Company No: SC528327 (Scotland)

Contents

• Balance Sheet
• Notes to the Financial Statements

	Note	2021		2020
		£		£
Fixed assets
Tangible assets	4	0		1,863
Investments	5	34,569		34,569
		34,569		36,432
Current assets
Debtors	6	13,922,156		11,408,476
Cash at bank and in hand		553,833		290,467
		14,475,989		11,698,943
Creditors
Amounts falling due within one year	7	( 673,681)		( 424,533)
Net current assets		13,802,308		11,274,410
Total assets less current liabilities		13,836,877		11,310,842
Creditors
Amounts falling due after more than one year	8	( 6,665,600)		( 5,286,383)
Net assets		7,171,277		6,024,459
Capital and reserves
Called-up share capital	9	396		365
Share premium account		6,510,148		5,533,653
Other reserves		1,353,898		403,465
Profit and loss account		( 693,165 )		86,976
Total shareholders' funds		7,171,277		6,024,459

For the financial year ending 31 December 2021 the Company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

Directors' responsibilities:

• The members have not required the Company to obtain an audit of its financial statements for the financial year in accordance with section 476;
• The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements; and
• These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime and a copy of the Profit and Loss Account has not been delivered.

The financial statements of Spex Group Holdings Limited (registered number: SC528327) were approved and authorised for issue by the Director on 30 September 2022. They were signed on its behalf by:

Mr R K Strachan Director

1. Accounting policies

The principal accounting policies are summarised below. They have all been applied consistently throughout the financial year and to the preceding financial year, unless otherwise stated.

General information and basis of accounting

Spex Group Holdings Limited (the Company) is a private company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006 and is registered in Scotland. The address of the Company's registered office is Blackwood House, Union Grove Lane, Aberdeen, AB10 6XU, United Kingdom. The trading address is Ground Floor, Unit 2 Dunnottar House, Howe Moss Drive, Kirkhill Industrial Estate, Aberdeen, AB21 0FN.

The financial statements have been prepared under the historical cost convention, and in accordance with Section 1A of Financial Reporting Standard 102 (FRS 102) ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ issued by the Financial Reporting Council and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.

The financial statements are presented in pounds sterling which is the functional currency of the company and rounded to the nearest £.

Going concern

At the time of approving the financial statements, the directors have reviewed trading and cashflow forecasts for the next 12 months through to 30 September 2023 and are satisfied that the company will have sufficient financial resources to continue in operational existence for the foreseeable future.

In making this assessment, the directors have taken into account the impact of the COVID-19 pandemic on projects proceeding over the last two years, as well as the uncertainty of the value and timing of certain project cash flows. The directors have also taking into account the willingness of the parent company and the wider group to provide continued financial support to the business.

The directors have also considered the ongoing litigation (see note 11), regardless of the final outcome of the case, do not believe a material outflow of cash is likely within twelve months of the date of signing these financial statements.

Subsequent to the year end, the shareholders have entered into several equity fund raises totalling £1m which has provided further cashflow for the group.

In addition, the shareholders have provided an indication of their intention to provide further funding, subject to the position of the group at that time, should this be required, and the directors are satisfied with the intention and ability of the shareholders to provide this funding if required.

On this basis, the directors consider it appropriate to prepare the financial statements on a going concern basis and do not consider that a material uncertainty exists.

Foreign currency

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Balance Sheet date are reported at the rates of exchange prevailing at that date.

Exchange differences are recognised in the Profit and Loss Account in the period in which they arise except for exchange differences arising on gains or losses on non-monetary items which are recognised in the Statement of Comprehensive Income.

Turnover

Turnover is recognised as services are provided at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes.

Employee benefits

Short term benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Defined contribution schemes
The Company operates a defined contribution scheme. The amount charged to the Profit and Loss Account in respect of pension costs and other post-retirement benefits is the contributions payable in the financial year.

Taxation

Current tax
Current tax is provided at amounts expected to be paid (or recoverable) using the tax rates and laws that have been enacted or substantively enacted at the Balance Sheet date.

Deferred tax
Deferred tax arises as a result of including items of income and expenditure in taxation computations in periods different from those in which they are included in the Company's financial statements. Deferred tax is provided in full on timing differences which result in an obligation to pay more or less tax at a future date, at the average tax rates that are expected to apply when the timing differences reverse, based on current tax rates and laws. Deferred tax assets and liabilities are not discounted.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible fixed assets

Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Depreciation is provided on all tangible fixed assets, other than investment property and freehold land, at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight-line or reducing balance basis over its expected useful life, as follows:

Leasehold improvements	4 years straight line
Plant and machinery	4 years straight line
Vehicles	4 years straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Impairment of assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Fixed asset investments

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company.

Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in creditors: amounts falling due within one year.

Financial instruments

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

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Financial assets and liabilities are only offset in the Balance Sheet when, and only when there exists a legally enforceable right to set off the recognised amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Basic financial assets
Basic financial assets, which include debtors, amounts due from group companies and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and amounts from fellow group companies that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments
Equity instruments issued by the Company are recorded at the fair value of cash or other resources received or receivable, net of direct issue costs. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company.

Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. Government grants are recognised in accordance with the accruals model. The income from the Job Retention Scheme is recognised in accordance with the accruals model. The income from the Job Retention Scheme is recognised as other operating income in the profit and loss account in the period to which the grant relates.

2. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company’s accounting policies, the directors are required to make judgements that have a significant impact on the amounts recognised. The following are the critical judgements that the directors have made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

The going concern assumption is a judgement exercised by the directors (see note 1).

Recoverability of group receivables: The company makes an assessment of the recoverable value of the amounts due from fellow group undertakings. When assessing the recoverability of these amounts owed, management considers factors such as the expected future trading performance of the group.

Contingent Liability: The Directors have made a critical judgement regarding a contingent liability, please see note 11.

3. Employees

	2021		2020
	Number		Number
Monthly average number of persons employed by the Company during the year, including directors	14		17

4. Tangible assets

	Leasehold improve- ments		Plant and machinery		Vehicles		Total
	£		£		£		£
Cost
At 01 January 2021	31,317		373		7,450		39,140
At 31 December 2021	31,317		373		7,450		39,140
Accumulated depreciation
At 01 January 2021	31,317		373		5,587		37,277
Charge for the financial year	0		0		1,863		1,863
At 31 December 2021	31,317		373		7,450		39,140
Net book value
At 31 December 2021	0		0		0		0
At 31 December 2020	0		0		1,863		1,863

5. Fixed asset investments

Investments in subsidiaries

	2021
	£
Cost
At 01 January 2021	34,569
At 31 December 2021	34,569
Carrying value at 31 December 2021	34,569
Carrying value at 31 December 2020	34,569

6. Debtors

	2021		2020
	£		£
Amounts owed by Group undertakings	13,546,199		10,982,604
Corporation tax	37,176		37,176
Other debtors	338,781		388,696
	13,922,156		11,408,476

Amounts owed by group undertakings are interest free and repayable on demand. Repayments are not expected within 12 months.

7. Creditors: amounts falling due within one year

	2021		2020
	£		£
Bank overdrafts	1,880		2,461
Trade creditors	351,032		133,859
Amounts owed to Group undertakings	35,541		5,439
Other creditors	262,093		252,442
Other taxation and social security	23,135		30,332
	673,681		424,533

Amounts owed to group undertakings are interest free and repayable on demand.

8. Creditors: amounts falling due after more than one year

	2021		2020
	£		£
Bank loans	50,000		50,000
Other creditors	6,615,600		5,236,383
	6,665,600		5,286,383

The long term loans are unsecured.

During the financial year, the company agreed revised repayment and interest terms with its loan note holders. Loan notes previously due for repayment in June 2022 have been deferred until 31 December 2023 and the interest attaching to these loans reduced from 14% to 12%.

Bank loan is repayable over 72 months with the first twelve months of interest paid by the government. The bank loan has an interest rate of 2.5% per annum.

9. Called-up share capital

	2021		2020
	£		£
Allotted, called-up and fully-paid
16,160 Ordinary shares of £ 0.01 each	161.60		161.60
7,365 'A' ordinary shares of £ 0.01 each	73.65		73.65
9,716 'B' ordinary shares of £ 0.01 each (2020: 6,647 shares of £ 0.01 each)	97.16		66.47
6,284 'A1' ordinary shares of £ 0.01 each	62.84		62.84
	395.25		364.56

3,069 B Ordinary shares of 1p each were issued during the year.
Share options of 2,987 have been granted over the A Ordinary shares during the year, totalling 4,255 share options. These are exit only options and the consideration has been paid up front.
Share premium of £976,494 and other equity of £950,434 (relating to the share options) was recognised accordingly.
142 Ordinary shares have been issued as NIL paid shares. The remainder of the share capital is fully paid.

Enhanced voting shares are attached to the A Ordinary shares, whereby the voting rights are increased to 51% of the voting rights attached to all the shares in the capital of the company, upon notice of an Enhanced Voting Event.

10. Financial commitments

Commitments

The bank hold a bond and floating charge over the whole assets of the company.

11. Contingencies

Contingent liabilities

The company and certain other group companies have been named in litigation regarding an alleged breach of a licence agreement by former group companies. The litigation started in the US legal system and is now in the Scottish legal system. At this stage it is too early in proceedings to conclude on the likely outcome either in terms of the likelihood of success in refuting the claims and if unsuccessful in so doing what the financial impact would be on the company and group. No provision has been made in the accounts for any liability that could arise if they were unsuccessful as they do not believe they have any liability and are continuing to refute the allegations.

12. Related party transactions

Loans were advanced to shareholders in a prior period. The balance due from these shareholders as at 31 December 2021 was £39,741 (2020 - £39,741). The amounts due are interest free with no fixed repayment terms.

A loan of £89,073 was advanced to a director in a prior period. The balance due from this director at 31 December 2021 was £89,073 (2020 - £89,073). The amounts due are interest free with no fixed repayment terms.

A loan was advanced to a director and shareholder in a prior period. The balance due from this director and shareholder at 31 December 2021 was £3,620 (2020 - £3,620). The amounts due are interest free with no fixed repayment terms.

The company also issued loan notes of £3,333,333 to a shareholder, in 2014. During the year as per of the corporate reorganisation, the loan notes along with unpaid interest due, were part converted into equity, with the remainder transferred into a new loan instrument, due 30 June 2022, with a revised interest rate of 12%. This new loan note instrument is now due 31 December 2023. The total balance due to this shareholder at 31 December 2021 was £6,205,499 (2020 - £5,236,384).

13. Events after the Balance Sheet date

Subsequent to the year end, as part of their ongoing support of the business and the wider group, the shareholders provided equity funding of £1 million through subscription of new shares.

14. Share premium account

The share premium account represents premiums received on issue of share capital.

15. Ultimate controlling party

No one individual controls the Company.