ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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FOR THE YEAR ENDED 31 DECEMBER 2020
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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 2020
The directors present their strategic report for the year ended 31 December 2019.
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.
We have an extensive network of high quality candidates and a strong work ethic. We operate to stringent standards in a highly regulated environment. Our methods are robust and transparent. We continue to evolve and lead best practice processes within our industry. This approach instils confidence in both clients and candidates and simplifies what would otherwise be a highly administrative process for them. The results for the group show a pre-tax profit of £55,437 (2018 - £2,080,203) for the year and sales of £15,929,060 (2018 - £26,464,687). The arrival of Covid 19 made 2020 a very difficult trading year for many businesses and SmithCorp was no exception. In our normal financial cycle, Q4 (the start of the academic year) is when we significantly build our contractor base, Q1 and Q2 consolidate on that position and deliver the majority our profits, whilst Q3 (the end of the academic year) is the quietest as schools and colleges close for the summer break. Permanent recruitment takes place all year round. In 2020 our usual financial cycle was broken. Q1 began promisingly and we were tracking to outperform 2019. However, the outlook changed rapidly. School and college closures during the first national lockdown reduced our revenues to a trickle, this at the very time we would usually make most of our profits. The national reopening in Q3 coincided with the summer break so did not really help us. And whilst Q4, was an improvement on the following six months, social distancing and ongoing localised Covid 19 outbreaks made for very subdued labour market nationally. Against this backdrop, a like for like comparison with the previous years’ trading isn’t particularly insightful. 2020’s profits were all made during Q1 (pre-Covid 19). For the rest of the year we, reduced overheads, made use of the government furlough scheme (CJRS) and managed the business and our cashflow carefully to ensure we would be in good shape to build back after the pandemic. The group made use of the Coronavirus Business Interruption Loan Scheme (CBILS) in 2020 but otherwise has few long-term borrowings, and in the main is financed by retained earnings with its contract book being financed by invoice discounting arrangements.
Management of the business and execution of the group's strategy are always subject to some risks. In Q1 probably the most significant of these was competition from other niche, and some multi-sector recruiters. From Q2 onwards all significant risks stemmed from Covid 19.
The pandemic has been a major disruptor. As well as dramatically subduing the labour market and hence directly impacting our revenues, the national lockdowns and social distancing have fundamentally changed home/office working patterns and wider attitudes to work. Prolonged time out of the business for some furloughed employees has led them to change career direction and leave the industry altogether.
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SMITHCORP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Given the straightforward nature of the business, the group’s directors believe analysis using KPIs is not necessary for an understanding of the development, performance or position of the business.
BUSINESS DEVELOPMENT
We remain committed to delivering a high quality, high speed service to both our candidates and clients. This has been a cornerstone of our approach since 2004 and will not change. We ceased operating field based Client Relationship Managers in 2020 and instead now offer online marketing and client feedback capabilities. CHARITY SmithCorp Limited, its employees and its suppliers continue to support the SmithCorp Charitable Trust. Due to Covid 19 restrictions SCCT couldn’t run its normal annual charity ball fundraiser in 2020. This event would normally raise money for an overseas aid trip, but with neither the ball or the trip able to proceed, we decided instead to join in with BBC’s ‘Big Night In’, which fortuitously was running the same evening. From the safety of our own homes on the night, we were proud to be able to raise and donate £45,832 from our employees to support a variety of worthy charities and great causes at this difficult time.
FUTURE OUTLOOK
We expect challenges to remain in the UK economy throughout 2021. Q1 2021 began with a second national lockdown and whilst the schools and colleges were better prepared and hence less disrupted the second time, our contractor base and revenues were still significantly lower than we would historically expect at this time of year. A successful UK vaccination programme has significantly improved new business levels in Q2 2021 but we don’t expect to see sustained new growth until Q4 and even this is not a certainty. New coronavirus variants will continue to emerge, and hence future planning will remain challenging throughout 2021 and beyond. Despite this we are confident our core markets are intact and a strong bounce back should occur once social distancing can be fully relaxed. The pandemic has presented many challenges, but as we move back to normality it will also present new opportunities. Additional tutors and remedial classes will undoubtedly be required to get the student population back up to speed after such a prolonged period of disruption. In the longer term, Secondary school pupil numbers are still projected to increase for the next five years. Whilst within Further Education the new T-Level qualifications continues its roll out, all requiring additional staffing. We are an established player within the Education Recruitment sector. We have retained significant expertise, have a strong identity and a culture of rewarding success. We are well placed to work through the short-term uncertainties to grow and capture greater market share as we emerge from the pandemic.
This report was approved by the board on 29 September 2021 and signed on its behalf.
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SMITHCORP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their report and the financial statements for the year ended 31 December 2020.
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 year, after taxation, amounted to £10,816 (2019: profit £1,601,110).
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 2020
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 2020, 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; and • 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; and • Any matters identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to: o Identifying, evaluation and complying with laws and regulations and whether they were aware of any instances of non-compliance; o Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; o 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
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SMITHCORP LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SMITHCORP LIMITED (CONTINUED)
• 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 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 2020
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SMITHCORP LIMITED
REGISTERED NUMBER:07805942
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 33 form part of these financial statements.
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SMITHCORP LIMITED
REGISTERED NUMBER:07805942
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 33 form part of these financial statements.
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SMITHCORP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
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SMITHCORP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
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SMITHCORP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
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SMITHCORP LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2020
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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.
Subsequent to the balance sheet date, in March 2020, the UK has been significantly impacted by the
Covid-19 pandemic. The impact on many businesses and sectors across the UK, Europe and the globe have been unprecedented, and at the date of these financial statements, the outcome of the outbreak still remains uncertain. The directors anticipate that the Group will continue to operate within its available resources, and be able to tolerate a reasonable level of unforeseen circumstance for a period of at least 12 months from the date of these financial statements. The financial statements have therefore been prepared on a going concern basis.
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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 2020
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 2020
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 2020
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 Statement of financial position 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 2020
SmithCorp Limited is a private company limited by shares registered in England and Wales, 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 2020
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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 2020
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 profit 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 2020
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 26
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 27
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 28
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 29
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 30
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Page 31
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SMITHCORP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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 £74,179 (2019 - £82,842). 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 2020
Page 33
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