Company No: SC528327 (Scotland)

Contents

• Balance Sheet
• Notes to the Financial Statements

	Note	2022		2021
		£		£
				Restated - note 3
Fixed assets
Investments	6	34,569		34,569
		34,569		34,569
Current assets
Debtors	7	15,892,281		13,922,156
Cash at bank and in hand		36,488		553,833
		15,928,769		14,475,989
Creditors: amounts falling due within one year	8	( 520,473)		( 673,680)
Net current assets		15,408,296		13,802,309
Total assets less current liabilities		15,442,865		13,836,878
Creditors: amounts falling due after more than one year	9	( 7,998,233)		( 6,557,628)
Net assets		7,444,632		7,279,250
Capital and reserves
Called-up share capital	10	412		396
Share premium account		7,010,326		6,510,148
Other reserves		1,854,093		1,353,898
Profit and loss account		( 1,420,199 )		( 585,192 )
Total shareholders' funds		7,444,632		7,279,250

For the financial year ending 31 December 2022 the Company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

Directors' responsibilities:

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

The financial statements of Spex Group Holdings Limited (registered number: SC528327) were approved and authorised for issue by the Director on 25 August 2023. They were signed on its behalf by:

Mr R K Strachan Director

1. Accounting policies

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

General information and basis of accounting

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

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

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

Going concern

At the time of approving the financial statements, the directors have reviewed trading and cashflow forecasts for the next 12 months through to 31 August 2024 and are satisfied that the company will have sufficient financial resources to continue in operational existence for the foreseeable future.

The directors have also considered the ongoing litigation (see note 12) and regardless of the final outcome of the case, do not believe a material outflow of cash is likely within twelve months of the date of signing these financial statements.

Subsequent to the year end, a majority of the shareholders have entered into several equity fund raises totalling £600k which has provided further cashflow for the group (see note 14).

In addition, the majority of the company's shareholders have provided an indication of their intention to provide further funding, subject to the position of the group at that time, should this be required, and the directors are satisfied with the intention and ability of the shareholders to provide this funding if required. Furthermore payment of loan notes of £4.3m plus accrued interest of £1.6m due on 31 December 2023 has been deferred such that it will not be repayable within the next 12 months.

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

Prior year error

The prior year restatement relates to an over accrual of long term interest. As a result, the interest charge for 2021, together with accruals has been restated by £107,972 accordingly.

Foreign currency

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

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

Turnover

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

Employee benefits

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

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

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

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

Taxation

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

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

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

Tangible fixed assets

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

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

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

Leases

The Company as lessee
Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term.

Impairment of assets

Assets, other than those measured at fair value, are assessed for indicators of impairment at each Balance Sheet date. If there is objective evidence of impairment, an impairment loss is recognised in the Profit and Loss Account as described below.

Non-financial assets
At each balance sheet date, the company reviews 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). The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

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. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Fixed asset investments

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

A subsidiary is an entity controlled by the company.

Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include deposits held at call with banks with original maturities of three months or less.

Financial instruments

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

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

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

Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are measured at transaction price including transaction costs.

Financial assets are derecognised when and only when the contractual rights to the cash flows from the financial asset expire or are settled, or the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or the Company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party.

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.

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.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

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

2. Critical accounting judgements and key sources of estimation uncertainty

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

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

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

Contingent Liability:
The directors have made a critical judgement regarding a contingent liability, please see note 12.

3. Prior year adjustment

The prior year restatement relates to an over accrual of long term interest. As a result, the interest charge for 2021, together with accruals has been restated by £107,972 accordingly.

		As previously reported		Adjustment		As restated
Year ended 31 December 2021		£		£		£
Accruals due after one year		2,300,212		(107,972)		2,192,240
Other Interest payable		794,132		(107,972)		686,160

4. Employees

	2022		2021
	Number		Number
Monthly average number of persons employed by the Company during the year, including directors	12		14

5. Tangible assets

	Leasehold improve- ments		Plant and machinery		Vehicles		Total
	£		£		£		£
Cost
At 01 January 2022	31,317		373		7,450		39,140
At 31 December 2022	31,317		373		7,450		39,140
Accumulated depreciation
At 01 January 2022	31,317		373		7,450		39,140
At 31 December 2022	31,317		373		7,450		39,140
Net book value
At 31 December 2022	0		0		0		0
At 31 December 2021	0		0		0		0

6. Fixed asset investments

Investments in subsidiaries

	2022
	£
Cost
At 01 January 2022	34,569
At 31 December 2022	34,569
Carrying value at 31 December 2022	34,569
Carrying value at 31 December 2021	34,569

7. Debtors

	2022		2021
	£		£
Trade debtors	15,681		0
Amounts owed by Group undertakings	15,570,994		13,546,199
Corporation tax	37,176		37,176
Other debtors	268,430		338,781
	15,892,281		13,922,156

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

8. Creditors: amounts falling due within one year

	2022		2021
	£		£
Bank loans	10,219		0
Trade creditors	118,198		351,032
Amounts owed to Group undertakings	119,466		35,541
Taxation and social security	102,872		23,142
Other creditors	169,718		263,965
	520,473		673,680

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

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

	2022		2021
	£		£
Bank loans	29,786		50,000
Other creditors	7,968,447		6,507,628
	7,998,233		6,557,628

The long term loans are unsecured.

During the financial year, the company agreed revised repayment and interest terms with its loan note holders. Loan notes previously due for repayment in December 2023 have been deferred and will not be repayable within the next 12 months. The interest attaching to these loans is 12%.

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

10. Called-up share capital

	2022		2021
	£		£
Allotted, called-up and fully-paid
11,288 'B' ordinary shares of £ 0.01 each (2021: 9,716 shares of £ 0.01 each)	112.88		97.16
7,365 'A' ordinary shares of £ 0.01 each	73.65		73.65
16,160 Ordinary shares of £ 0.01 each	161.60		161.60
6,284 'A1' ordinary shares of £ 0.01 each	62.84		62.84
	410.97		395.25

1,572 B Ordinary shares of 1p each were issued during the year for a consideration of £500k. Share premium of £500k was recognised accordingly.

Share options of 1,572 were granted over the A Ordinary shares during the year and other equity of £500k was recognised accordingly. These are exit only options and the consideration has been paid up front.

142 Ordinary shares have been issued as NIL paid shares. The remainder of the share capital is fully paid.
Enhanced voting shares are attached to the A Ordinary shares, whereby the voting rights are increased to 51% of the voting rights attached to all the shares in the capital of the company, upon notice of an Enhanced Voting Event.

11. Financial commitments

Commitments

	2022		2021
	£		£
Total future minimum lease payments under non-cancellable operating lease	69,919		24,833

Other financial commitments

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

12. Contingencies

Contingent liabilities

The company has been named in litigation regarding an alleged breach of a licence agreement by former group companies. The litigation started in the US legal system and is now in the Scottish legal system.

Whilst it is too early in proceedings to conclude on the likely outcome, a formal Adjudication of claims has been made by the Liquidators of the former group companies which assessed the claim against those former group companies by a third party at nil whilst upholding a claim submitted by the Company. Whilst the Adjudication is subject to appeal, it accords with the company's ongoing refuting of the allegations. On this basis, the company has not made a provision in the accounts for any liability that could arise if it was unsuccessful in the overall litigation, as it does not believe it has any liability.

13. Related party transactions

Loans were advanced to shareholders in a prior period. The balance due from these shareholders in relation to unpaid share capital as at 31 December 2022 was £67,219 (2021 - £67,219).

As at 31 December 2022, there is a balance of £89,073 due from a director (2021 - £89,073). The amounts due are interest free with no fixed repayment terms.

As at 31 December 2022, there is a balance £92,537 due to a director (2021 - £7,462 due from a director). The amounts due are interest free with no fixed repayment terms.

The loan note instrument of £4.3m plus accrued interest of £1.6m due on 31 December 2023 has been deferred. The total balance due to this shareholder at 31 December 2022 was £6,286,999 (2021 - £6,205,499).

14. Events after the Balance Sheet date

Subsequent to the year end, as part of their ongoing support of the business and the wider group, the shareholders provided equity funding of £600k (2021 - £1 million) through the subscription of new shares.

15. Share premium account

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

16. Ultimate controlling party

No one individual controls the Company.