The Sigma Financial Group Limited - Limited company accounts 20.1

REGISTERED NUMBER: 07299903 (England and Wales)

REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 APRIL 2020

FOR

THE SIGMA FINANCIAL GROUP LIMITED

Page

Company Information

1

Report of the Directors

2

Report of the Independent Auditors

4

Statement of Profit or Loss

6

Statement of Profit or Loss and Other Comprehensive Income

7

Statement of Financial Position

8

Statement of Changes in Equity

9

Statement of Cash Flows

10

Notes to the Statement of Cash Flows

11

Notes to the Financial Statements

12

DIRECTORS:

G E Gilburd

M J Harfield

SECRETARY:

Industrial & Commercial Consultancy Ltd

REGISTERED OFFICE:

Grosvenor House

Prospect Hill

Redditch

Worcestershire

B97 4DL

REGISTERED NUMBER:

07299903 (England and Wales)

SENIOR STATUTORY AUDITOR:

T P Curtis

INDEPENDENT AUDITORS:

Barrow LLP

Jackson House

Station Road

Chingford

London

E4 7BU

BANKERS:

Natwest Bank

Chesterfield

Leicester Customer Service Centre

11 Western Boulevard

Bede Island

LE2 7EJ

The directors present their report with the financial statements of the company for the year ended 30 April 2020.

PRINCIPAL ACTIVITIES

The principal activity of the company during the year was that of a holding company which provided support to subsidiary companies. The main activity of the group was the provision of business process outsourcing services.

BUSINESS REVIEW AND FUTURE OUTLOOK

The Sigma Financial Group Limited is wholly owned by Sanclare (UK) Limited. Sanclare (UK) Limited provides Business Process Outsourcing services to UK credit providers and has been trading for 18 years. Sanclare (UK) Limited forms part of the Digicall group of companies, which is a South African based outsource provider with turnover in excess of £60m.

In accordance with International Financial Reporting Standards (IFRS), the directors have carried out the impairment review of the investments made in the wholly owned subsidiary Clanchatton Birmingham Ltd. The management has conducted their review by calculating the net present value of the future cash flows by incorporating the growth in adjusted EBITDA (calculated as adjusted operating profit before depreciation and amortisation), timing and the amount of future capital expenditure, long-term growth rates and appropriate discount rates to reflect the risks involved. The review concluded that the investment is not impaired.

DIVIDENDS

No dividends will be distributed for the year ended 30 April 2020.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 May 2019 to the date of this report.

G E Gilburd

M J Harfield

DIRECTORS' INDEMNITY

As permitted by the articles of association, the directors have the benefit of an indemnity which is a qualifying third party indemnity provision as defined by section 234 of the Companies Act 2006. The indemnity was in force throughout the last financial year and is currently in force. The company also maintained Directors' and Officers' liability insurance during the year in respect of itself and its directors.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

ON BEHALF OF THE BOARD:

G E Gilburd - Director

11 August 2020

Opinion

We have audited the financial statements of The Sigma Financial Group Limited (the 'company') for the year ended 30 April 2020 which comprise the Statement of Profit or Loss, the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and Notes to the Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 30 April 2020 and of its profit for the year then ended;

-	have been properly prepared in accordance with IFRSs as adopted by the European Union; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

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

-

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

Other information

The directors are responsible for the other information. The other information comprises the information in the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

-	the Report of the Directors has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

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

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page two, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

T P Curtis (Senior Statutory Auditor)

for and on behalf of Barrow LLP

Jackson House

Station Road

Chingford

London

E4 7BU

11 August 2020

CONTINUING OPERATIONS

Revenue

175,010

150,690

Administrative expenses

(173,788

)

(149,291

)

OPERATING PROFIT

1,222

1,399

Finance costs

4

(1,222

)

(1,399

)

PROFIT BEFORE INCOME TAX

5

-

-

Income tax

6

-

-

PROFIT FOR THE YEAR

-

-

PROFIT FOR THE YEAR

-

-

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

-

-

ASSETS

NON-CURRENT ASSETS

Investments

9

2,775,003

2,775,002

CURRENT ASSETS

Trade and other receivables

10

180,411

137,310

Cash and cash equivalents

11

2,277

58

182,688

137,368

TOTAL ASSETS

2,957,691

2,912,370

EQUITY

SHAREHOLDERS' EQUITY

Called up share capital

12

3,835,611

3,835,611

Share premium

13

2,872,748

2,872,748

Retained earnings

13

(3,945,993

)

(3,945,993

)

TOTAL EQUITY

2,762,366

2,762,366

LIABILITIES

CURRENT LIABILITIES

Trade and other payables

14

195,325

150,004

TOTAL LIABILITIES

195,325

150,004

TOTAL EQUITY AND LIABILITIES

2,957,691

2,912,370

The financial statements were approved by the Board of Directors and authorised for issue on 11 August 2020 and were signed on its behalf by:

G E Gilburd - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 May 2018

3,835,611

(3,945,993

)

2,872,748

2,762,366

Changes in equity

Balance at 30 April 2019

3,835,611

(3,945,993

)

2,872,748

2,762,366

Changes in equity

Balance at 30 April 2020

3,835,611

(3,945,993

)

2,872,748

2,762,366

Cash flows from operating activities

Cash generated from operations

1

3,442

(1,606

)

Interest paid

(1,222

)

(1,399

)

Net cash from operating activities

2,220

(3,005

)

Cash flows from investing activities

Purchase of fixed asset investments

(1

)

(2

)

Net cash from investing activities

(1

)

(2

)

Increase/(decrease) in cash and cash equivalents

2,219

(3,007

)

Cash and cash equivalents at beginning of year

2

58

3,065

Cash and cash equivalents at end of year

2

2,277

58

1.	RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

30.4.20

30.4.19

£

£

Profit before income tax

-

-

Finance costs

1,222

1,399

1,222

1,399

Increase in trade and other receivables

(43,101

)

(103,096

)

Increase in trade and other payables

45,321

100,091

Cash generated from operations

3,442

(1,606

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 30 April 2020

30.4.20

1.5.19

£

£

Cash and cash equivalents

2,277

58

Year ended 30 April 2019

30.4.19

1.5.18

£

£

Cash and cash equivalents

58

3,065

1.	STATUTORY INFORMATION

The Sigma Financial Group Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparation

These annual financial statements have been prepared on the going concern basis in accordance with, and in compliance with, International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations issued and effective at the time of preparing these annual financial statements and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

These annual financial statements have been prepared under the historical cost convention. This is the first set of the company's annual financial statements prepared under IFRS and in which IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases have been applied.

The principal accounting policies applied and changes to significant accounting policies are set out and described below where applicable.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of annual financial statements in conformity with IFRS requires management, from time to time, to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected financial statements.

Critical judgements in applying accounting policies

Management did not make critical judgements in the application of accounting policies, apart from those involving estimations, which would significantly affect the financial statements.

Key sources of estimation uncertainty

Financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period. For details of the key assumptions and inputs used, refer to the individual notes addressing financial assets.

Trade receivables

Trade receivables are impaired using the simplified approach in terms of IFRS 9. Expected credit losses are determined by applying bad debts written off in the past year to the total credit sales in order to determine the historical loss ratio. This is applied to the receivables balance.

The simplified impairment model has been applied by the company as trade receivables do not contain a financing component. The default terms of collection is 60 days. In accordance with the model, lifetime expected credit losses (ECL) are required to be recognised. As the maturities are 12 months or less, the 12 month and lifetime ECLs will be the same.

The new impairment model allows entities to calculate ECLs on trade receivables and requires that historical provision rates be updated with current and forward looking estimates. This was performed by calculating historical loss rates (actual credit losses as a percentage of credit sales). These rates were calculated for the current year and two prior years. The historical loss rate was then applied to the trade receivables balance at year end in order to calculate the ECL. No forward looking adjustment was deemed necessary as the company does not consider that any significant change in credit conditions will occur.

The calculated ECL was then compared to the current provision for bad debts to establish whether any additional provision was required.

Provisions

Judgement is required in relation to methods and assumptions used when estimating future cash flows required to settle present obligations for which provisions are required.

Taxation

Judgement is required in determining the provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The company recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the company to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the company to realise the net deferred tax assets recorded at the end of the reporting period could be impaired.

Revenue recognition

Revenue is recognised using a five step model as follows:

- Identify the contract with a customer

- Identify the performance obligations

- Determine the transaction price

- Allocate the transaction price to the performance obligations

- Recognise revenue as and when performance obligations are satisfied

The company recognises revenue from the provision of:

Turnover represents the value, net of value added tax and discounts, of work carried out in respect of services provided to group companies. It is recognised in line with the provision of the service.

Financial instruments

Initial recognition and measurement

Financial instruments held by the company are classified in accordance with the provisions of IFRS 9 Financial Instruments. Broadly, the classification possibilities which are adopted by the company as applicable, are as follows:

Financial assets which are equity instruments:

- Mandatorily at fair value through profit or loss; or

- Designated as at fair value through other comprehensive income. (This designation is not available to equity instruments which are held for trading or which are contingent consideration in a business combination).

Financial assets which are debt instruments:

- Amortised cost. This category applies only when the contractual terms of the instrument give rise, on specified dates, to cash flows that are solely payments of principal and interest on principal, and where the instrument is held under a business model whose objective is met by holding the instrument to collect contractual cash flows. This includes trade receivables, loans to group companies, other financial assets and cash and cash equivalents.

Financial liabilities:

- Amortised cost which include borrowings raised, trade payables, loans from group companies and overdraft facilities.

The specific accounting policies for the classification, recognition and measurement of each type of financial instrument held by the company are presented below:

Financial Assets held at fair value through profit or loss (FVTPL)

Classification

Financial assets that are held within a different business model other than "hold to collect" or 'hold to collect and sell' are categorised at FVTPL. Further, irrespective of the business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL.

The company's investment in unit trusts are classified as held at FVTPL and did not make the irrevocable election to account for the investment in unit trusts at fair value through other comprehensive income.

Recognition and measurement

Financial assets are recognised when the group becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial assets and substantially all the risks and rewards are transferred.

Financial assets through profit or loss are initially measured at fair value with transactions costs recognised in profit or loss. The fair value of investments in unit trusts is derived from quoted bid prices in an active market.

Loans receivable at amortised cost

Classification

Loans to / from group companies and other loan receivables are classified as financial assets subsequently measured at amortised cost.

They have been classified in this manner because the contractual terms of these loans give rise, on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding, and the group's business model is to collect the contractual cash flows on these loans.

Recognition and measurement

Loans receivable are recognised when the company becomes a party to the contractual provisions of the loan. The loans are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at amortised cost.

The amortised cost is the amount recognised on the loan initially, minus principal repayments, plus cumulative amortisation (interest) using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.

Impairment of loans receivable

The company recognises a loss allowance for expected credit losses on all loans receivable measured at amortised cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective loans.

The company measures the loss allowance at an amount equal to lifetime expected credit losses (lifetime ECL) when there has been a significant increase in credit risk since initial recognition. If the credit risk on a loan has not increased significantly since initial recognition, then the loss allowance for that loan is measured at 12 month expected credit losses (12 month ECL).

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a loan. In contrast, 12 month ECL represents the portion of lifetime ECL that is expected to result from default events on a loan that are possible within 12 months after the reporting date.

In order to assess whether to apply lifetime ECL or 12 month ECL, in other words, whether or not there has been a significant increase in credit risk since initial recognition, the company considers whether there has been a significant increase in the risk of a default occurring since initial recognition rather than at evidence of a loan being credit impaired at the reporting date or of an actual default occurring.

Significant increase in credit risk

In assessing whether the credit risk on a loan has increased significantly since initial recognition, the company compares the risk of a default occurring on the loan as at the reporting date with the risk of a default occurring as at the date of initial recognition.

The credit risk on a loan is always presumed to have increased significantly since initial recognition if the contractual payments are more than 60 days past due, unless the company has reasonable and supportable information that demonstrates otherwise.

By contrast, if a loan is assessed to have a low credit risk at the reporting date, then it is assumed that the credit risk on the loan has not increased significantly since initial recognition.

The company regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increases in credit risk before the amount becomes past due.

Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default.

The assessment of the probability of default and loss given default is based on historical data adjusted by forward looking information as described above. The exposure at default is the gross carrying amount of the loan at the reporting date.

Lifetime ECL is measured on a collective basis in cases where evidence of significant increases in credit risk are not yet available at the individual instrument level. Loans are then grouped in such a manner that they share similar credit risk characteristics, such as nature of the loan, external credit ratings (if available), industry of counterparty etc.

The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.

If the company has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the company measures the loss allowance at an amount equal to 12 month ECL at the current reporting date, and vice versa.

An impairment gain or loss is recognised for all loans in profit or loss with a corresponding adjustment to their carrying amount through a loss allowance account. The impairment loss is included in other operating expenses in profit or loss as a movement in credit loss allowance.

Trade and other receivables

Classification

Trade and other receivables, excluding, when applicable, VAT and prepayments, are classified as financial assets subsequently measured at amortised cost.

They have been classified in this manner because their contractual terms give rise, on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding, and the company's business model is to collect the contractual cash flows on trade and other receivables.

Recognition and measurement

Trade and other receivables are recognised when the company becomes a party to the contractual provisions of the receivables. They are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at amortised cost.

The amortised cost is the amount recognised on the receivable initially, minus principal repayments, plus cumulative amortisation (interest) using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.

Impairment of trade and other receivables

The company recognises a loss allowance for expected credit losses on trade and other receivables, excluding VAT and prepayments. The amount of expected credit losses is updated at each reporting date.

The company measures the loss allowance for trade and other receivables at an amount equal to the life time expected credit losses (lifetime ECL), which represents the expected credit losses that will result from all possible default events over the expected lifetime of the receivables.

Measurement and recognition of expected credit losses

The customer base does not show significantly different loss patterns for different customer segments. The loss allowance is calculated on a collective basis for all trade and other receivables in totality.

An impairment gain or loss is recognised in profit or loss with a corresponding adjustment to the carrying amount of trade and other receivables, through use of a loss allowance account. The impairment loss is included in other operating expenses in profit or loss as a movement in credit loss allowance.

Cash and cash equivalents

Classification, recognition and measurement

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially recorded at their carrying amount which is deemed to be fair value and subsequently carried at amortised cost.

Impairment

For financial assets carried at amortised cost, with the exception of trade receivables, the company distinguishes between financial assets that have not deteriorated significantly in credit quality since initial recognition or that have low risk (stage 1); financial assets that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (stage 2) and financial assets where objective evidence of impairment exists at the reporting date (stage 3).

For financial assets in Stage 1, 12 month ECL are recognised while for financial assets in Stage 2 and Stage 3, lifetime ECL are recognised.

The company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter- party, therefore cash and cash equivalents are considered low risk and the credit risk of the borrowers did not increase significantly during the period.

Financial liabilities at amortised cost

Classification

Financial liabilities at amortised cost comprise borrowings raised (cumulative preference shares), loans from group companies, trade and other payables and overdraft facilities.

The company does not have financial liabilities through profit or loss in accordance with IFRS 9.

Recognition and measurement

Financial liabilities are measured at fair value at initial recognition plus transactions costs directly attributable to the issuance of the financial liability in the case of financial liabilities not subsequently measured at fair value through profit or loss. After initial recognition, financial liabilities are measured at amortised cost using the effective interest rate method.

The difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the company's accounting policy on borrowing costs.

Dividends paid and accrued on cumulative preference shares are recognised as finance costs over the term of the preference shares.

Taxation

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the statement of financial position date. Timing differences are differences between the group's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax is measured at the average rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is measured on a non-discounted basis. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing difference can be deducted.

Investments in subsidiaries - the company

Investments in subsidiaries are carried at cost less any accumulated impairment. This excludes investments which are held for sale and are consequently accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

The cost of an investment in a subsidiary is the aggregate of:

· the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group, plus

· any costs directly attributable to the purchase of the subsidiary.

And adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.

Impairment

At each reporting date, tangible fixed assets and investments are assessed to determine whether there is an indication that the carrying amount of an asset may be more than its recoverable amount and that the asset should be impaired. If there is an indication of possible impairment, the recoverable amount of an asset, which is the higher of its value in use and its net realisable value, is estimated and compared with its carrying amount. If the recoverable amount is lower, the carrying amount of the asset is written down to its estimated recoverable amount and an impairment loss is recognised in profit and loss.

3.	EMPLOYEES AND DIRECTORS

4.	NET FINANCE COSTS

30.4.20

30.4.19

£

£

Finance costs:

Bank interest

1,222

1,399

5.	PROFIT BEFORE INCOME TAX

The profit before income tax is stated after charging:

30.4.20

30.4.19

£

£

Auditors' remuneration

2,000

2,000

The auditors' remuneration relating to the company for the year was borne by Clanchatton Birmingham Limited (2019: Clanchatton Birmingham Limited), a fellow group company.

6.	INCOME TAX

Analysis of tax expense

No liability to UK corporation tax arose for the year ended 30 April 2020 nor for the year ended 30 April 2019.

Deferred tax

No deferred tax asset has been recognised due to the uncertainty as to the timing and quantum of the recovery of corporation tax losses within the company. The total amount of unprovided deferred tax, which mainly comprises trading losses is £22,920 (2019: £24,973).

7.	OPERATING LEASING AGREEMENTS

30.04.20

30.04.19

£

£

Within one year

188,322

613,965

Between two and five years

196,169

1,253,512

384,491

1,867,477

The operating lease commitments relating to the company for the year was borne by Clanchatton Birmingham Limited (2019: Clanchatton Birmingham Limited), a fellow group company.

8.	LEASING - RIGHT-OF-USE ASSETS

Right-of-use assets in respect of leased buildings of which net book value is £1,078,002 and lease liabilities of £1,078,002 relating to the company for the year was borne by Clanchatton Birmingham Limited (2019: Nil), a fellow group company.

In applying IFRS 16 for the first time under the modified retrospective approach, the company has used the following practical expedients permitted by the standard:

- applying a single discount rate to a portfolio of leases with reasonably similar characteristics

- relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review

- accounting for operating leases with a remaining lease term of less than 12 months as at 1 May 2019 as short-term leases

- excluding initial direct costs for the measurement of the right-of-use asset at the date of initial

application, and;

- using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The company has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the company relied on its assessment made applying IAS 17 and interpretation for determining whether an arrangement contains a lease.

9.	INVESTMENTS

Shares in

group

undertakings

£

COST

At 1 May 2019

2,775,002

Additions

1

At 30 April 2020

2,775,003

NET BOOK VALUE

At 30 April 2020

2,775,003

At 30 April 2019

2,775,002

The company's investments at the Statement of Financial Position date in the share capital of companies include the following:

Sigma Financial Limited

Registered office: Grosvenor House, Prospect Hill, Redditch, Worcestershire, B97 4DL

Nature of business: Dormant

%

Class of shares:

holding

1 Ordinary share A

100.00

30.4.20

30.4.19

£

£

Aggregate capital and reserves

(19,169

)

(19,169

)

Sigma Red Limited

Registered office: Grosvenor House, Prospect Hill, Redditch, Worcestershire, B97 4DL

Nature of business: Dormant

%

Class of shares:

holding

1 Ordinary share A

100.00

30.4.20

30.4.19

£

£

Aggregate capital and reserves

(8,913,029

)

(8,913,029

)

Recodebt Limited

Registered office: Grosvenor House, Prospect Hill, Redditch, Worcestershire, B97 4DL

Nature of business: Holding company

%

Class of shares:

holding

1,000 Ordinary shares class A

100.00

3 Ordinary shares class B

100.00

30.4.20

30.4.19

£

£

Aggregate capital and reserves

94,863

94,863

Clanchatton Birmingham Limited

Registered office: Grosvenor House, Prospect Hill, Redditch, Worcestershire, B97 4DL

Nature of business: Provision of credit management services

%

Class of shares:

holding

2,775,100 Ordinary shares A

100.00

30.4.20

30.4.19

£

£

Aggregate capital and reserves

3,161,699

1,220,426

Profit for the year

1,941,273

94,876

The investments include a carrying value of £2,775,000 for Clanchatton Birmingham Limited. After the application of the equity method, the company determines whether it is necessary to impair the investments in the wholly owned subsidiary. As explained in the report of the directors the investment is not impaired.

Commercial Credit Services Limited

Registered office: Grosvenor House, Prospect Hill, Redditch, Worcestershire, B97 4DL

Nature of business: Dormant

%

Class of shares:

holding

2,635 Ordinary shares A

100.00

30.4.20

30.4.19

£

£

Aggregate capital and reserves

100

100