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02998939
CREDENCE BACKGROUND SCREENING LIMITED
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
31 DECEMBER 2022
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CREDENCE BACKGROUND SCREENING LIMITED
REGISTERED NUMBER:02998939
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BALANCE SHEET
AS AT 31 DECEMBER 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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CREDENCE BACKGROUND SCREENING LIMITED
REGISTERED NUMBER:02998939
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BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2022
The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 4 to 13 form part of these financial statements.
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CREDENCE BACKGROUND SCREENING LIMITED
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STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2022
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At 1 July 2020 (Unaudited)
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Dividends: Equity capital
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At 1 July 2021 (Unaudited)
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Unpaid share capital now fully paid
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Unpaid share capital now fully paid
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Dividends: Equity capital
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Shares issued during the period
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The notes on pages 4 to 13 form part of these financial statements.
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
Credence Background Screening Limited ('the Company') is a private company limited by shares and domiciled and incorporated in England and Wales.
The address of the Company's registered office and place of business is 160 London Road, Sevenoaks, Kent, TN13 1BT.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
Monetary amounts in these fionancial statements are stated in pounds sterling and are rounded to the nearest whole £1, except where otherwise indicated.
The following principal accounting policies have been applied:
The Company has made a loss after tax of £488,806 (2021: profit of £868,396). The net assets of the Company are £1,986,729 (2021: £2,361,664).
The financial statements have been prepared on a going concern basis. The directors have considered relevant information, including the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment. The Company has invested heavily in its staff during the period since the acquisition by its parent company, Certn Inc which has been a driving factor for both growth of business activities but also the loss made for the period ended 31 December 2022. The parent company has confirmed its support to the Company for at least 12 months from the date of approving these financial statements.
Based on these assessments and having regard to the resources available to the entity, the directors have concluded that there is no material uncertainty in relation to going concern and that the going concern basis of accounting is appropriate for these financial statements.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Revenue recognition occurs at the point when individual services under a contract are completed, with revenue accrued when an individual service has been completed but not yet invoiced.
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, as follows.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Short-term debtors are measured at transaction price, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.
Short-term creditors are measured at the transaction price.
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting. Dividends on shares recognised as liabilities are recognsied as expenses and classified within interest payable.
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Company keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.
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Current and deferred taxation
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The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Statement of Comprehensive Income over its useful economic life of 10 years.
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In the application of the Company's accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on 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. Significant items subject to such assumptions and estimates include:
The measurement and recognition of accrued income in accordance to the stage of completion of a contract. Accrued income at the period end is £318,152 (2021 - £285,272). The company has control and review processes in place to monitor and evaluate the estimates being made to ensure that they are consistent and accurate.
The useful economic life of goodwill where a useful economic life of 10 years has been assessed. This is based upon the extent to which benefit realised from the purchase of a business. The carrying value of goodwill at the period end is £299,987 (2021 - £379,395).
The provision for bad debts where the carrying value of bad debts at the period end is £67,257 (2021 - £30,692). The company has processes in place to review any significant debts more than three months old that have not already been provided for.
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The average monthly number of employees, including directors, during the period was 127 (2021 - 77).
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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At 1 July 2021 (Unaudited)
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At 1 July 2021 (Unaudited)
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Charge for the period on owned assets
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At 30 June 2021 (Unaudited)
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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At 1 July 2021 (Unaudited)
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At 1 July 2021 (Unaudited)
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Charge for the period on owned assets
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At 30 June 2021 (Unaudited)
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Amounts owed by group undertakings
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Prepayments and accrued income
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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At beginning of year (Unaudited)
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Charged to profit or loss
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The deferred taxation balance is made up as follows:
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Fixed asset temporary differences
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Short term temporary differences
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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At 1 July 2021 (Unaudited)
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Charged to profit or loss
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The Company is a wholly owned subsidiary of Certn Holdings Inc. which is established and registered in Canada.
The results of the group are included in the consolidated financial statements of Certn Holdings Inc. Copies of the financial statements for Certn Holdings Inc. are available on request from the parent company's office at 1006 Fort St Unit 300, Victoria, BC V8V 3K4, Canada.
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CREDENCE BACKGROUND SCREENING LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
The auditors' report on the financial statements for the period ended 31 December 2022 was a disclaimer of opinion, as detailed below.
Disclaimer of opinion
We were engaged to audit the financial statements of Credence Background Screening Limited (the 'Company') for the period ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We do not express an opinion on the accompanying financial statements of the Company. Because of the significance of the matter described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient, appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Basis for disclaimer of opinion
We have been unable to obtain sufficient appropriate audit evidence from management over the following matters:
Trade debtors, trade creditors and write-offs to profit and loss
We identified that trade debtors included an unknown balance of £464,570, which has subsequently been written off as an expense in the profit and loss account. We also identified that trade creditors included an unknown balance of £733,692, which has subsequently been written back as a negative expense in the profit and loss account. The profit and loss account therefore includes a net negative expense of £269,122 in relation to these write-offs.
As of the date of our report, management have been unable to determine what the unknown trade debtor and trade creditor balances were. Consequently, we are unable to confirm or verify the underlying nature or purpose of these unknown balances which were in trade debtors and trade creditors. By extension, we are unable to determine whether the adjustments to trade debtors, trade creditors and the profit and loss account are reasonable.
Tangible fixed assets
The registers have not been maintained, and so we are unable to conclude whether they are complete or accurate. The fixed asset registers do not agree to the cost, depreciation and net book value balances in the financial statements.
Trade debtors
In addition to the matters noted above, we found that the trade debtor balance was materially overstated by £201,263, compared with the balance shown on the period-end aged debtors report.
The audit report was signed on 20 December 2023 by Matthew Neill BA (Hons) MA FCA (Senior Statutory Auditor) on behalf of CLA Evelyn Partners Limited.
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