P2_TopCo_Limited - Accounts

The directors present their strategic report together with the audited financial statements for the year ended 31 December 2021. The comparative figures cover the period from 1 January 2020 to 31 December 2020.

Principal activity

The principal activity of the group in the year under review was that of programme management and IT consultancy services. The principal activity of the company is that of a holding company.

2021 saw the business continue its recovery from the impacts of the COVID-19 pandemic with growth across the year. Deepening relationships with existing clients as well as winning several new clients saw revenue grow by 44% over the previous year. The Directors consider turnover of £23.6m (2020 - £16.5m), gross margin of 34% (2020 - 32%) and EBITDA of £3.7m (2020 - £1.8m) to be a good performance for the Group for 2021.

During December 2021, 100% of the shares of P2 TopCo were sold to Valcon, a pan-European consultancy headquartered in the Netherlands. The combined business expands the range of services the Group is able to offer its clients.

Financial risk

The Group is exposed to a number of financial risks.

Liquidity Risk - Management monitor the cash requirements of the Group on a daily basis. Liquidity is forecast on a rolling basis and the Directors are confident that the Group will meet all its obligations for at least the next 12 months.

Credit Risk - The Group's client base is overwhelmingly blue chip, the majority of which are FTSE listed. Internal procedures require that empowered client representatives issue written approval prior to any commitment of Group resources to a client assignment. The Group suffered no bad debts during 2021.

Foreign Exchange Risk - The Group has very limited exposure to transaction foreign exchange risk as a result of some of its trade being in currencies other than sterling. This exposure is closely monitored and hedging is considered if required.

Business risk

In addition to the financial risks facing the group, there are other risks arising from the operations.

Economic Risk - The Group has historically demonstrated resilience to general economic downturns and the wider economic impact of the COVID-19 pandemic. Whilst a UK recession will always give potential to impact negatively on the Group, opportunities would normally be expected to arise as a result of clients needing to change their processes and systems in response to an downturn.

Regulatory Risk - The group does not have a specific ongoing requirement to report into a sector regulator, but where there are regulatory requirements with which the Group needs to comply (e.g. GDPR), internal procedures are designed, and outside expertise procured, to ensure the Group is wholly compliant.

Reputational Risk - For a services business, such as that run by the Group, reputational risk is all important. All employees are trained on effective consultancy techniques and professional standards have been designed to ensure consistent engagement with clients and potential clients such that there is a full understanding of what the Group can and cannot do prior to business being agreed. This goes some way to ensuring the Group's reputation is fully protected and that the business is not misrepresented at any point during the sales process.

This is supplemented by an extensive customer satisfaction programme where clients are regularly consulted as to the ongoing performance of the team.

Going Concern Risk – On 30th June 2022, the company’s business was moved in its entirety to Valcon Group UK Ltd. At this point, the company's trade started to wind down as legacy client contracts were run down in the company before being transferred to Valcon Group UK Limited.

At the end of the year the Group had net liabilities of £12.1m (2020 - £8.7m) and generated a comprehensive loss of £3.4m (2020 - £4.6m). £4.7m of this loss related to goodwill amortisation (2020 - £4.7m).

Other risks

The Directors have been following events relating to the Russian invasion of Ukraine closely and have continuously assessed any potential impact on the business.

At the time of writing, there has been no discernible impact on the Company's trade or outlook at a result of the invasion apart from increased inflation across the economy as a whole. The business is experiencing some pressure on margins, but these pressures are being mitigated by implementing efficiencies where possible and applying sub-inflationary rate increases onto clients. The Directors hope for a swift resolution to the crisis but do not anticipate any direct impact on the business in future.

Management use a number of key performance indicators to analyse the performance of the business.

Gross profit margin - The group achieved a gross profit margin of 34% (2020 - 32%) for the period under review, which is in line with Management's expectations. The improvement from 2020 levels is due to the Group reducing its reliance on the Associate market which, although providing a flexible cost model, generally results in lower margins.

Earnings before interest, tax, depreciation and amortisation - The Group achieved an EBITDA return of 16% (2020 - 11%) for the period under review which was achieved by increasing revenues and grow margin percentage without a corresponding increase on overheads.

Overall, the Directors are satisfied with the Group's performance.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2021.

The principal activity of the group in the year under review was that of programme management and IT consultancy services. The principal activity of the company is that of a holding company.

A business review, its principal risks and uncertainties and its financial key performance indicators are set out in the strategic report on pages 1 to 2 of these financial statements.

The loss for the year after taxation amounted to £3,387,906 (2020 - £4,572,332).

The directors do not recommend the payment of a final dividend (2020 - £Nil).

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

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

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 group and company, 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 and then apply them consistently;

•     make judgements 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 ;

•     prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

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

The financial statements have been prepared on a going concern basis. The directors have considered the impact of the current economic climate on the P2 Group and the Company’s financial performance, operations and cash flows for the next 12 months.

Trading operations of the P2 Group have been moved to its parent company (Valcon). Going forward, Valcon has committed to support the P2 Group in satisfying obligations as they fall due.

As at 31 December 2021, Valcon had cash reserves of £0.8m (2020 - £0.7m).

Based on the current forecast, Valcon has capability to satisfy the P2 Group’s obligations for a period of no less than 12 months from approval of the financial statements. For the sole purpose of demonstrating the financial strength of the Valcon Group, a sensitivity analysis has been conducted, including significant reductions to earnings forecast over the next 12 months. The results show that the Valcon Group can maintain sufficient profitability.

Based on this assessment, the directors have a reasonable expectation that the P2 Group and the Company has adequate resources to continue to be in existence for the foreseeable future and, consequently, continue to adopt the going concern basis of accounting in preparing the annual financial statements.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

We have audited the financial statements of P2 Topco Limited (“the Parent Company”) and its subsidiaries (“the Group”) for the year ended 31 December 2021 which comprise the Group profit and loss account, Group statement of Comprehensive, Group balance sheet, Group statement of changes in equity, Group statement of cashflows, Company balance sheet, Company statement of changes in equity and Company statement of cashflows 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 Financial Reporting Standard 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 of the Parent Company’s affairs as at 31 December 2021 and of the Group’s loss for the year then ended;

•     the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     the financial statements 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

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.

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 or 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 Directors are responsible for the other information. The other information comprises the information included in the Directors' report and Strategic report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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.

Other Companies Act 2006 reporting

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

• the information given in the 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 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 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; or

• the Directors were not entitled to take advantage of the small companies’ exemptions in preparing the Directors’ report.

As explained more fully in the Statement of Directors Responsibilities, 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’s and the 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 either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

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.

Extent to which the audit was capable of detecting irregularities, including fraud

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:

The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.

Our approach was as follows:

• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant frameworks, which are directly relevant to specific assertions in the financial statements, are those that relate to the reporting framework, FRS 102 and the Companies Act 2006.

• We considered provisions of other laws and regulations that do not have direct effect on the financial statements but compliance with which may be fundamental to the Company's ability to operate. This included testing compliance with the regulations around Health & Safety, Bribery Act 2010, GDPR, Modern Slavery Act, Gender Pay Gap and Money Laundering Act.

• We understood how the Company is complying with those frameworks by making enquiries of management. We corroborated our enquiries through our review of board minutes. There were no material legal matters detected through our audit procedures.

• Our audit planning identified fraud risks in relation to management override of controls and improper revenue recognition around the year-end. We considered the processes and controls that the Company has established to address risks identified, or that otherwise prevent, deter and detect fraud and how management monitors those processes and controls.

• We designed our audit procedures to detect irregularities, including fraud. Our audit approach was focused on testing accounting estimates and we have checked appropriately if there was any management bias involved in the different accounting estimates. Our procedures included journal entry testing, with a focus on large (greater than performance materiality) and unusual transactions based on the knowledge of the business. This also included testing, any journal entries posted with unusual account combinations, which were revenue journals with double entry posted directly to unexpected financial statement account; and testing of cash journals posted directly to income statement. We have performed a review of legal and regulatory cost which were incurred during the year, with a focus on potential breaches arising on the different Laws and Regulations.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £0 (2020 - £0 profit).

P2 TopCo Limited (“the company”) is a private limited company incorporated in England and Wales. The registered office is 70 Gracechurch Street, London, England, EC3V 0HR.

The group consists of P2 TopCo Limited and all of its subsidiaries.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company's result for the year was £Nil (2020: £Nil).

The consolidated group financial statements consist of the financial statements of the parent company P2 TopCo Limited together with all entities controlled by the parent company (its subsidiaries).

All financial statements are made up to 31 December 2021. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

The financial statements have been prepared on a going concern basis. The directors have considered the impact of the current economic climate on the P2 Group and the Company’s financial performance, operations and cash flows for the next 12 months.

Trading operations of the P2 Group have been moved to its parent company (Valcon). Going forward, Valcon has committed to support the P2 Group in satisfying obligations as they fall due.

As at 31 December 2021, Valcon had cash reserves of £0.8m (2020 - £0.7m).

Based on the current forecast, Valcon has capability to satisfy the P2 Group’s obligations for a period of no less than 12 months from approval of the financial statements. For the sole purpose of demonstrating the financial strength of the Valcon Group, a sensitivity analysis has been conducted, including significant reductions to earnings forecast over the next 12 months. The results show that the Valcon Group can maintain sufficient profitability.

Based on this assessment, the directors have a reasonable expectation that the P2 Group and the Company has adequate resources to continue to be in existence for the foreseeable future and, consequently, continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Turnover comprises revenue recognised by the company in respect of management consultancy services provided during the period, exclusive of value added tax and trade discounts.

Income is charged either on a time plus expenses basis or an a pre agreed fixed monthly basis. Therefore at the end of each month, income is recognise on the basis that the company has a right to consideration.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

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

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

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

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.

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.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset’s carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset’s carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the balance sheet date.

Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an enforceable right to set off recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

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

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

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

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

The average monthly number of persons (including directors) employed by the group and company during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2020 - 3).

The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

Details of the company's subsidiaries at 31 December 2021 are as follows:

The registered office of P2 Bidco Limited, Certeco HoldCo Limited, Certeco Limited, P2CG Limited and FS101 Limited is 70 Gracechurch Street, London, England, EC3V 0HR.

The registered office of P2CG US LLC is 315 E 70th ST APT 8J New York, NY, 10021, US.

The loans were repaid during the year.

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

Rights and obligations

• A and B shares have no rights to vote, but have an economic right to 10% IRR on exit proceeds.

• C shares have no rights to vote or dividends.

• Ordinary 1, Ordinary 2, Ordinary 3, Ordinary 4 and Ordinary 5 shares rank equally for economic rights as regards capital.

• Ordinary 1, Ordinary 2, Ordinary 3, Ordinary 4 and Ordinary 5 shares rank equally for dividend rights.

• Ordinary 1, Ordinary 3, and Ordinary 5 shares have one vote per share.

• Ordinary 2 and ordinary 4 shares have three votes per share.

• Ordinary 6 shares have no rights to vote or dividends.

During the year, 100 Ordinary C shares of £0.01 each and 3,824 Ordinary 5 shares of £0.01 each were allotted for a consideration of £1 per share.

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

On 30th June 2022, the company’s business was moved in its entirety to Valcon Group UK Ltd. At this point, the company’s trade started to wind down as legacy client contracts were run down in the company before being transferred to Valcon Group UK Ltd.

The immediate parent company is Valcon Holding B.V, a company incorporated in The Netherlands..

The ultimate parent company is Valcon Topholding B.V, a company incorporated in The Netherlands.

The smallest and largest group is in which the company is consolidated is Valcon Topholding B.V, whose registered office is Parijsboulevard 143A, Utrecht, 3541CS. Copies of Valcon Topholding B.V's accounts are available from KVK, De Ruijterkade 5, 1013 AA Amsterdam.