ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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FOR THE YEAR ENDED 31 DECEMBER 2021
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SMITHCORP LIMITED
COMPANY INFORMATION
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SMITHCORP LIMITED
CONTENTS
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SMITHCORP LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present their strategic report for the year ended 31 December 2021.
SmithCorp Limited is a holding company for a group engaged in specialist resourcing. The recruitment companies are leading UK providers of temporary, contract and permanent staff within the education sector. We have recruitment offices in Bristol, Truro and London. We provide teaching and support staff across the Further Education and Compulsory Education sectors and service a wide portfolio of commercial training companies.
The results for the group show a pre-tax profit of £553,512 (2020 - £55,437) for the year and sales of £14,776,064 (2020 - £15,929,060). Usual business activity was impacted significantly in 2020 by COVID-19 restrictions. A second national lockdown from November 2020 to March 2021 led to reduced contractor numbers at the start of 2021 vs the start of 2020. This impacted revenue for the first half of the year. With the start of the new academic year in September 2021 we built back strongly, both in temporary and permanent recruitment.
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SMITHCORP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
Management of the business and execution of the group's strategy are always subject to some risks. The Board reviews these and processes are put in place to mitigate them:
COVID-19 The pandemic continued to be a major disruptor. We utilised the following government schemes to aid cash flow and support our staff in 2021: • VAT payment deferral scheme (2020 VAT) • CBILS (2020) • CJRS where necessary. As well as subduing the labour market and hence our revenue stream, the national lockdowns and social distancing fundamentally changed home/office working patterns and wider attitudes to work. Some of our staff opted to change career direction and leave the recruitment industry altogether. After a 15-month internal recruitment freeze, we began building the team again from the second half of 2021. Market & Economic As we came out of lockdown, demand for skilled teachers and support staff in the UK rebounded quickly. Skills Shortages We are an established player in the market with a strong network of candidates. We have invested in IT and systems development in 2021 to further enhance our candidate sourcing capabilities. Competition The UK is a highly competitive market for recruitment although the regulated nature of the education sector does serve as a barrier to entry for non-specialists. Regulatory and Legislation We closely monitor all legislative and regulatory changes and are well equipped to deal with them. Liquidity The group actively forecasts, manages and reports upon its working capital requirements to ensure it has sufficient operational funds. Interest Rates The group is exposed to interest rate risk in respect of its invoice discounting facility. We do not seek to fix or hedge interest on this facility, the board considers exposure to interest rate increases an acceptable risk
Given the straightforward nature of the business, The Board believe detailed analysis using KPIs is not necessary to understand of the development, performance or position of the business. However, all the following are monitored and do influence management decisions:
• Turnover • Gross margin • Contract margins • Contract / Permanent income mix • Productivity per fee earner • Headcount / employee retention
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SMITHCORP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
BUSINESS DEVELOPMENT
We remain committed to delivering a high quality, high speed service to our candidates and clients. We offer online client feedback. CHARITY With COVID-19 restrictions around the world in 2021, SmithCorp Charitable Trust (SCCT) largely took a break from fundraising or sending its employees on overseas aid trips. SmithCorp and its employees remain committed to the charity and fundraising events are planned again for 2022.
FUTURE OUTLOOK
The market has recovered well and we expect to build back to our pre COVID-19 revenues by 2023. 2022 holds many challenges for the global economy. The war in Ukraine is compounding post pandemic fragilities. Inflation will be significant in 2022 and beyond. SmithCorp will not be immune to these pressures. We intend to support our staff and grow the business. We expect running costs to rise and profit margins to be impacted. Nevertheless, we expect the education recruitment sector and our position within it to remain strong. The government has committed additional funding to the Further Education sector and the new T-Level qualifications continue to roll out. Secondary Education pupil numbers remain set to increase for the next few years and there is widespread acceptance that there is some ‘catching up’ to be done across all education sectors post COVID. In short, we expect staffing needs within the education recruitment sector to remain high for years to come. We remain an established player in the sector and despite some staff losses, we have retained significant expertise. We are investing in our people, investing in our training and investing our systems. We are well placed to work through the current economic pressures, to grow and to capture greater market share.
This report was approved by the board on 4 August 2022 and signed on its behalf.
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SMITHCORP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present their report and the financial statements for the year ended 31 December 2021.
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £399,560 (2020: loss £10,816).
No further amounts are recommended to be paid by way of dividends in respect of this financial period.
The directors who served during the year were:
Items required under Schedule 7 above to be disclosed in the directors' report are set out in the strategic report in accordance with s.414C(11) CA 2006.
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SMITHCORP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
The auditors, Bishop Fleming LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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SMITHCORP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SMITHCORP LIMITED
We have audited the financial statements of SmithCorp Limited (the 'parent company') and its subsidiaries (the 'Group') for the year ended 31 December 2021, which comprise the Group Statement of comprehensive income, the Group and company Statements of financial position, the Group Statement of cash flows, the Group and company Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.
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SMITHCORP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SMITHCORP LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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SMITHCORP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SMITHCORP LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙We have considered the nature of the sector, control environment and financial performance;
∙We have considered the results of enquiries with management and directors in relation to their own identification and assessment of the risk of irregularities within the entity;
∙We have reviewed the documentation of key processes and controls and performed walkthroughs of transactions to confirm that the systems are operating in line with documentation;
∙Any matters identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
- Identifying, evaluation and complying with laws and regulations and whether they were aware of any instances of non-compliance;
- Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
- The internal controls established to mitigate risks of fraud or noncompliance with laws and regulations;
∙We have considered the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we have considered the opportunities and incentives that may exist within the organisation for fraud and identified the highest area of risk to be in relation to income recognition, with a particular risk in relation to year-end cut off. In common with all audits under ISAs (UK) we are also required to perform specific procedures to respond to the risk of management override.
We have also obtained understanding of the legal and regulatory frameworks that the Groups operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the Companies Act 2006, FRS 102 and UK tax legislation.
In addition, we considered the provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Group’s ability to operate or avoid a material penalty. These include, data protection regulations, health and safety regulations, employment legislation, money laundering legislation and aspects of the Children’s Act and Education Act relating to the recruitment industry.
Our procedures to respond to risks identified included the following:
∙Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
∙Performing analytical procedures to identify unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
∙Reviewing board meeting minutes;
∙Enquiring of management in relation to actual and potential claims or litigations;
∙Performing detailed transactional testing in relation to the recognition of income, specifically grants and legacies, with a particular focus around year-end cut off; and
∙In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgments made in accounting estimates are
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SMITHCORP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SMITHCORP LIMITED (CONTINUED)
indicative of potential bias; and evaluating the business rationale of significant transactions that are unusual or outside the normal course of business.
We also communicated identified laws and regulations and potential fraud risks to all members of the engagement team and remained alert to possible indicators of fraud or non-compliance with laws and regulations throughout the audit.
As a result of the inherent limitations of an audit, there is a risk that not all irregularities, including a material misstatement in financial statements or non-compliance with regulation, will be detected by us. The risk increases the further removed compliance with a law and regulation is from the events and transactions reflected in the financial statements, given we will be less likely to be aware of it, or should the irregularity occur as a result of fraud rather than a one-off error, as this may involve intentional concealment, forgery, collusion, omission or misrepresentation.
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 Auditors' report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
Chy Nyverow
Newham Road
Cornwall
TR1 2DP
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SMITHCORP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
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SMITHCORP LIMITED
REGISTERED NUMBER:07805942
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 36 form part of these financial statements.
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SMITHCORP LIMITED
REGISTERED NUMBER:07805942
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 36 form part of these financial statements.
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SMITHCORP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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SMITHCORP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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SMITHCORP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
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SMITHCORP LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2021
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The financial statements use British Pounds Sterling as the presentation currency, and are rounded to the nearest £1 throughout.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of Group and its own subsidiaries ("the Group") as they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The Group has more than doubled turnover in the first half of 2022 (£13.8m), when compared to the first half of 2021 (£6.6m). This shows a strong return to ‘business as usual’ after the COVID-19 related disruptions of the previous two years. We expect labour demand in the Education Sector and hence demand for our services to remain strong throughout 2022 and into 2023.
Wider economic conditions across the UK and indeed the world will present challenges and risks for all businesses. The directors have considered these risks and expect the Group will continue to operate within its available resources whilst it plans for growth.
The Group will able to tolerate these expected pressures for a period of at least 12 months from the date of these financial statements, which have been prepared on a going concern basis.
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.ACCOUNTING POLICIES (continued)
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.ACCOUNTING POLICIES (continued)
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Income statement over its useful economic life. Amortisation is provided on the following basis: Goodwill - 5 % on cost
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.ACCOUNTING POLICIES (continued)
The Group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight line and reducing balance methods..
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.ACCOUNTING POLICIES (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of financial position.
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
SmithCorp Limited is a private company limited by shares registered in England and Wales in the United Kingdom, registered number 07805942. The registered office is Bristol North Baths, Gloucester Road, Bishopston, Bristol, BS7 8BN.
Goodwill and intangible assets Positive goodwill acquired on each business combination is capitalised, classified as an asset on the statement of financial position and amortised on a straight line basis over its useful life. The company establishes a reliable estimate of the useful life of goodwill and intangible assets arising on business combinations. This estimate is based on a variety of factors such as the expected use of the acquired business, the expected useful life of the cash generating units to which the asset is attributed, any legal, regulatory or contractual provisions that can limit useful life and assumptions that market participants would consider in respect of similar businesses. Tangible fixed assets and depreciation Tangible fixed assets are capitalised, classified as assets on the statement of financial position and depreciated over their useful lives in accordance with the policies above. The company establishes a reliable estimate of the useful life of tangible fixed assets based on a variety of factors such as the expected use of the acquired assets, and the expected date that replacement will be required.
The whole of the turnover is attributable to the Group's recruitment services activities.
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
There were no factors that may affect future tax charges.
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements. The loss after tax of the parent company for the year was £
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Page 27
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Page 28
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
SUBSIDIARY UNDERTAKINGS (CONTINUED)
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Page 30
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Page 31
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Page 32
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Page 33
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
In May 2018, a payment of £162,347 from SmithCorp Investments Limited to jjFOX Limited was made following the sale of a property. However, this was incorrectly recognised within jjFOX Limited's financial statements, when it should have been recognised in SmithCorp Limited's financial statements.
The comparative figures for the Company have been amended to correctly reflect the adjustment. There is no adjustment to the Group comparative figures. The table below shows how the face of the Primary Statements for the Company have been impacted by the adjustment, which in turn has affected the respective subtotals and notes on those Statements for the Company.
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £64,148 (2020: £74,179). There were no outstanding or prepaid contributions at the balance sheet date.
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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