine. Outside the client site’s
working hours, the operative checks whether it is genuine by reviewing CCTV footage and audio
output.
2. If the alarm is genuine, the operative takes appropriate action, eg, audio challenge to an intruder,
notifying the police and the building keyholder.
(b) Maintenance
KUAS stresses to all new clients the importance of ongoing maintenance to keep the systems operating
efficiently and effectively at all times without compromising business security. Even for an apparently
minor issue (eg, dead battery, loose connection), the consequences for security can be major.
Maintenance contracts involve one or two visits per year (depending on size of the site and complexity
of the systems). At these visits, KUAS engineers check that all systems are in full working order. KUAS
provides a brief report of findings to the client after each visit, highlighting any issues or areas of
concern. KUAS also provides a call-out service for any major faults or problems. For both routine visits
and call-outs, there is no charge for parts and labour, provided that the fault or problem was not caused
by the client or one of its own staff or customers. In practice, as long as they upgrade their systems
when scheduled and receive regular maintenance visits, most clients rarely require a call-out.

Clients without maintenance contracts (now a small minority – generally long-standing clients who no
longer wish to renew their contracts each year) pay for each call-out as it occurs. This can sometimes
be more expensive overall for the client than an annual contract, depending on the frequency of call-
outs, which can vary significantly from system to system, from site to site and from client to client. It
also depends on the age of the systems: for some, the level of maintenance required increases as they
get older; others may need more attention in the first few weeks after installation while users become
familiar with them but then require very little maintenance in the ensuing months and years.
Sales
KUAS’s sales team is led by Eleanor O’Farrell (Sales Director). In addition to Eleanor, it comprises 12
people, whose task is to maximise new business from both existing and potential clients. This involves
meeting prospective new clients; looking and listening out for announcements of new construction
projects; monitoring media coverage of crimes and other incidents in which security has been
compromised; and getting KUAS included on as many tender lists as possible (see below). The team
must also keep their knowledge of KUAS’s products and services up to date, which means regular
briefings from internal product experts.
All 12 staff receive a fixed salary, along with commissions if they achieve the personal quarterly goals
that Eleanor sets for them. Commissions generally represent 10-20% of their total pay. For example, in
2022, total pay was £526,000, of which commissions were £79,000 (these figures exclude Eleanor’s
own remuneration).
KUAS displays all of its products and services on its website, with videos showing them in action,
including footage (using professional actors) of incidents where systems are activated and a crime is
prevented. KUAS has a deliberate policy of not putting any prices on the website. Rather, it encourages
visitors to register their interest: this will then be followed up by a call from the sales team.
Pricing and tenders
KUAS wins a significant amount of new business through commercial tenders. The first stage is being
invited onto the list of tendering companies. With its good profile and reputation in the market, KUAS is
often invited to tender. The management accounts include tendering costs under marketing and
advertising expenditure: there is a close correlation between the number of tenders in a year and the
tendering costs for that year. In general, especially in tenders, KUAS prices its work by estimating the
costs and applying a mark-up, as for Nile (see Exhibit 7).
Purchasing and suppliers
Purchasing is led by Orli Spitz (Operations Director), who oversees a team of five responsible for
liaising with suppliers. KUAS sources its security equipment from a range of reputable suppliers
across the UK, including:
• Ixan: Headquartered in Manchester, Ixan designs and manufactures access control systems. It
prides itself on its after-sales support and its open working relationships with customers.
• RVU: RVU has been making CCTV and intruder alarm systems from its Bristol factory since 2008.
In April 2022, it launched a system suitable for companies with old ones that needed upgrading.
• Yoll: Based in Oxford, Yoll designs and manufactures a wide range of wired and wireless
intruder alarm systems, using market-leading patented technologies developed by its in-house
R&D team.
• Tickit: With several factories across England, Tickit makes high-definition CCTV systems for all
sizes of businesses, using the latest technology for crystal-clear images and ease of storage and
retrieval.
• Bishop: Located in Liverpool, Bishop manufactures panic buttons and other alarm ancillaries,
mainly for retailers of high-value products (eg, jewellery).

Payment terms with suppliers typically vary between 30 and 60 days. In tenders and when negotiating
for work, KUAS advises clients that the products being supplied are sourced from these other
companies. Where applicable, it gives clients a choice of suppliers and products, clearly explaining the
differences in functionality, quality and price. On its website and in other publicity material, KUAS
promotes its links with its suppliers, for example by displaying their logos and stating that it is an
authorised user of their products.
Faults
Under KUAS’s standard contract terms, products found to be faulty within two years of installation may
be returned to the supplier, replaced and re-installed free of charge. If the fault can be shown to have
arisen from improper use by the client or its customers, or by wilful damage, the product can still be
replaced, but the client is charged for parts and labour.
KUAS has a good relationship with its suppliers and can generally obtain replacement parts within 24
hours of a fault being identified. However, there are some items for which clients frequently require
replacements; KUAS holds a small supply of these at Oxford and in storage areas at its other ARCs. In
addition, under KUAS’s vehicle insurance policies, staff may carry spare parts and tools within their
vans (see below).
IT and capital investment
As well as being an essential feature of its products and services, IT is vital to KUAS’s administrative
and support functions. It has invested in several new systems in recent years. All critical data is backed
up in the cloud. As part of their service from KUAS, all clients can access a secure portal, where they
can view reports from maintenance visits, change nominated contacts and manage payments.
Vehicles
KUAS’s fleet of vans enables its installers, engineers and operatives to travel easily to and from client
sites. The vans all bear the company’s logo. KUAS also has a number of cars that are used by head
office staff, especially sales staff.
KUAS staff are permitted to keep their vans at home overnight. They must adhere to KUAS’s internal
security protocols. All vans have alarms and immobilisers.
Equipment for large installations and upgrades is transported directly from the equipment supplier’s
premises to the client, so KUAS does not need to have its own lorries. The client pays the supplier
direct for the transport costs.
Sustainability
In its quest to be an environmentally sustainable company – without sacrificing business sustainability –

KUAS seeks at all times to dispose of old equipment in an efficient and environmentally-friendly
manner. Similarly, when it takes on a new client, it works with the client to ensure that any existing
equipment from a previous security provider is removed securely and, where possible, recycled.

EXHIBIT 7
KUAS: Example tender – Nile
In 2020, KUAS was invited to tender for the full security systems contract for Nile, a US-based online
retailer expanding into UK by building three large warehouses at strategic locations near motorways.
KUAS was one of six companies asked to tender for three phases of work:
1. Installation and monitoring of security systems for the warehouses during construction
2. Installation of security systems for the operation of the completed warehouses
3. Maintenance and monitoring of the warehouse security systems
Construction would begin on 1 July 2020, so the initial security systems had to be in place by then. The
warehouses would be built in parallel, with all three opening on 1 January 2021. This was a complex
and high-value contract. Nile had to be confident that it was choosing a provider with the skills to offer
all three phases and to remain flexible. It was keen to use the same company throughout to give
continuity and to avoid multiple relationships. After an exploratory visit to two of the planned sites and
submitting a written proposal, KUAS was notified that it was on the final shortlist of two companies and
was asked to make a presentation to the Nile board. The board had especially liked the fact that the
KUAS team conducting the site visits comprised not only senior staff but also installers, and that KUAS
in turn had arranged for Nile staff to visit one of the ARCs that would be servicing Nile.
KUAS impressed Nile with its knowledge and experience of construction security. It demonstrated a
strong understanding of both the general security risks facing warehouses and the specific challenges
for Nile’s individual sites because of their locations, configurations and sizes. While most of the
systems installed for the warehouses, once built, would be the same for all three sites, the intruder
alarm systems would need to be tailored for each site. KUAS was also able to give assurances to Nile
about the quality of its equipment and of its CCTV images (it gave Nile permission to speak to the
companies that would be supplying the equipment).
KUAS explained to Nile the importance of close communication throughout and of moving seamlessly
from one phase of the project to the next so that security was not compromised. At the presentation,
KUAS provided Nile with the names and photos of all the KUAS employees that would be involved in
the project. This illustrated to the Nile board the level of client service that it could expect from KUAS.
Pricing
Immediately after the presentation, Nile notified KUAS that its tender had been successful. The two
companies had discussed pricing throughout the process but, with the appointment now made they set
about drawing up a comprehensive contract, with the following provisional fees:
£
Construction security
Installation, including monitoring (per site) 61,500
Warehouse security
Installation (per warehouse) 27,150
Maintenance and monitoring (annual per warehouse) 2,500
Systems upgrade
Upgrade (per warehouse) 15,000
The contract covered the construction phase, then maintenance and monitoring for one year after the
warehouses opened, to be renewed annually as appropriate. After three years, the systems would be
upgraded – or sooner if required by changes in technology. The fees were based on detailed costings
prepared by KUAS using mark-ups within its usual ranges, as follows (note: some fees are rounded):

Purchases Direct labour Subcontract Total cost Mark-up Fee
(see below)
Construction security £ £ £ £ % £
Installation (incl. monitoring) 15,000 18,800 3,500 37,300 65 61,500
Warehouse security
Installation 8,600 9,870 1,650 20,120 35 27,150
Maintenance and monitoring 200 1,050 - 1,250 100 2,500
Systems upgrade
Upgrade 4,700 5,600 800 11,100 35 15,000
Direct labour
Direct labour costs represent the attributable costs of the identified employees that would carry out the
work, based on their average annual basic salary. The working year is treated as 240 days. Thus, for
example, the expected direct labour cost per construction installation was calculated as:
Number of employees 20
Average annual basic salary £28,200
Number of days’ work per employee (see below) 8
Total cost = 20 x £28,200 x 8/240 £18,800
As Nile wanted the warehouse installations to be done at weekends, it was agreed that KUAS’s usual
50% overtime premium would be applied, giving the following expected direct labour cost:
Number of employees 7
Average annual basic salary £28,200
Number of days’ work per employee 8
Basic cost = 7 x £28,200 x 8/240 £6,580
Overtime premium 50%
Total cost £9,870
In setting the fees for Nile, the main unknown was the length of the construction phase. It was agreed
that the fee for this could increase if there were unforeseen delays, outside KUAS’s control, at one or
more sites. This might also mean that the warehouses would not all be ready to open at the same time
– which might therefore require some flexibility in the contract.
Uncertainties
On some projects, there may be uncertainties over cost components. In such cases, KUAS may use
probabilities to calculate the expected cost and hence determine an appropriate fee. For example, the
number of days’ work per employee for each construction site at Nile could vary, if the work proved
easier or more complex, as follows:
Number of days Probability

6 20%
8 50%
10 15%
12 15%
In this case, as 8 was by far the most likely number of days, KUAS used this in determining the fee.
Where things are less clear, KUAS would calculate an expected value, in this instance (6 x 20%) + (8 x
50%) + (10 x 15%) + (12 x 15%) = 8.5 days, rework the direct labour costs as 20 x £28,200 x 8.5/240 =
£19,975 and reset the fee accordingly.

EXHIBIT 8
KUAS: Client case studies
Case study 1: Leisure – gyms: Ultrafit
Industry context
Gyms carry lots of very expensive equipment. At any one time there may be large numbers of people –
both staff and customers – inside. Prominent cameras help considerably to prevent damage to property
or individuals, especially in gyms open 24/7, which have minimal staff at nighttime.
KUAS’s involvement
KUAS began working with Ultrafit when it opened its first gym in Oxford in 2012, capitalising on a
national fitness craze created by the London Olympic Games. Derek Gardner was one of those caught
up in this craze. One day, he was talking to the owner of Ultrafit, Eliza Monk, and on learning that she
didn’t have a proper security plan in place, offered her KUAS’s services. A decade later, Ultrafit has 30
gyms, all open 24/7. Following a period of financial difficulty, Ultrafit was acquired by leisure
conglomerate Tully in 2021 but it has remained a KUAS client, with Eliza Monk staying on the
management team and continuing as the link with KUAS. The security systems now cover:
• CCTV and alarms: CCTV cameras are located throughout the premises to watch all activity both
inside and outside. They also allow managers to check on staff productivity and take any necessary
action. Intruder alarms, monitored remotely at KUAS’s ARCs, are integrated with the CCTV.
• Access control: To enter a gym, users must swipe their unique membership card to open the
door. When it is swiped, the information is logged by computer, so managers can see who entered
which door and at what time, as well as record when employees clock in and out.
• CCTV for car parks: Ultrafit’s car parks have limited space. Dedicated CCTV identifies legitimate
users by their vehicle registration number, allowing Ultrafit to manage access and prevent misuse
by outsiders seeking free parking or by members when not using the gym.
Panic buttons: KUAS has installed panic buttons at strategic places, such as the reception desk
(to intercept any unwanted visitors) and changing rooms.
Case study 2: Construction – housebuilder: Bowen
Industry context
Construction is a vast industry involving the storage and ongoing use of expensive vehicles, materials,
tools and machinery, all with a ready resale value, making construction sites highly attractive to
criminals. Theft costs the industry £800 million each year. Most sites have a series of access points with
easy entry for vehicles. They are often left vacant outside business hours, especially at weekends. Theft
can cause disruption and thus extend and/or delay projects and create significant financial losses.
As a leading UK housebuilder, Bowen is at any one time developing a large number of new homes,
with typically several locations at different stages of completion. These comprise both estates of
houses and blocks of flats. Depending on the number of units, complexity of the task and terrain, a
single project can last up to one year. Bowen needs security systems in place throughout the
construction. Bowen chose KUAS as its sole security systems provider because of its professionalism
and attention to detail. KUAS has earned an average of £47,000 from each site (installation and
monitoring).
The systems at Bowen comprise:

• CCTV: Some cameras are mounted on towers to give 360-degree coverage. Infrared sensors are
installed at entrances and exits, where a camera reacts to any activation. Footage is monitored by
KUAS’s ARCs, allowing for round-the-clock surveillance, and retained for a specified period.
• Video-verified intruder alarms: Using a built-in camera, these take a ten-second video of any
activation. This is sent automatically to an ARC so that suitable action can be taken.
• Access control: Biometric facial recognition, in use at all Bowen sites, ensures that only authorised
personnel can enter. Anyone who wishes to visit a site but is not on the system must notify the site
security manager in advance so that the relevant personal identification features can be captured.
• Perimeter fencing: All Bowen sites have wire fencing on the outside that can contribute to the
safety of people, equipment, tools and vehicles. These are sourced and erected by Bowen and so
are not part of the fee charged by KUAS.
• LED security lights: Using motion sensors, these come on as soon as someone enters the site.
They are attached to timers that activate the system automatically before nighttime.
Case study 3: Retail – jewellers: Ringstar
Industry context
Jewellery stores (jewellers) are a prime target for thieves, both during and outside opening hours.
Jewellers must strike a balance between, on the one hand, protecting their stock and, on the other,
giving their customers the best service so that they can interact, touch and try on high-value goods.
Ringstar engaged KUAS as its new security provider in 2017 for its 50 stores after a series of break-
ins, found to have been caused by a combination of faulty equipment and obsolete systems supplied
by its previous provider (which subsequently went out of business). KUAS’s security incorporates:
• CCTV: As burglars usually wear masks, facial recognition is not possible. However, CCTV can
record other identifying features, eg, height, hair, skin colour – and the type of getaway vehicle
being used and its number plate. In 2020, Ringstar successfully prosecuted a gang because they
were recognisable by the mopeds that they were riding.
• Intruder alarms: KUAS recently upgraded Ringstar’s systems to ‘smart’ ones: in the event of an
incident, an app immediately sends a notification to an ARC. The systems are also equipped with
motion detectors and sensors on doors and display cabinet glass: these work together to detect
break-ins at potential entry points.
• Access control: A biometric facial recognition system ensures that only authorised staff can enter
the store, back offices and safes. Managers are notified every time someone tries to gain access.
Customers and other outsiders can enter only if an employee activates the electronic front door
mechanism. Outside business hours, as a condition of its insurance, Ringstar keeps all jewellery
in safes (fitted by another company); some is also held there during the day.
• Product tagging: KUAS uses radio-frequency identification (RFID) to tag Ringstar’s jewellery.
The nature of the tag varies slightly with the type and size of item (earrings, watches, rings, etc). It
is removed before the customer leaves the shop. If this does not occur, an alarm automatically
sounds.
• Panic buttons: KUAS has installed panic buttons, both wired and wireless, at all Ringstar stores.
These can alert the police to an emergency. The wired buttons are placed under the display cases
– near where staff will likely be at the time of a theft – and in back offices, so that staff away from
the main sales area also have access. The wireless buttons are carried by employees at all times.
• Fog: KUAS is trialling at 10 Ringstar stores a new product called Mistify, developed in conjunction
with GOF (see Exhibit 9). This impedes intruders’ vision by aiming a dense field of fog at them.

EXHIBIT 9
KUAS: Product development and technology
To remain competitive in a field where technology changes very rapidly, KUAS forms strategic alliances
with carefully chosen businesses that have relevant expertise. The table summarises current alliances,
one of which (GOF) is described below. The 2023 forecast reflects projects currently under development.
Each alliance agreement states the basis on which revenue and costs (including R&D) are to be shared.
KUAS share of R&D costs (years to 30 June)

Partner Product Launch date (Actual) (Actual) (Actual) (Forecast)
2020 2021 2022 2023
£000 £000 £000 £000
Orca Biometrics 1 October 2019 147 24 - -
Sizzle Video analytics 1 January 2021 - 163 94 -
GOF Mistify 1 January 2022 - - 145 35
Various Various Various 50 42 226 191
197 229 465 226
Alliance with GOF (Mistify)
The product
KUAS jointly developed Mistify, an anti-intruder fog, with GOF, a start-up based in Oxford. GOF was set
up by three young Oxford University chemistry researchers (Rajesh Dhawan, Maria Zanz, Paul Smith).
Mistify is stored in canisters at the client location. If unusual movement is detected, it instantly activates,
covering the immediate area in an impenetrable blanket of fog, reducing visibility to less than an arm's
length and so, in the case of a shop, stopping the intruders from seeing the products on sale. They still
have a ‘corridor’ by which to leave the shop (empty-handed) – important for staff safety and damage
limitation.
The development
KUAS had been seeking for some time to add a fog product to its existing range of systems. Having
noticed worsening security issues at some clients, mainly high-value retailers and leisure operators,
KUAS had identified a strong demand for new, enhanced security measures as criminals were
becoming more sophisticated and finding clever ways to bypass traditional systems.
Rajesh, Maria and Paul had seen the potential for a fog-based spray that could be used to distract
intruders without hurting them. They had seen similar products in use but they believed that a better
version was possible. Adam Menzies met Rajesh at a Chamber of Commerce meeting in March 2021.
They exchanged contact details and the following week began a series of more formal discussions, at
which Derek Gardner and his assistant Oliver Ison also became involved, along with Maria and Paul.
The research team presented their proposed product to the KUAS team, who were very pleased with it in
principle but raised ethical concerns: whilst it might be used in self-defence and to prevent potentially
deadly attacks, it was based on chemicals that could in fact cause permanent health issues for the
people at whom it was directed and for innocent bystanders. KUAS could not justify these risks. As a
result, the researchers returned to the laboratory, spending many hours from August to November 2021
creating a formulation that avoided such issues without compromising functionality.
After testing the revised version in various settings and with people of various age groups and health
profiles, the GOF team were satisfied that it would work as intended in a commercial environment (eg,
retail store, nightclub) and asked their chosen manufacturer to begin full production. The product, which
GOF named and patented as Mistify, was ready to be launched in January 2022. KUAS began trialling
it at 10 of the 50 stores operated by its jeweller client Ringstar.

The agreement
Both parties realised that they needed a formal contract to document their respective rights and
obligations in respect of Mistify and to ensure financial clarity and commercial transparency. They
recognised that the project was important for the future development of both companies, and its
success relied on achieving mutual respect and business trust.
KUAS’s Legal & Regulatory Head drew up an agreement with GOF’s lawyers. The agreement was to
begin on 1 January 2022 and continue for an initial period of 24 months to 31 December 2023, at
which date either party could choose to terminate it. If either KUAS or GOF is taken over by another
business in the initial period, this agreement will remain in place. Other key terms were as follows.
Heading Key terms Note
Coverage • Initial trial at 10 Ringstar stores for 6 months from 1 January 2022; if -
successful, to be rolled out on 1 July 2022 to the other 40 Ringstar
stores, then to 100 locations of other KUAS retail and leisure clients,
chosen jointly by KUAS and GOF.
Revenue sharing • KUAS client revenue will be shared 20:80 between GOF and KUAS -
respectively.
Purchase costs • KUAS will pay GOF a purchase cost equivalent to 40% of the revenue
charged by KUAS to the client.
R&D costs • Total pre-launch R&D costs of £260,000, all incurred by GOF by 31 1, 2
December 2021, will be shared 50:50 between GOF and KUAS.
• Subsequent R&D costs, all incurred by GOF, will be shared 50:50
between GOF and KUAS respectively. Any individual expense of
more than £5,000 must be approved by KUAS before being incurred.
Incidental • KUAS will absorb its own incidental expenses incurred in relation to 3
expenses Mistify.
Marketing • All marketing expenditure specifically relating to Mistify will be shared -
50:50 between GOF and KUAS respectively. Marketing will be
primarily the responsibility of GOF.
Accounting • Separate ledgers will be created and used for all revenue and costs -
directly connected to Mistify.
Signage • Each client site will display clear signage listing the chemical -
composition of Mistify, stating that it may be deployed in situations of
danger and referring to it as a collaboration between KUAS and GOF.
Exclusivity • GOF is not allowed to contract with another company to sell Mistify for -
a period of 24 months from the start date of this agreement.
Warranties and • In the event of injury to any person from the use of Mistify: -
indemnities o GOF will be fully liable if the injury is proven to be caused by
formulation of the product.
o KUAS will be fully liable if the injury is proven to be caused by
inappropriate use of the product.
Intellectual • The patent for Mistify and all related IP will reside with GOF. -
property (IP)
Notes
1. GOF will continue to refine the product, based on its own analysis and feedback from KUAS clients,
and create variants suitable for different settings.
2. R&D costs may be independently audited by a third party, to be agreed jointly by GOF and KUAS,
and the audit costs shared 50:50 by them.
3. KUAS expects to incur some direct expenditure (eg, IT, travel) on an ongoing basis until Mistify is
fully established. Direct labour costs of installation are expected to be negligible as it is assumed
that Mistify will not require installation in the conventional sense. Maintenance will be covered by
the existing arrangements with clients.

Financial summary and criteria for success
The following were agreed by GOF and KUAS as indicative figures:
Year to 30 June 2022 2023

£000 £000
Projected further R&D costs 30.0 70.0
Projected marketing costs 40.0 60.0
Selling price of Mistify by KUAS to client per location 6.0 6.0
Based on all the above information, KUAS expected to achieve the following results in the two financial
years ending 30 June 2022 and 2023.
Year to 30 June 2022 2023

£000 £000
Revenue
Ringstar: £6k x 10 x 80% / £6k x 40 x 80% 48 192
Other clients: £6k x 100 x 80% - 480
48 672
Cost of sales
Direct labour - -
Purchase costs: 40% x £6k x 10 / 40% x £6k x (40 + 100) (24) (336)
Gross profit 24 336
Share of R&D costs: 50% x (£260k + £30k) / 50% x £70k (145) (35)
Share of marketing costs: 50% x £40k / 50% x £60k (20) (30)
Incidental KUAS expenses (45) (60)
Operating (loss)/profit (186) 211
Thus, from its share of revenue and costs, KUAS’s alliance with GOF would yield operating profit of
£25,000, ie, just break even – KUAS’s minimum requirement over this period. However, KUAS
recognised that the figures were necessarily estimates and that it would be useful to model a number of
possible scenarios.
The product was then expected to earn increasing profits over subsequent years as it became an
established element of KUAS’s overall offering and was sold to more clients. After 30 June 2023, R&D,
marketing, staff and incidental costs relating to Mistify would be much lower. KUAS and GOF would
renegotiate the agreement for potential renewal on 1 January 2024.
It was unresolved how, other than by breaking even, ‘success’ would be determined – whether
quantitatively or qualitatively – either in the initial period or in the later roll-out or once the product was
fully established. Ideally (ie, because of the effectiveness of other security measures and/or an
absence of crime), no activations of Mistify would be needed over the period. In such a case, success
might be hard to determine – though it could be defined by Mistify’s evident value as a visible deterrent.
There would also be at least one unannounced test per year at each store, to show how staff would
respond in the event of a real activation.
Mistify was launched as scheduled. Actual 2022 revenue and costs were exactly as forecast.

EXHIBIT 10
Email
From: Eleanor O’Farrell (Sales Director)
To: Adam Menzies (Managing Director)
Date: 19 January 2023
Subject: Industry research
I thought that you should see the attached article published yesterday (Exhibit 11). I
have re-presented the results so you can see pictorially how we fared by plotting our
scores for each of the three criteria against those of the three identified competitors.
Top commercial security systems

Reliability
100 Ostrin (1st)
95 LKT (2nd)
90 Rangelight (3rd)
85
KUAS (4th)
80
Client Value for

service money
Axis range: 80% to 100%
Obviously we knew that the research was being done – I have been keenly awaiting the
findings – but we didn’t know how well we would do. Apparently, 50 companies were
covered, so we can be very pleased with finishing 4th – though it would have been
helpful if the article had mentioned that it was 4th out of 50! (I have emailed BMG to
ask if this can be put right but I’m not expecting a reply.)
Some of the data is fair and as we would probably have expected, but other parts are a
surprise – if not a ‘wake-up call’ for us to assess the quality and attractiveness of our
products and of everything that we do. In particular, it’s great that we are seen as
good for larger businesses – after all, that’s where all the money is to be made – and
that technology is a strong point, given all our development work with our alliance
partners. It’s also great that we scored so highly on client service – higher than Ostrin,
I notice – but there is always room for improvement and we can’t allow our staff to
become complacent.
However, the figures for reliability and value for money trouble me. Seen in isolation,
they are very good – but they are generally lower than for the other three companies.
Could we have a chat about what we can do to increase these percentages – maybe it
should be on the agenda for the next board meeting or we need to bring in an outside
consultant to help us? The most striking results are those for LKT, especially in light of
the £150,000 rebranding exercise that it undertook a few months ago. Is that
something we might consider doing?

EXHIBIT 11
Top Commercial Security Systems in 2022 (‘Be My Guide’, January 2023)

What is ‘Be My Guide’?
Be My Guide (BMG) is a well-respected website offering independent, impartial advice to buyers

of a huge range of products and service providers, from mobile phones to washing machines, from
kitchen fitters to car mechanics. Our writers are anonymous and are paid solely by us.
Each month, we include a focused review of a particular product chosen by you, our readers,
and at the end of each year we have a special additional feature on a more significant product
or service. This time, as we look back on 2022, we devote our attention to the complex and
confusing world of commercial security systems. All self-respecting businesses have – or should
have – a security system, but how do they know that they are getting good value and that the
system is working as it should?
Compare security system prices and save! Get free quotes here
And the winner is …
Ostrin is BMG’s choice as the top commercial security system provider in 2022, scoring 99% on
reliability and 96% on value for money. Ostrin’s systems come in an attractively flexible range
of options, enabling buyers to select those that work best for them. Clients cover a wide variety
of sectors – including small corner shops, cinemas, hotels and leisure centres. User testimonials
report that Ostrin takes the trouble to understand the needs of each client and to give the
impression of being an expert in its particular sector. The following feedback is typical:
“Your engineer Carol was first-class throughout. She was very approachable, clearly very
knowledgeable and determined to ensure that our system worked properly in all respects. Soon
after installation, stray items of litter kept activating a sensor, making the alarm ring. She
came back straightaway and resolved the issue and we have had no complaints since. Her
regular maintenance visits are always efficient and friendly!” Another common point of praise
was the quality of CCTV footage, using equipment from the well-known supplier Tickit. The
only criticism that we came across was that response times are slower than for some other
providers.
The table below summarises our findings for Ostrin and the other three companies that achieved
the best results in our research. For the full report, email us by clicking here.
Ostrin (1st) LKT (2nd) Rangelight (3rd) KUAS (4th)
Target market Businesses of Small to Medium-sized to Larger

all sizes medium-sized larger businesses businesses
businesses
Top feature All-round Technical skills of Fast alarm Good use of

expertise installers/engineers response times technology
Reliability (%) 99 95 92 86
Value for money (%) 96 92 81 84
Client service (%) 93 97 89 95

EXHIBIT 12
KUAS: Strategic summary (23 January 2023)
The directors, together with senior managers from across the company, met for a day at a rural hotel to
reassess KUAS’s priorities and risks in the light of its perceived growth opportunities, especially those
arising from its strategic alliances and the increasing role of artificial intelligence. The event was led by
an experienced external facilitator. There was much lively debate, with healthy disagreement in a
number of areas. The summary below captures the eventual consensus reached.
Focus
Our future is underpinned by three principles:
a) We remain constantly aware of the economic environment and how this might impact us, either
positively (through higher crime rates or terrorism threats, necessitating enhanced security) or
negatively (through financial pressures, causing clients to reassess their security spending).
b) We will continue to specialise in our three main types of system (alarms, CCTV, access control).
c) We will continue to form alliances with other companies that have appropriate skills and expertise.
Priorities
Our key strategic priorities are to be recognised as:
• A premier supplier of quality, up-to-date security systems to larger UK businesses across a

range of sectors
• A market leader in service to clients, earning their loyalty, achieving strong results in client
surveys, and maintaining a strong profile in mainstream and social media
• An employer that recruits and retains a diverse group of top-quality individuals and rewards them
• An expert in the joint creation of sophisticated new technology in response to market demand.
We want to explore the idea of doing maintenance for clients and on sites for which we did not carry
out installations. However, this can work both ways: our own clients could seek to have their
maintenance carried out by another provider. We could also offer clients longer contracts (say, three
years, perhaps at a discounted price), rather than asking them to renew annually, even though
currently most do continue for several years.
Risks
We reviewed the risks facing the company. As the previous list of risks had been devised in 2020, we
unanimously recognised the need to create a risk register documenting the most important risk areas
now identified. We would then monitor them every 6 months at board meetings, ensuring that the
stated actions were being implemented and measuring their effectiveness. Where necessary, we may
identify a new risk, whether in addition to or in place of an existing one. The actions may also be
revised if they are not sufficiently targeted or rigorous.
Set out below is a summary of the risk register arising from our review.

Area Risk Action
1. Client service Any (actual or perceived) We carry out frequent client satisfaction reviews,
failing in client service could as well as monitoring industry surveys and
lead to the loss of clients comments on social media and in the
and a more significant mainstream media. Any adverse feedback,
impact on our profile and especially when of a recurring nature, is promptly
reputation. followed up.
2. Recruitment & Our staff are an essential We keep in close contact with our staff at all
retention part of our business. If we levels. We act swiftly on any sign of poor morale
do not keep them well to ensure that problems are aired and resolved. If
motivated, well remunerated necessary, we arrange staff meetings where
and healthy, they could common issues can be raised and responded to.
leave, making it hard to
The new promotion structure will help to mitigate
replace them.
this risk.
3. Technology Without investing in, and We are constantly seeking potential new strategic
advances making best use of, new alliance partners and have a rigorous process of
technology, we risk losing due diligence and acceptance. We closely
our market position. It would monitor the effectiveness of all alliances: terms of
be hard to regain it. our agreements allow us to terminate any that
prove not to be beneficial.
4. Working If clients do not pay on time, We undertake credit checks on all prospective
capital our cashflow and liquidity clients, and all new clients pay a small upfront
management may be compromised. deposit on installations.
Our credit control team seek to be sympathetic to
clients suffering short-term financial challenges,
but sometimes have to take difficult decisions to
prevent damage to the company’s finances.
5. Product The products that we sell to We undertake periodic audits of our suppliers but
quality clients and install on their we largely rely on written assurances from them.
premises are sourced from In the event that we discover a common problem
a wide range of suppliers. It with a piece of equipment, we work with the
may not be possible to supplier to address the fault, remain in close
guarantee the continued communication with clients and arrange any
high quality of these necessary remedy at the earliest opportunity.
products and any
breakdown could damage
our reputation.
6. Regulation The sector is highly Our Legal & Regulatory Head (LRH) is responsible
regulated. An inability to for compliance, being up-to-date on proposed and
respond to changes and actual new legal requirements and giving timely
comply with regulation could training on these requirements to relevant staff.
impact our business, When appropriate, the LRH also lobbies standard-
potentially leading to setting bodies to withdraw potentially challenging
financial and other or contentious new regulations. KUAS is
penalties. accredited by several independent bodies.

EXHIBIT 13
The Security Systems Audit Authority (SSAA), London
Adam Menzies, KUAS, Oxford (By email)
April 2023
Dear Mr Menzies,
Report on our recent annual audit
The following is a confirmation of the outcome from our recent annual audit, as required by our certification
agreement with KUAS.
Scope of work
We spent 2 days with you, comprising:
• ½ day at your office reviewing systems and processes

• ½ day at your Oxford ARC watching your monitoring operations and speaking to staff
• ½ day visiting a client (construction site)
• ½ day accompanying a team of engineers on a maintenance visit to a large retail client
Summary findings
We are pleased to report that KUAS continues to demonstrate high standards. In particular:
• Business processes are clearly documented and appropriately followed

• Premises (offices and ARC) are suitably configured and equipped for current business needs
• The ARC operates effectively, dealing appropriately with both genuine and false alarms
• Staff are well trained and know where to find assistance and support
• Effective back-ups exist for all key internal business systems
• Installations are carried out with rigour and professionalism
• Maintenance visits are carried out in accordance with best industry practice
Matters requiring attention
• The construction site that we visited did not display clear signage to warn that CCTV is in operation
• KUAS personnel on the same site handling hazardous equipment were not wearing appropriate
protective clothing
• Some staff at the ARC left their screens completely unattended during refreshment breaks
As a result of the above, we are pleased to advise that your accreditation remains in place for a further 12
months. Our next visit is scheduled for April 2024 and we will be in contact with you closer to the date.
Please convey our thanks to your staff for their courtesy and co-operation during our visit.
SSAA

Recent media coverage
EXHIBIT 14a
AI: The future of security systems? (Think Security magazine, May 2023)
Artificial intelligence (AI) could well be the future of security systems. Read on …
Cameras, monitors and guards
A guard sitting in front of screens is a good security measure but does not guarantee full protection. The
guard cannot stay fully focused or monitor all screens at once, so intruders can enter unchallenged. By
eliminating this ‘human factor’, integrated AI can make security systems more efficient.
A guard may not notice a person trying to enter an ill-lit building. A camera equipped with an intelligent
video analysis system has a full view of the area and, without distraction, can easily spot someone
loitering suspiciously, trigger a flash of light on the screen for a guard to investigate and take action.
False alarms
False alarms cost huge amounts of money (fines, lost revenue) and wasted hours, but they can also give
building managers valuable information about potential security issues – whether an old system
requiring maintenance/replacement or human behaviour requiring correction. If not addressed, false
alarms can cause major problems: systems can overload, increasing downtime, compromising security
and needing extensive repairs. With their attention diverted, security managers can’t deal with bigger,
more complex issues affecting the overall safety of occupants and assets. False alarms also create
complacency: staff and ARCs naturally expect alarm activations to be false and start to ignore them.
AI, cloud-based data analytics and machine learning can rapidly process large volumes of data to identify
unusual alarm patterns and make recommendations to prevent future false alarms. This cuts costs and
business disruption, improving the effectiveness of security and enabling building managers to act fast.
But what about the ethics?
Alongside its benefits, AI carries big ethical risks. The Organisation for Economic Cooperation and
Development (OECD) sets out the principles for the responsible use of AI systems. They should:
1. Benefit people and the planet through inclusive growth, sustainable development and wellbeing.
2. Respect the rule of law, human rights, democratic values and diversity; and include appropriate
safeguards, eg, enabling human intervention where necessary to ensure a fair and just society.
3. Offer transparency and responsible disclosure so users can understand and can challenge outcomes.
4. Function robustly, securely and safely. Potential risks should be continually assessed and managed.
Organisations and individuals developing, deploying or operating AI systems – for security and in other
industries – should be held accountable for their proper functioning in line with the above principles.
EXHIBIT 14b
Advertising Standards Authority (ASA) ruling – May 2023
ASA, the UK advertising watchdog, has upheld a complaint against security company Ostrin. Its
website described its new alarm systems as ‘the UK market leader’ with a chart comparing Ostrin
against other companies by reference to selected features. The ASA agreed with the complaint –
that the advert was misleading and not verifiable – and ruled that it could not appear again in its
current form. The ASA considered that buyers would understand the wording to mean that Ostrin’s
alarm systems were better than those of all other UK providers; and that the chart did not allow
buyers to verify the comparison. Ostrin responded that it had some unique patented products,
which supported its wording, but it acknowledged the need to correct the statement and align it
with verifiable data.

EXHIBIT 14c
Television review – last night’s documentary: ‘Secret Executive’ (May 2023)
Last night saw the welcome return of the popular documentary ‘Secret Executive’, in which directors secretly
tour their own company to see how it really works. They alter their appearance, taking on a temporary new
identity with a fictitious story (eg, making a film about new joiners in the industry). They visit a range of locations,
often learning troubling things about the company’s operations or individual staff. At the end, they share their
findings with fellow directors, talk through the issues that they encountered and their plans to solve them.
Orli Spitz is the Operations Director of security systems company KUAS. Masquerading as Serena Olson, she
met Lucy, a recent recruit who felt that she had not been given a proper induction. Lucy was expected to carry
out a certain number of maintenance visits each week but, although she had been accompanying more
experienced engineers on these visits, she didn’t really know what was expected of her. She was worried that
this might reflect badly on KUAS. Orli listened sympathetically and, when off camera, said that this was clearly
an issue needing her attention.
Orli then went to a construction site to watch one of KUAS’s largest projects. She was surprised that even
though visiting with a member of the team, she was able to walk onto the site without having to obtain her own
electronic entry – and that she had to ask for a hard hat. She was also subjected to provocative remarks by
three workers (who turned out to be subcontractors rather than KUAS employees) standing on tall scaffolding
while installing a tower. She evidently found this incident highly distressing.
Orli was also invited to join a London regional team social evening, which enabled her to talk to a large number
of employees. She found that most were happy working for KUAS and with the pay and promotion prospects.
However, there were some common complaints: they didn’t like the uniform, which was often ridiculed by
client staff; the new alarm systems recently introduced by one supplier were very hard to fit; the vans provided
to engineers were old, often suffering mechanical faults (resulting in high repair costs) and, ironically, frequent
break-ins (resulting in the loss of expensive and essential tools). Another concern was the level of sickness,
which had meant some ARC staff working 16-hour shifts. On one occasion, an operative fell asleep and almost
missed the notification of a serious incident at a Ringstar jewellery store.
Orli came across as likeable and knowledgeable figure but she made it clear that she did not tolerate poor
behaviour or idleness. Overall, she clearly found the experience very useful, with plenty of follow-ups,
especially in dealing with staff conduct, poor training processes, inefficiencies and quality lapses. This was a
captivating hour of broadcasting, highlighting some real human issues in the tough world of work.
EXHIBIT 14d
Inside job? (Crime Weekly, 16 April 2023)
Yesterday’s theft of thousands of pounds’ worth of tools from a construction site in central London may have been
masterminded by a former convicted thief working for LKT – the company that installed the site’s security systems. Mr X
(for legal reasons he cannot be named) is alleged to have deactivated the alarms, cameras and perimeter lights and entered
the site unchallenged at night, at a time when he knew that there was no-one patrolling. Knowing where tools were stored,
he helped himself to some hi-tech drills and other expensive gadgets, which he then sold to contacts in the building trade. He
was caught when some of the stolen tools were found on a routine spot-check of company vehicles the next day.
EXHIBIT 14e
Not so secure (WatchYourWaste blogger, 2 May 2023)
I’m constantly amazed how careless some individuals and organisations can be when discarding things!
There I was yesterday, waiting by a skip near a building site, and what should be thrown into it but the
footage from an old security camera which appeared to show a well-known athlete buying illicit drugs
from a dealer. I am still deciding which magazine to sell my story to – or do I go straight to the police? –
or do I contact the athlete direct?

Case Study JULY 2023 Advance Information

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Case Study JULY 2023 Advance Information

Uploaded by

Copyright:

Available Formats

CASE STUDY

This material is issued prior to the exam session on 19 July 2023.

Assessment of the Case Study

• Lack of professional independence or objectivity

ICAEW\CS\J23 Page 2 of 36 Back to contents page

2 The UK security systems industry: An introduction

3 Keep Us All Safe Limited (KUAS): An introduction

6 KUAS: Key features of the business

7 KUAS: Example tender – Nile

8 KUAS: Client case studies

9 KUAS: Product development and technology

11 Top Commercial Security Systems in 2022 (‘Be My Guide’, January 2023)

12 KUAS: Strategic summary

13 KUAS: Report on SSAA audit visit (April 2023)

14 Recent media coverage

ICAEW\CS\J23 Page 3 of 36 Back to contents page

ICAEW\CS\J23 Page 4 of 36 Back to contents page

1. Electronic security systems (intruder alarms; CCTV; access control)

The current market environment

How security systems companies make money

ICAEW\CS\J23 Page 5 of 36 Back to contents page

ICAEW\CS\J23 Page 6 of 36 Back to contents page

KUAS: Revenue breakdown

History and development

ICAEW\CS\J23 Page 7 of 36 Back to contents page

• Adam Menzies (Managing Director)

ICAEW\CS\J23 Page 8 of 36 Back to contents page

KUAS operating results

Revenue Gross profit Operating profit

2022 2021 2020

ICAEW\CS\J23 Page 9 of 36 Back to contents page

KUAS: Cost of sales by cost area

Purchases of goods for installation and repairs

Year ended 30 June 2021 (2021)

ICAEW\CS\J23 Page 10 of 36 Back to contents page

KUAS: Revenue mix by activity

40% 83.1% 74.9% 78.4%

Installations and upgrades Monitoring and maintenance

Year ended 30 June 2022 (2022)

ICAEW\CS\J23 Page 11 of 36 Back to contents page

KUAS: Tender performance summary

Average tender value participated in (£000)

Average successful tender value (£000)

Win ratio: by volume (%)

ICAEW\CS\J23 Page 12 of 36 Back to contents page

ICAEW\CS\J23 Page 13 of 36 Back to contents page

Revenue 1 23,121 16,578 20,971

Statement of financial position

TOTAL ASSETS 6,506 5,414 5,479

Trade and other payables 6 1,971 1,761 1,922

TOTAL EQUITY AND LIABILITIES 6,506 5,414 5,479

ICAEW\CS\J23 Page 14 of 36 Back to contents page

Cash flows from investing activities

Cash flows from financing activities

Net change in cash and cash equivalents 95 201 506

ICAEW\CS\J23 Page 15 of 36 Back to contents page

Note 1: Segmental analysis 2022 2021 2020

Note 2: Administrative expenses 2022 2021 2020

ICAEW\CS\J23 Page 16 of 36 Back to contents page

Note 4: Inventories 2022 2021 2020

Note 5: Trade and other receivables 2022 2021 2020

Note 6: Trade and other payables 2022 2021 2020

Note 7: Staff 2022 2021 2020