The Recruitment Shed Limited - Limited company accounts 22.3

REGISTERED NUMBER: 07508893 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2022

FOR

THE RECRUITMENT SHED LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Statement of Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

Directors:

Mr T E Cropper

Mr R W Cropper

Mr P O'Reilly

Mr D Archer

Registered office:

1 Smithy Court

Wigan

Lancashire

WN3 6PS

Registered number:

07508893 (England and Wales)

Auditors:

Saffery Champness LLP

Chartered Accountants

Statutory Auditors

Trinity

16 John Dalton Street

Manchester

M2 6HY

The directors present their strategic report for the year ended 31 March 2022.

Review of business

The business is a member of a group of companies whose ultimate parent entity is Challenge Group Holdings Limited. The business provides temporary labour to the logistics industry and has experienced significant organic growth since being established in 2011.

The Directors are satisfied with the performance of the company during the period, particularly in the context of challenging macroeconomic conditions and significant legislative changes which impacted the sector heavily, in particular the introduction of reforms to the Off-Payroll Working (IR35) legislation in April 2021.

Although revenue increased by 16.0% to £26,476k, this was primarily driven by expansion of the company's industrial recruitment offering, which typically generates lower hourly margins than the group's core HGV driver offering. Consequently, gross profit margins for the period reduced to 5.1%.

In addition to the company's expansion of its industrial service line, its sales mix was further altered due to lower volumes within the driving space. This trend affected the UK driver recruitment market as a whole and resulted from the adverse impacts of the aforementioned changes to IR35.

For these reasons, the business' gross profit reduced to £1,346k whilst profit before tax showed a loss of £1,169k (2021: £685k). However, as with prior periods, the net profit before tax figure includes the cost of significant groupwide overheads which do not relate entirely to the company's activities (in particular costs associated with permanent group staff). Such costs have continued to support significant growth in the group's other business units though they are recognised by The Recruitment Shed as the group's primary employer.

The figures for the current and previous trading periods are as follows:

Year Ended

Year Ended

31 March 2022

31 March 2021

£'000

£'000

Revenue

26,476

22,246

Gross Profit

1,346

2,808

GP (%)

5.1%

12.6%

Net Profit / (loss) before tax

(1,169)

(685)

Principal risks and uncertainties

Performance in the sector is affected by general economic conditions. The Directors carry out regular assessments of competitor activity, customer behaviour and general market conditions to ensure they can identify and react to any risks and opportunities as they arise.

The company has exposures to two main areas of financial risk - liquidity risk and customer credit exposure.

Liquidity risk

The objective of the company in managing liquidity risk is to ensure that it can meet its financial obligations as and when they fall due. The company expects to meet its financial obligations through operating cash flows, including the use of invoice discounting facilities.

Customer credit exposure

The company offers credit terms to its customers which allows payment of the debt after the service is provided. The company is at risk to the extent that a customer may be unable to pay the debt on the specified due date but seek to minimise this risk by checking the credit worthiness of customers and by using invoice discounting services including, where feasible, credit insurance.

Future developments

Following the year-end, the Group undertook a corporate restructure to consolidate and streamline its operating activities, resulting in the merger of several of the Group's subsidiaries operating in the Recruitment space.

This included transferring the entire trade and assets of The Recruitment Shed Limited to another of the Group's subsidiaries, Challenge-TRG Recruitment Limited (formerly TRG Logistics Limited).

Following this transfer, it is anticipated that the now dormant company will be struck from the register in due course. Consequently, the accounts have been prepared on a basis other than going concern, as disclosed elsewhere in the financial statements.

Human resources and employment policy

The company's most important resource is its people and their knowledge and experience is crucial to meeting customer requirements. The retention of key staff is crucial.

The company is committed to achieving excellence in Health & Safety, welfare and protection of its employees.

On behalf of the board:

Mr T E Cropper - Director

22 March 2023

The directors present their report with the financial statements of the company for the year ended 31 March 2022.

Principal activity

The principal activity of the company in the year under review was that of temporary employment agency services.

Dividends

No dividends will be distributed for the year ended 31 March 2022.

The results for the period are set out on page 10.

Events since the end of the year

Information relating to events since the end of the year is given in the notes to the financial statements.

Directors

The directors shown below have held office during the whole of the period from 1 April 2021 to the date of this report.

Mr T E Cropper

Mr R W Cropper

Mr P O'Reilly

Mr D Archer

Disclosure in the strategic report

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the Directors' report. It has done so in respect of principal risks and uncertainties and future developments.

Statement of directors' responsibilities

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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), 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 of the profit or loss of the company 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;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement as to disclosure of information to auditors

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

Auditors

The auditors, Saffery Champness LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

On behalf of the board:

Mr T E Cropper - Director

22 March 2023

Opinion

We have audited the financial statements of The Recruitment Shed Limited (the 'company') for the year ended 31 March 2022 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity 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 company's affairs as at 31 March 2022 and of its loss for the year 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the 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.

Emphasis of matter :

Basis of financial statements prepared on a basis other than going concern

We draw attention to Note 2 to the financial statements which explains that the directors intend to dissolve the newly dormant entity and therefore do not consider it to be appropriate to adopt the going concern basis of accounting in preparing the financial statements. Accordingly, the financial statements have been prepared on a basis other than going concern. Our opinion is not modified in respect of this matter.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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.

In connection with our audit of the financial statements, 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 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 Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the 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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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 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 company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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.

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the company's financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and updating our understanding of the sector in which the company operates.

Laws and regulations of direct significance in the context of the company include The Companies Act 2006, and UK Tax legislation.

Audit response to risks identified:

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner's review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above 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 would become aware of it. Also, 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 or intentional misrepresentations, or through collusion.

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 Report of the Auditors.

Use of our 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 a Report of the Auditors 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.

Diane Petit-Laurent FCA (Senior Statutory Auditor)

For and on behalf of Saffery Champness LLP

Chartered Accountants

Statutory Auditors

Trinity

16 John Dalton Street

Manchester

M2 6HY

22 March 2023

TURNOVER

4

26,475,610

22,246,064

Cost of sales

25,129,920

19,437,760

GROSS PROFIT

1,345,690

2,808,304

Administrative expenses

4,647,639

3,517,453

(3,301,949

)

(709,149

)

Other operating income

5

2,253,978

95,086

OPERATING LOSS

7

(1,047,971

)

(614,063

)

Interest payable and similar expenses

8

120,564

102,288

LOSS BEFORE TAXATION

(1,168,535

)

(716,351

)

Tax on loss

9

(27,269

)

34,134

LOSS FOR THE FINANCIAL YEAR

(1,141,266

)

(750,485

)

FIXED ASSETS

Intangible assets

10

-

326,000

Tangible assets

11

153,165

147,229

Investments

12

1,001

1,001

154,166

474,230

CURRENT ASSETS

Debtors

13

19,444,988

12,323,554

Cash at bank and in hand

581,671

167,684

20,026,659

12,491,238

CREDITORS

Amounts falling due within one year

14

21,998,928

13,615,036

NET CURRENT LIABILITIES

(1,972,269

)

(1,123,798

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(1,818,103

)

(649,568

)

PROVISIONS FOR LIABILITIES

17

-

27,269

NET LIABILITIES

(1,818,103

)

(676,837

)

CAPITAL AND RESERVES

Called up share capital

18

100

100

Retained earnings

19

(1,818,203

)

(676,937

)

SHAREHOLDERS' FUNDS

(1,818,103

)

(676,837

)

The financial statements were approved by the Board of Directors and authorised for issue on 22 March 2023 and were signed on its behalf by:

Mr T E Cropper - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2020

100

73,548

73,648

Changes in equity

Total comprehensive loss

-

(750,485

)

(750,485

)

Balance at 31 March 2021

100

(676,937

)

(676,837

)

Changes in equity

Total comprehensive loss

-

(1,141,266

)

(1,141,266

)

Balance at 31 March 2022

100

(1,818,203

)

(1,818,103

)

1.	STATUTORY INFORMATION

The Recruitment Shed Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Going concern

Following the end of the financial period, the Directors initiated a corporate restructure which involved streamlining and simplifying the Group's operational structure.

This involved transferring all of the trade and assets of several of the Group's recruitment businesses, including The Recruitment Shed Limited, into a single recruitment business Challenge-TRG Recruitment Limited (formerly TRG Logistics Limited).

It is the Directors' intention to strike-off the newly dormant entities, including The Recruitment Shed Limited, in due course.

Consequently, the financial statements have been prepared on a basis other than a Going Concern.

Financial Reporting Standard 102 - reduced disclosure exemptions

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

Section 4

- 'Statement of Financial Position' : Reconciliation of the opening and closing number of shares;

Section 7

- ‘Statement of Cash Flows’ : Presentation of a statement of cash flow and related notes and disclosures;

Section 11

- 'Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ : Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income ;

Section 33

- ‘Related Party Disclosures’ : Compensation for key management personnel.

Preparation of consolidated financial statements

The financial statements contain information about The Recruitment Shed Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, Challenge Group Holdings Limited, 1 Smithy Court, Smithy Brook Road, Wigan WN3 6PS.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Sales for the provision of workers is recognised in the period that work was performed.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

An impairment loss has been recognised in the Statement of Comprehensive Income, following an assessment at the Balance Sheet date indicating the recoverable amount was less than its carrying value.

Computer software is being amortised evenly over its estimated useful life of ten years.

Tangible fixed assets

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:

Short leasehold

- Straight line over the life of the lease

Fixtures, fittings & equipment

- 20% reducing balance

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

Impairment of fixed assets

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

Government grants

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

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable . A grant received before the recognition criteria are satisfied is recognised as a liability

Invoice discounting

Amounts due in respect of invoice discounting are separately disclosed as creditors: amounts due within one year. The company can use these facilities to draw down on a percentage of the value of certain sales invoices. The management and collection of trade debtors remains with the company.

Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset , with the net amounts presented in the financial statements ,when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

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

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss , except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Amounts due in respect of invoice discounting are separately disclosed as creditors: amounts due within one year. The company can use these facilities to draw down on a percentage of the value of certain sales invoices. The management and collection of trade debtors remains with the company.

Financial assets, other than those held at fair value through profit and loss , are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

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

Basic financial liabilities

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

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

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value th rough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Fixed asset investments

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

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

Cash at bank and in hand

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Employee benefits

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

Retirement benefits

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

Leases

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 leases asset are consumed.

3.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The directors consider that significant judgements, estimates or assumptions in the financial statements are as follows :

Useful economic life of goodwill

This estimate is based on a variety of factors such as the expected use of the acquired business, the expected useful life of cash generating units to which the goodwill 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.

4.

TURNOVER

The turnover and loss before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

31.3.22

31.3.21

£

£

Provision of services

26,475,610

21,986,087

Rebate income

-

259,977

26,475,610

22,246,064

An analysis of turnover by geographical market is given below:

31.3.22

31.3.21

£

£

United Kingdom

26,475,610

22,246,064

26,475,610

22,246,064

5.	OTHER OPERATING INCOME

31.3.22

31.3.21

£

£

Management charges

2,243,014

-

Government grants

10,964

95,086

2,253,978

95,086

6.	EMPLOYEES AND DIRECTORS

31.3.22

31.3.21

£

£

Wages and salaries

7,999,393

1,980,988

Social security costs

789,285

174,673

Other pension costs

142,317

32,342

8,930,995

2,188,003

The average number of employees during the year was as follows:

31.3.22

31.3.21

Administration

58

47

Temporary workers for hire

160

4

218

51

31.3.22

31.3.21

£

£

Directors' remuneration

410,455

410,818

Directors' pension contributions to money purchase schemes

51,963

5,252

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

3

4

Information regarding the highest paid director is as follows:

31.3.22

31.3.21

£

£

Emoluments etc

141,000

118,876

Pension contributions to money purchase schemes

25,321

1,313

7.	OPERATING LOSS

The operating loss is stated after charging/(crediting):

31.3.22

31.3.21

£

£

Depreciation - owned assets

34,268

34,935

Goodwill amortisation

51,048

51,048

Computer software amortisation

-

27,757

Auditors remuneration : audit fees

38,725

5,200

Auditors remuneration : non-audit fees

45,430

1,920

Impairment of intangible assets

-

137,326

Operating lease charges

45,644

8,564

Government grants

(10,964

)

(95,086

)

8.

INTEREST PAYABLE AND SIMILAR EXPENSES

31.3.22

31.3.21

£

£

Invoice finance interest

payable

118,926

100,994

Interest on overdue taxation

1,638

1,294

120,564

102,288

9.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the loss for the year was as follows:

31.3.22

31.3.21

£

£

Current tax:

Corporation tax in respect of

prior years

-

38,058

Deferred tax

(27,269

)

(3,924

)

Tax on loss

(27,269

)

34,134

UK corporation tax has been charged at 19% .

Reconciliation of total tax (credit)/charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

31.3.22

31.3.21

£

£

Loss before tax

(1,168,535

)

(716,351

)

Loss multiplied by the standard rate of corporation tax in the UK of 19% (2021 - 19%)

(222,022

)

(136,107

)

Effects of:

Expenses not deductible for tax purposes

6,909

3,618

Depreciation in excess of capital allowances

10,688

7,746

Group relief

204,425

120,819

Under provision in prior year

-

38,058

Reverse deferred tax provision

(27,269

)

-

Total tax (credit)/charge

(27,269

)

34,134

Factors that may affect future tax charges

The Chancellor confirmed in the Autumn Statement on 17 November 2022 that the rate of corporation tax will increase from 19% to 25% from 1 April 2023, as originally planned in the 2021 Budget. From the same date a small companies' rate of 19% will be introduced for companies' with profits of £50,000 or less. The main rate applies to companies with profits over £250,000 and marginal relief will apply to for profits in between the thresholds.

10.	INTANGIBLE FIXED ASSETS

Computer

Goodwill

software

Totals

£

£

£

COST

At 1 April 2021

560,073

109,571

669,644

Reclassification/transfer

(560,073

)

-

(560,073

)

At 31 March 2022

-

109,571

109,571

AMORTISATION

At 1 April 2021

234,073

109,571

343,644

Amortisation for year

51,048

-

51,048

Reclassification/transfer

(285,121

)

-

(285,121

)

At 31 March 2022

-

109,571

109,571

NET BOOK VALUE

At 31 March 2022

-

-

-

At 31 March 2021

326,000

-

326,000

Goodwill has been reclassified as a current asset.

11.	TANGIBLE FIXED ASSETS

Fixtures,

Leasehold

fittings

improvements

& equipment

Totals

£

£

£

COST

At 1 April 2021

5,168

382,873

388,041

Additions

-

40,204

40,204

At 31 March 2022

5,168

423,077

428,245

DEPRECIATION

At 1 April 2021

4,631

236,181

240,812

Charge for year

108

34,160

34,268

At 31 March 2022

4,739

270,341

275,080

NET BOOK VALUE

At 31 March 2022

429

152,736

153,165

At 31 March 2021

537

146,692

147,229