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Hazel Newco Limited
Registered number: 13526970
Annual report and
financial statements
For the period ended 31 March 2022
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HAZEL NEWCO LIMITED
COMPANY INFORMATION
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J Ludwig (appointed 6 August 2021)
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W Scales (appointed 2 November 2021)
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D Smith (appointed 6 August 2021)
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J Tan (appointed 23 July 2021)
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M Vitty (appointed 3 October 2022)
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L Wang (appointed 2 November 2021)
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St Crispin Way, Haslingden
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Chartered Accountants & Statutory Auditor
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HAZEL NEWCO LIMITED
CONTENTS
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Independent Auditors' Report
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Consolidated Statement of Comprehensive Income
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Consolidated Statement of Financial Position
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Company Statement of Financial Position
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Notes to the Financial Statements
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HAZEL NEWCO LIMITED
GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 31 MARCH 2022
The Directors present their Strategic Report for the year ended 31 March 2022 as follows:
Business review and future developments
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On the 10th of August 2021 the business acquired 100% of the share capital of Texecom Limited, from Halma PLC. Texecom Limited is a market leading intruder alarm system manufacturer with excellent growth prospects from market share increases, geographic expansion and a growing digital revenue stream.
In November 2021 Texecom Limited established a subsidiary legal entity Texecom India Private Limited, to enable us to further grow our foot print in the fast growing intruder market in India.
The company continues to invest in developing innovative products that delight our customers. In March 2022 we launched Texecom Monitor, a fully integrated primary alarm signalling service, further extending our range of digital solutions.
As a result of the economy rebounding in the UK & Europe post the Covid-19 pandemic we saw elevated levels of order intake. The recovery in order intake and our ability to ship the products was tempered by the impact of the electronic supply chain shortages and ongoing Covid-19 lockdowns in China. This had a knock on impact with increasing stock levels and increasing inflationary pressures to source material.
The Group’s sales were £26,695,187 in the 8 month period, with a loss before tax £5,498,034.
The Directors do not propose the payment of a Dividend.
Principal risks and uncertainties
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In determining whether the Group's accounts can be prepared on a going concern basis, the directors considered the Group’s business activities together with the factors likely to affect its future development, performance, its financial position including cash flows, liquidity position, borrowing facilities and the risks and uncertainties in relation to its business activities. The directors regularly review these factors to ensure that any risks are recognised and managed effectively. The principal risks affecting the business are as follows.
Foreign exchange
A proportion of the Group's sales outside of the UK are made in Euros and US Dollars and therefore the Group is exposed to the movement in the Euro and US Dollar to Pound Sterling exchange rates. The Group takes out forward exchange contracts to manage this risk.
Changes in technology
Changes in technology and standards compliance pose a risk to the Group. The risk is managed through training of key personnel who frequently review new technologies and participate in the setting of standards.
Competitive pressure
Competitive pressure in all the Group's markets is a continuing risk for the Group, which could result in it losing sales to its key competitors. The Group manages this risk by providing added value services to its customers, having fast response times not only in supplying products but in handling customer queries, and by maintaining strong relationships with customers.
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HAZEL NEWCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2022
Interest rates
The Group holds a loan facility and is therefore exposed to movements in the interest rate affecting the balance.
Financial key performance indicators
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The Company's directors believe that further financial key performance indicators for the Group other than those disclosed in the business review are not necessary or appropriate for an understanding of the development, performance or position of the business.
Impact of the Ukraine crisis
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On 24 February 2022 Russian Forces invaded Ukraine, resulting in Western Nation reactions including announcements of sanctions against Russia and Russian interests worldwide and an economic ripple effect on the global economy. The Directors have carried out an assessment of the potential impact of Russian Forces entering Ukraine on the business, including the impact of mitigation measures and uncertainties, and have concluded that the greatest impact on the business is expected to be from the economic ripple effect on the global economy. The Directors have taken account of these potential impacts in their going concern assessment.
Directors' statement of compliance with duty to promote the success of the Group
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The Companies (Miscellaneous Reporting) Regulations 2018 require that Directors explain how they have had regard to the matters set out in section 172(1) (a) to (f) (S.172(1 )) of the Companies Act 2006 when performing their duty to promote the success of the Company. Throughout the year, while discharging their S.172(1) duty, the Directors have acted in a way that they considered, in good faith, would be most likely to promote the success of the Group for the benefit of shareholders, and in doing so had regard, amongst other matters, to:
a) the likely consequences of any decision in the long term;
b) the interests of the Group’s employees;
c) the need to foster the Group's business relationships with suppliers, customers and others;
d) the impact of the Group’s operations on the community and the environment;
e) the desirability of the Group maintaining a reputation for high standards of business conduct; and
f) the need to act fairly as between members of the Group.
The Directors also considered the interests of a wider set of stakeholders including its subsidiary undertakings, acquisition prospects and business partners.
The section below sets out the Group's stakeholders, the key issues the Directors considered relevant, and the engagement methods of Directors and responses during the year.
Our people
Hazel Newco Limited has always relied on it’s loyal, dedicated and skilled workforce as a key part of our success. We continue to invest in our workforce, ensuring their safety and regular engagement with them is a key part of our management philosophy.
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HAZEL NEWCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2022
Customers
Our customers play an essential role in ensuring the sustainability of the Group. By delivering our products and services to the end market where they serve to protect and improve the quality of life, they play a pivotal role in the fulfilment of our purpose.
Suppliers
Developing strong relationships with our suppliers is key to the operational success of our business and ensures that we have agility to develop new and market competitive solutions to meet our customers' needs.
Society & Community
The Directors are aware of the Group’s responsibilities to the communities in which it operates and take this very seriously. In the communities we support local employment, apprenticeship schemes and charities. We also seek to operate safely and ethically while monitoring our environmental impact.
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the abilities of the applicant concerned. In the event any member of staff became disabled, every effort would be made to ensure that their employment with the Group continued, and the appropriate training would be arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
This report was approved by the board on 16 December 2022 and signed on its behalf.
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HAZEL NEWCO LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 MARCH 2022
The Directors present their report and the financial statements for the period ended 31 March 2022.
Directors' responsibilities statement
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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 loss for the period, after taxation, amounted to £5,473,582.
Dividends paid for the period ended 31 March 2022 were £nil.
The Directors who served during the period were:
J Ludwig (appointed 6 August 2021)
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W Scales (appointed 2 November 2021)
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D Smith (appointed 6 August 2021)
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J Tan (appointed 23 July 2021)
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L Wang (appointed 2 November 2021)
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M Vitty was appointed as a director on 3 October 2022.
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HAZEL NEWCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2022
The financial statements have been prepared on a going concern basis. In adopting the going concern basis the directors have considered the Group and Parent Company’s business activities, together with the main trends and factors likely to affect it’s future development, performance and position, and the financial position of the Group and Parent Company as at 31 March 2022 and at the approval date of these financial statements, it’s cash flows, liquidity position and borrowing facilities.
The directors have prepared forecasts up to 31 March 2024 and these forecasts show that the Group is expected to remain in a positive EBITDA position, strong cash projections and even in a severe but plausible downside scenario the Group is still able to meet its debts as they fall due. The Group's £5,473,5782 loss after tax as at 31 March 2022 is driven by high levels of interest and amortisation. The directors have a high level of confidence that despite the current economic uncertainty the Group and Parent Company has access to the necessary liquid resources to meet its liabilities as they fall due and will be able to sustain its business model, strategy and the operations and remain solvent for the foreseeable future even in the event of the severe but plausible downside scenario. Thus, the directors believe there is no material uncertainty in the use of the going concern assumption.
Greenhouse gas emissions, energy consumption and energy efficiency action
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The Group's greenhouse gas emissions and energy consumption for the period are:
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Aggregate of energy consumption in the period
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Emissions of CO2 equivalent
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Scope 1 - direct emissions
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Scope 2 - indirect emissions
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Tonnes of CO2e per employee
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Quantification and reporting methodology
The Group has followed the 2019 HM Government environmental reporting guidelines. We have also used the GHG reporting protocol – Corporate Standard and have used the 2021 UK Government's conversion factors for company reporting.
Intensity ratio measurement
The Directors consider CO2e per employee to be most appropriate for intensity ratio measurement.
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HAZEL NEWCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2022
Energy efficiency actions
The Group actively looks for ways to reduce it’s carbon emissions. In February 2022 we signed up to a green energy tariff which supplies 50% of our electricity from renewable energy. In addition to this we have invested in new energy efficient injection moulding machines and central feed system at our Delph site.
We are looking to make further investments at our Haslingden site to improve our energy efficiency and reduce WEEE waste at the site over the next few years.
Disclosure of information to auditors
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Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the Director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
∙the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.
Post balance sheet events
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There have been no significant events affecting the Group since the year end.
Mazars LLP were appointed as auditor during the period. Mazars LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 16 December 2022 and signed on its behalf.
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HAZEL NEWCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HAZEL NEWCO LIMITED
Opinion
We have audited the financial statements of Hazel Newco Limited (the 'Parent Company’) and its subsidiaries (the 'Group') for the period ended 31 March 2022 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
∙give a true and fair view of the state of the Group's and Parent Company’s affairs as at 31 March 2022 and of the Group's loss for the period then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; 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 Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Parent 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
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 and 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.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s 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.
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HAZEL NEWCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HAZEL NEWCO LIMITED
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.
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 Group Strategic Report and the Directors' Report for the financial period 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.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and 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.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the Parent Company financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
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HAZEL NEWCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HAZEL NEWCO LIMITED
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors intend either to liquidate the Group and the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor's 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 an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
Based on our understanding of the Group and the Company and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation, anti-money laundering regulation.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the Group and the Parent Company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the Group and the Parent Company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation, pension legislation, the Companies Act 2006.
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HAZEL NEWCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HAZEL NEWCO LIMITED
In addition, we evaluated the directors' and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of override of controls, and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, revenue recognition (which we pinpointed to the the cut-off assertion) and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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 auditor’s report.
Use of the audit report
This report is made solely to the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body for our audit work, for this report, or for the opinions we have formed.
Christopher Martin (Senior statutory auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
One St. Peter's Square
Manchester
M2 3DE
16 December 2022
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HAZEL NEWCO LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 MARCH 2022
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Interest payable and similar expenses
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Loss for the financial period
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There were no recognised gains and losses for 2022 other than those included in the consolidated statement of comprehensive income.
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There was no other comprehensive income for 2022.
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The notes on pages 18 to 42 form part of these financial statements.
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HAZEL NEWCO LIMITED
REGISTERED NUMBER: 13526970
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 16 December 2022.
The notes on pages 18 to 42 form part of these financial statements.
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HAZEL NEWCO LIMITED
REGISTERED NUMBER: 13526970
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Profit and loss account carried forward
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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 £4,078,161.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 16 December 2022.
The notes on pages 18 to 42 form part of these financial statements.
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HAZEL NEWCO LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2022
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Comprehensive income for the period
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Total comprehensive income for the period
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Shares issued during the period
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Transfer to/from profit and loss account
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Total transactions with owners
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The notes on pages 18 to 42 form part of these financial statements.
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HAZEL NEWCO LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2022
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Comprehensive income for the period
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Total comprehensive income for the period
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Contributions by and distributions to owners
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Shares issued during the period
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Total transactions with owners
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The notes on pages 18 to 42 form part of these financial statements.
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HAZEL NEWCO LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 MARCH 2022
Cash flows from operating activities
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(Loss)/profit for the financial period
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Amortisation of intangible assets
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Depreciation of tangible assets
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(Decrease)/increase in provisions
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Corporation tax (paid)/received
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Sale of intangible assets
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Purchase of tangible fixed assets
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Sale of tangible fixed assets
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Acquisition of subsidiary
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Net cash from investing activities
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HAZEL NEWCO LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2022
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Cash flows from financing activities
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Net cash used in financing activities
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Net increase in cash and cash equivalents
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Cash and cash equivalents at the end of period
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Cash and cash equivalents at the end of period comprise:
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
Hazel Newco Limited ("the Company") is a private company limited by shares, registered number 13526970, incorporated in England and Whales. The register office is Bradwood Court, St Crispin Way, Haslingden, Rossendale, Lancashire, United Kingdom, BB4 4PW.
The principal activity of the Group is the supply of security systems.
2.Accounting policies
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Basis of preparation of financial statements
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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 following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form 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.
- 18 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
2.Accounting policies (continued)
The financial statements have been prepared on a going concern basis. In adopting the going concern basis the directors have considered the Group and Parent Company’s business activities, together with the main trends and factors likely to affect it’s future development, performance and position, and the financial position of the Group and Parent Company as at 31 March 2022 and at the approval date of these financial statements, it’s cash flows, liquidity position and borrowing facilities.
The directors have prepared forecasts up to 31 March 2024 and these forecasts show that the Group is expected to remain in a positive EBITDA position, strong cash projections and even in a severe but plausible downside scenario the Group is still able to meet its debts as they fall due. The Group's £5,473,5782 loss after tax as at 31 March 2022 is driven by high levels of interest and amortisation. The directors have a high level of confidence that despite the current economic uncertainty the Group and Parent Company has access to the necessary liquid resources to meet its liabilities as they fall due and will be able to sustain its business model, strategy and the operations and remain solvent for the foreseeable future even in the event of the severe but plausible downside scenario. Thus, the directors believe there is no material uncertainty in the use of the going concern assumption.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using exchange rates uploaded on the Company system on a weekly basis.
At each period end foreign currency monetary items are translated using the closing rate. Nonmonetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the
translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
- 19 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
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Operating leases: the Group as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
- 20 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
2.Accounting policies (continued)
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives. Capitalised development costs are considered to have a finite useful life of three years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.
- 21 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
- 22 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
2.Accounting policies (continued)
Goodwill
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 Consolidated Statement of Comprehensive Income over its useful economic life.
Other intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Development expenditure assets are considered to have a finite useful life of three years. These have been included and amortised within intangible assets.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
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.
- 23 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
2.Accounting policies (continued)
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Tangible fixed assets (continued)
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Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Short-term leasehold property
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over the life of the lease
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8% - 33% on straight line basis
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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.
Investments in subsidiaries are measured at cost less accumulated impairment.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
- 24 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
2.Accounting policies (continued)
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
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.
The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Statement of Comprehensive Income.
- 25 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In the application of the Group's accounting policies, which are described in note 2, management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical accounting judgments
The critical accounting judgments that the directors have made in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the statutory financial statements are discussed below.
(i) Assessing indicators of impairment
In assessing whether there have been any indicators of impairment of assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no indicators of impairments identified during the current financial year.
(ii) Impairment of goodwill and other intangibles
At each reporting date, the Group reviews the carrying amounts of its intangible assets (other than goodwill) 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).
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Determining residual values and useful economic lives of tangible and intangible assets
The Group depreciates tangible and intangible assets over their estimated useful lives. The estimation of the useful lives of tangible and intangible assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance and programmes.
Judgement is also applied, when determining the residual values of fixed assets. When determining the residual value, the directors have assessed the amount that the Group would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful life. Where possible this is done with reference to external market prices.
- 26 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
Analysis of turnover by country of destination:
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The operating loss is stated after charging:
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Research & development charged as an expense
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Other operating lease rentals
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- 27 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements
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Fees payable to the Group's auditor:
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Taxation compliance services
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Staff costs, including Directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the Directors, during the period was as follows:
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Sales, distribution, admin and other
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The Company has no employees other than the Directors.
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- 28 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Group contributions to defined contribution pension schemes
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During the period retirement benefits were accruing to 2 Directors in respect of defined contribution pension schemes.
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The highest paid Director received remuneration of £500,204.
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The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid Director amounted to £12,318.
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Interest payable and similar expenses
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Other loan interest payable
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- 29 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Adjustments in respect of prior periods
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Taxation on loss on ordinary activities
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- 30 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
11.Taxation (continued)
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Factors affecting tax charge for the period
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The tax assessed for the period is higher than the standard rate of corporation tax in the UK of 19%. The differences are explained below:
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Loss profit on ordinary activities before tax
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Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19%
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Expenses not deductible for tax purposes
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Income not taxable for tax purposes
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Remeasurement of deferred tax for changes in tax rates
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Adjustments to tax charge in respect of prior periods
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Adjustments to tax charge in respect of prior periods - deferred tax
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Other differences leading to an increase (decrease) in the tax charge
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Total tax charge for the period
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Factors that may affect future tax charges
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The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom will increase from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
- 31 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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On acquisition of subsidiaries
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On acquisition of subsidiaries
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- 32 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Short-term leasehold property
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Assets under construction
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On acquisition of subsidiaries
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Charge for the period on owned assets
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On acquisition of subsidiaries
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- 33 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Investments in subsidiary companies
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On 10 August 2021, Hazel Newco Limited acquired 100% of Texecom Limited.
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Direct subsidiary undertaking
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The following was a direct subsidiary undertaking of the Company:
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Bradwood Court, St Crispin Way Haslingden, Rossendale, Lancashire, BB4 4PW
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Indirect subsidiary undertaking
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The following was an indirect subsidiary undertaking of the Company:
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Texecom Suraksha India Private Limited
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C/o Expeditors Pvt Lt, 2/1, Unit No 3, Thirumalashetty Halli, Annugondanahalli Hobli, Hoskote Taluk, Bengaluru Rural, Karnataka, 560 067, India
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- 34 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Raw materials and consumables
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Finished goods and goods for resale
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The difference between purchase price or production cost of stocks and their replacement cost is not material.
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Prepayments and accrued income
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Cash and cash equivalents
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- 35 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Amounts owed to group undertakings are interest free and repayable on demand.
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Creditors: Amounts falling due after more than one year
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- 36 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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An analysis of the maturity of loans is given below:
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Amounts falling due 2-5 years
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Amounts falling due after more than 5 years
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The loans are secured by way of a fixed and floating charge over the present and future property, assets and undertakings of the Group. Included in the loans balance is a balance of £33,000,000 that has interest charged at 6.5% plus Sonia and is repayable 7 years from the anniversary date. Also, included is a balance of £37,179,130 with interest charged at 10% per annum which is repayable on sale of the business.
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- 37 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Charged to profit or loss
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Arising on business combinations
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Accelerated capital allowances
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Short term timing differences
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Arising on business combinations
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Dilapidations
The dilapidations provision is held to recognise the future cost of returning rented premises in a suitable
condition at the end of their lease term. The expenditure related to these obligations is expected to be
incurred at dates falling between 2022 and 2030.
Warranty
The warranty provision relates to expected returns of goods sold and is expected to be utilised within one
year. The warranty provision movement represents the net movement in new provisions and utilised provisions during the year.
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- 38 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
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Allotted, called up and fully paid
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700,220 A1 shares of £0.001 each
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85,393 A2 shares of £0.001 each
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14,387 B shares of £0.010 each
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200,000 C shares of £0.010 each
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On 6 August 2021, 2,929 shares were issued at a premium for a total consideration of £294,876.
Ordinary shares A1, A2, B and C have the right to one vote per show of hands and one vote for each ordinary share a held. Members are entitled to a return of capital in proportion to shareholding. Ordinary shares A1, A2, B and C are not redemable.
Share premium account
This represents the excess consideration received on the par value of shares issued.
Profit and loss account
The profit and loss account is comprised of cumulative retained profits and losses and equity distributions.
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Acquisition of subsidiaries
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- 39 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
On 10 August 2021, Hazel Newco Limited acquired 100% of Texecom Limited.
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Acquisition of Texecom Limited
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Recognised amounts of identifiable assets acquired and liabilities assumed
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Total Identifiable net assets
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Total purchase consideration
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Directly attributable costs
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Total purchase consideration
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|
- 40 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
26.Business combinations (continued)
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Cash outflow on acquisition
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Purchase consideration settled in cash, as above
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Directly attributable costs
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Less: Cash and cash equivalents acquired
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Net cash outflow on acquisition
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The results of Texecom Limited since acquisition are as follows:
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Current period since acquisition
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Loss for the period since acquisition
|
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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 £436,610. Contributions totalling £66,824 were payable to the fund at the reporting date and are included in creditors.
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Commitments under operating leases
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At 31 March 2022 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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- 41 -
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HAZEL NEWCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2022
|
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Related party transactions
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The Group has taken advantage of the exemption available under Financial Reporting Standard 102 section 33 relating to the disclosure of related party transactions between wholly owned group companies.
At the reporting date, the Group owed £Nil to the shareholders and Directors of the Company.
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Post balance sheet events
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There have been no significant events affecting the Group since the year end.
At the year end the ultimate parent company was LDC GP LLP, a company registered in England and Wales. The controlling party of LDC GP LLP is considered to be Ldc (General Partner) Limited.
- 42 -
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