REGISTERED NUMBER: 12195761 (England and Wales) |
GROUP STRATEGIC REPORT, |
REPORT OF THE DIRECTORS AND |
CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
FOR |
SMARTSOURCING GROUP LIMITED |
REGISTERED NUMBER: 12195761 (England and Wales) |
GROUP STRATEGIC REPORT, |
REPORT OF THE DIRECTORS AND |
CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
FOR |
SMARTSOURCING GROUP LIMITED |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
CONTENTS OF THE CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
Page |
Company Information | 1 |
Group Strategic Report | 2 |
Report of the Directors | 6 |
Report of the Independent Auditors | 7 |
Consolidated Income Statement | 10 |
Consolidated Other Comprehensive Income | 11 |
Consolidated Balance Sheet | 12 |
Company Balance Sheet | 13 |
Consolidated Statement of Changes in Equity | 14 |
Company Statement of Changes in Equity | 15 |
Consolidated Cash Flow Statement | 16 |
Notes to the Consolidated Cash Flow Statement | 17 |
Notes to the Consolidated Financial Statements | 18 |
SMARTSOURCING GROUP LIMITED |
COMPANY INFORMATION |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Statutory Auditors and Chartered Accountants |
Rutland House |
90-92 Baxter Avenue |
Southend on Sea |
Essex |
SS2 6HZ |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
GROUP STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
The directors present their strategic report for the year ended 31 December 2021. |
SmartSourcing Group Limited was incorporated as a holding company to enable the existing SmartSourcing management team to buy out the shareholders not actively involved in the business. The directors believe that this will enable the business to further motivate and retain its key personnel to build on the historic success. |
On 6 March 2020 the company acquired the entire share capital of SmartSourcing Limited in exchange for a consideration comprising ordinary shares to the remaining shareholders, and cash and redeemable preference shares to the outgoing shareholders. |
The redeemable preference shares comprise 2,839,898 non-voting shares of £1 each with a fixed 1% dividend coupon. They are capable of earlier redemptions at the Chairman's (A R Martin) discretion but no later than 6 March 2030. They also could not be redeemed until the company's loan facility with HSBC Plc had been paid in full. |
During the year ended 31 December 2021, the company fully repaid its bank loan with HSBC Plc. Furthermore, the company is now in a position to make in-roads into its preference share obligations. Substantial quarterly repayments of the preference shares commenced in 2022 with a view to early redemption. |
The group enjoys very strong relationships with its clients and service providers. It intends to continue to manage its affairs on a prudent basis and to preserve a strong asset base. |
REVIEW OF BUSINESS |
The company is a pure holding company that does not trade on its own account. It has a single trading subsidiary, SmartSourcing Limited, and hence these comments reflect the trading activities of SmartSourcing Limited. |
For accounting purposes, these accounts include consolidated accounts for the group. These reflect various accounting adjustments that are required by accounting standards that do not impact on the cash that is generated by the business. The directors are also mindful the comparative figures represent only 10 months of the trading subsidiary's activity, since it was acquired in March 2020. |
In summary, the group results for the year are as follows: |
Turnover | £29,965,792 |
Operating profit of the subsidiary | £1,257,350 |
Parent company costs | (£244,874 | ) |
Goodwill amortisation | (£284,661 | ) |
Consolidated profit before tax | £727,815 |
Our 2021 strategy to build on our success in services provision proved a profitable approach with the successful delivery of many lucrative Managed Service projects and work packages throughout the year evidencing our strong delivery capability in this market. |
In the Public Sector demand remained high too for contingent labour and our highly experienced National Recruitment Centre successfully met our clients' needs for the supply of experienced temporary labour. |
IR35 implementation across the Private Sector however led to a reduced demand for temporary staff with many existing private sector Contractors being removed or replaced with Permanent headcount. |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
GROUP STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
Following the impact of IR35 in the private sector April 2021, the year saw an upsurge in permanent opportunities leading to a management decision towards the second half of the year, to build an exclusive Permanent department who could focus on increasing our internal capability in this area to meet the increased demand. 2021 results reflect the subsidiary's most successful year to date in permanent billing and SmartSourcing remains focused on continuing to grow our capability to support the Permanent market. |
SmartSourcing continue to be successful on the major Public Sector Frameworks such as Gcloud, NCS and DOS. We are expanding that portfolio to include RM6263 Digital Specialists Framework (DSP) a new framework released in 2021 to be awarded 2022. |
2021 we put in place our Carbon Neutral Plan and ensure that our future obligations are met. |
SHARE CAPITAL AND SHAREHOLDERS' FUNDS |
As explained above, the management buyout was largely financed by issuing preference shares to the outgoing shareholders. Whilst the company anticipates that it will be in a position to redeem the preference shares over the next few years, it has limited obligations to do so. |
As can be seen from the balance sheet on page 12, Shareholders' funds are reported at a figure of £1,584,698, whilst the preference shares have to be included within creditors for accounting purposes. When the preference shares and resultant reserves are taken into account, the total funds available to the ordinary and preference shareholders aggregate to £4,329,186. |
PRINCIPAL RISKS AND UNCERTAINTIES |
The management of the business and the successful execution of the group's strategy are subject to a number of key risks: |
- IR35 remains a risk to the industry as legislation targets the fee payer in the event of an investigation; and |
- economic downturn. |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
GROUP STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
SECTION 172(1) STATEMENT |
SmartSourcing Group Limited: Stakeholder engagement |
As the board of directors at SmartSourcing Group Ltd we have a legal responsibility under section 172 of the Companies Act 2006 to act in the way we consider in good faith to promote the group's success for the benefit of its members as a whole and to have regard to the long-term effect of our decisions on the group and its stakeholders. This statement addresses the ways in which we as a board support this responsibility. |
Promoting the company's success for its members |
The trading subsidiary SmartSourcing Ltd, founded in 2002, set up as a dynamic and innovative recruitment agency specialising in the provision of freelance contractors, independent consultants, fixed term and permanent resource across ICT, digital, project and programme management and functional business disciplines. |
Our industry knowledge and inhouse IT capability enabled our investment in our own bespoke technology which has greatly contributed to our success. In 2022 we are building a new look recruitment system using the latest technologies for greater functionality and to futureproof our inhouse capability, remaining leading edge. |
SmartSourcing operate in both the public and private sector supporting our clients all over the UK from our Midlands based national recruitment centre. We are proud to support the Social Value Act providing employment in an area of high unemployment. |
In 2021 we have established our Carbon Neutral plan which is now visible on our website. |
The directors run the business with considerable professionalism, honesty and integrity and our staff are all highly experienced and supportive of our service lead approach. It is notable that unlike others in our market we experience an exceptionally low rate of attrition. |
The board at SmartSourcing continue to make decisions based on long term objectives and our enviable reputation in the market shows that we have become a trusted supplier synonymous with professionalism, honesty and integrity. |
ENGAGEMENT WITH EMPLOYEES |
SmartSourcing benefit from a highly skilled recruitment and business development team with significant years of working in our industry. We also have our own inhouse IT capability which enables us to further develop our own recruitment system as needs evolve. Our highly skilled accounts team are highly commended for our fast and efficient payment services to all our contractors. Recruitment and retention of staff is therefore a critical business activity. We help to engage with team members by: |
- good levels of remuneration, job security, and rewarding performance with bonuses at all levels; |
- providing training and career development support; |
- issuing EMI options to all existing staff members; and |
- ensuring that staff from each department are present and involved in all management meetings and are consulted for significant decisions. |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
GROUP STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS |
Our customers and suppliers |
We pride ourselves on our exceptional knowledge of the market, our delivery capability and our focus on the highest levels of customer service. The SmartSourcing team build strong supportive relationships with our contractors, consultants and clients and much of our business has evolved from recommendations. We aim to be different, more service lead in our approach and our reputation in the market for our excellent customer service, honesty and integrity shows that this is recognised. |
Our community |
SmartSourcing are proud to be an SME who takes care of our staff offering job security, a supportive environment, a rewarding career and remuneration package. We are committed to the Social Value Act offering employment in an area of high unemployment and as a company taking part in supporting both local and national charities such as donations to the local hospice, crisis supporting the homeless, dementia, MS and many more. |
Our planet |
Smartsourcing have been awarded ISO 14001 and are proud to consider the environment in all that we do. Our aim is to store our records electronically and to only print if essential. Our paper is recycled and our waste is securely shredded and disposed of by suppliers who also carry the environmental accreditation. Meetings wherever possible are carried out through video conferencing in order to lower our carbon footprint. Our future strategy to embrace a hybrid remote-office working approach will also significantly lower our carbon footprint. |
RESEARCH AND DEVELOPMENT |
SmartSourcing continues to invest in our bespoke, E-resourcing technologies and systems to increase our capabilities and market edge and underpin accreditation to ISO 9001 (Quality), ISO 14001 (Environmental) and ISO 27001 (Information Security Management). |
ON BEHALF OF THE BOARD: |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
The directors present their report with the financial statements of the company and the group for the year ended 31 December 2021. |
DIVIDENDS |
No dividends will be distributed for the year ended 31 December 2021. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Group 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). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information. |
AUDITORS |
The auditors, Goldwyns Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
SMARTSOURCING GROUP LIMITED |
Opinion |
We have audited the financial statements of SmartSourcing Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, 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 affairs as at 31 December 2021 and of the group's profit 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 group 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. |
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's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Group 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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
SMARTSOURCING GROUP LIMITED |
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 Group 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 Group 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the 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 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. |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page six, 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 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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
SMARTSOURCING GROUP LIMITED |
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. |
In order to address the risks of misstatements in respect of irregularities, including fraud, we have: |
- | obtained an understanding of the key laws and regulations applicable to the company, including the Companies Act 2006 and applicable taxation legislation; |
- | assessed the company's own internal controls and systems for the prevention and detection of irregularities and particularly the control environment within which they operate; |
- | determined a materiality level and audit approach sufficient to identify most irregularities, including fraud, that may occur; |
- | considered our own involvement in the preparation of the company's statutory financial statements and taxation returns; |
- | conducted audit verification work, on a sample basis, on the key audit areas and risks we have identified; and |
- | reflected on the outcome of our work, and the likelihood that conclusions drawn may be indicative of other areas of potential irregularity. |
We therefore consider our audit approach has been sufficient to detect material irregularities, including fraud. |
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. |
for and on behalf of |
Statutory Auditors and Chartered Accountants |
Rutland House |
90-92 Baxter Avenue |
Southend on Sea |
Essex |
SS2 6HZ |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
CONSOLIDATED |
INCOME STATEMENT |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
Notes | £ | £ |
TURNOVER | 3 | 29,965,792 | 23,692,970 |
Cost of sales | 26,976,206 | 21,507,771 |
GROSS PROFIT | 2,989,586 | 2,185,199 |
Administrative expenses | 2,117,581 | 1,569,845 |
872,005 | 615,354 |
Other operating income | - | 10,000 |
OPERATING PROFIT | 5 | 872,005 | 625,354 |
Interest receivable and similar income | - | 213 |
872,005 | 625,567 |
Interest payable and similar expenses | 6 | 144,190 | 136,744 |
PROFIT BEFORE TAXATION | 727,815 | 488,823 |
Tax on profit | 7 | 211,617 | 186,513 |
PROFIT FOR THE FINANCIAL YEAR |
Profit attributable to: |
Owners of the parent | 516,198 | 302,310 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
CONSOLIDATED |
OTHER COMPREHENSIVE INCOME |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
Notes | £ | £ |
PROFIT FOR THE YEAR | 516,198 | 302,310 |
OTHER COMPREHENSIVE INCOME |
Issue of preference shares | - | 614,973 |
Share option costs recognised | 65,900 | - |
Income tax relating to components of other comprehensive income |
(16,480 |
) |
- |
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX |
49,420 |
614,973 |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
565,618 |
917,283 |
Total comprehensive income attributable to: |
Owners of the parent | 565,618 | 917,283 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
CONSOLIDATED BALANCE SHEET |
31 DECEMBER 2021 |
2021 | 2020 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 9 | 2,327,844 | 2,612,505 |
Tangible assets | 10 | 4,019 | 6,439 |
Investments | 11 | - | - |
2,331,863 | 2,618,944 |
CURRENT ASSETS |
Debtors | 12 | 2,681,438 | 4,099,198 |
Cash at bank and in hand | 1,224,387 | 142,065 |
3,905,825 | 4,241,263 |
CREDITORS |
Amounts falling due within one year | 13 | 2,393,123 | 2,833,596 |
NET CURRENT ASSETS | 1,512,702 | 1,407,667 |
TOTAL ASSETS LESS CURRENT LIABILITIES |
3,844,565 |
4,026,611 |
CREDITORS |
Amounts falling due after more than one year |
14 |
2,259,867 |
3,007,531 |
CAPITAL AND RESERVES |
Called up share capital | 18 | 101,797 | 101,797 |
Other reserves | 19 | 456,222 | 544,413 |
Share option reserve | 19 | 49,420 | - |
Retained earnings | 19 | 977,259 | 372,870 |
SHAREHOLDERS' FUNDS | 1,584,698 | 1,019,080 |
3,844,565 | 4,026,611 |
The financial statements were approved by the Board of Directors and authorised for issue on 5 September 2022 and were signed on its behalf by: |
Ms J M Hall - Director |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
COMPANY BALANCE SHEET |
31 DECEMBER 2021 |
2021 | 2020 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 9 |
Tangible assets | 10 |
Investments | 11 |
CURRENT ASSETS |
Debtors | 12 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 13 |
NET CURRENT LIABILITIES | ( |
) | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year |
14 |
CAPITAL AND RESERVES |
Called up share capital | 18 |
Other reserves | 19 |
Share option reserve | 19 |
Retained earnings | 19 |
SHAREHOLDERS' FUNDS |
3,060,289 | 3,736,928 |
Company's profit for the financial year | 21,605 | 12,627 |
The financial statements were approved by the Board of Directors and authorised for issue on |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
Called up | Share |
share | Retained | Other | option | Total |
capital | earnings | reserves | reserve | equity |
£ | £ | £ | £ | £ |
Changes in equity |
Issue of share capital | 101,797 | - | - | - | 101,797 |
Total comprehensive income | - | 372,870 | 544,413 | - | 917,283 |
Balance at 31 December 2020 | 101,797 | 372,870 | 544,413 | - | 1,019,080 |
Changes in equity |
Total comprehensive income | - | 604,389 | (88,191 | ) | 49,420 | 565,618 |
Balance at 31 December 2021 | 101,797 | 977,259 | 456,222 | 49,420 | 1,584,698 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
COMPANY STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
Called up | Share |
share | Retained | Other | option | Total |
capital | earnings | reserves | reserve | equity |
£ | £ | £ | £ | £ |
Changes in equity |
Issue of share capital | - | - | - |
Total comprehensive income | - |
Balance at 31 December 2020 |
Changes in equity |
Total comprehensive income | - | ( |
) |
Balance at 31 December 2021 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
CONSOLIDATED CASH FLOW STATEMENT |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 1 | 2,479,425 | (541,528 | ) |
Interest paid | (29,528 | ) | (45,004 | ) |
Tax paid | (186,515 | ) | (246,362 | ) |
Net cash from operating activities | 2,263,382 | (832,894 | ) |
Cash flows from investing activities |
Purchase of tangible fixed assets | (1,647 | ) | (2,971 | ) |
Interest received | - | 213 |
Net cash from investing activities | (1,647 | ) | (2,758 | ) |
Cash flows from financing activities |
New loans in year | - | 1,151,014 |
Loan repayments in year | (1,151,014 | ) | - |
Preference shares redeemed | (28,399 | ) | 2,839,898 |
Share issue | - | 101,797 |
Acquisition of subsidiary shares | - | (4,705,485 | ) |
Cash acquired | - | 1,590,493 |
Net cash from financing activities | (1,179,413 | ) | 977,717 |
Increase in cash and cash equivalents | 1,082,322 | 142,065 |
Cash and cash equivalents at beginning of year |
2 |
142,065 |
- |
Cash and cash equivalents at end of year |
2 |
1,224,387 |
142,065 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
1. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
£ | £ |
Profit before taxation | 727,815 | 488,823 |
Depreciation charges | 288,727 | 237,729 |
Non-cash costs | 65,900 | - |
Finance costs | 144,190 | 136,744 |
Finance income | - | (213 | ) |
1,226,632 | 863,083 |
Decrease/(increase) in trade and other debtors | 1,417,760 | (145,901 | ) |
Decrease in trade and other creditors | (164,967 | ) | (1,258,710 | ) |
Cash generated from operations | 2,479,425 | (541,528 | ) |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Year ended 31 December 2021 |
31/12/21 | 1/1/21 |
£ | £ |
Cash and cash equivalents | 1,224,387 | 142,065 |
Period ended 31 December 2020 |
31/12/20 | 9/9/19 |
£ | £ |
Cash and cash equivalents | 142,065 | - |
3. | ANALYSIS OF CHANGES IN NET DEBT |
At 1/1/21 | Cash flow | At 31/12/21 |
£ | £ | £ |
Net cash |
Cash at bank and in hand | 142,065 | 1,082,322 | 1,224,387 |
142,065 | 1,082,322 | 1,224,387 |
Debt |
Debts falling due within 1 year | (368,407 | ) | 340,008 | (28,399 | ) |
Debts falling due after 1 year | (3,007,531 | ) | 747,664 | (2,259,867 | ) |
(3,375,938 | ) | 1,087,672 | (2,288,266 | ) |
Total | (3,233,873 | ) | 2,169,994 | (1,063,879 | ) |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
1. | STATUTORY INFORMATION |
SmartSourcing Group Limited is a |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
Basis of consolidation |
The group accounts consolidate the affairs of SmartSourcing Limited since acquisition on 6 March 2020. The subsidiary accounts have been included in the group figures under the acquisition method of accounting. |
SmartSourcing Limited own 100% of E-SmartSourcing Limited (company number: 05622845), but due to the immaterial nature of E-SmartSourcing Limited, the financial figures are not included within the group accounts. |
Turnover |
Turnover represents the value of services provided to the extent that there is a right to consideration and is recorded at the value of the consideration due. Partially completed services are recognised on a proportion of the total expected consideration at completion. |
Goodwill |
Intangible assets |
Acquired intellectual property rights are recognised on the balance sheet as intangible assets at cost, and are amortised evenly over their estimated useful life of five years. |
Tangible fixed assets |
Office equipment | - |
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
Preference shares |
On 6 March 2020 the company issued 1% preference shares with annual redemption instalments and a 10-year maximum life. In accordance with FRS 102, these have been recognised as a financial liability and interest cost in the company's accounts, based on a comparable 5% amortised cost profile. The initial discount on creation was recognised as a capital contribution reserve, which is being unwound over the life of the liability. |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
2. | ACCOUNTING POLICIES - continued |
Share option reserve |
The company operates an approved enterprise management incentive scheme - further details of which can be found in the notes. |
The fair value of that scheme is calculated based upon the underlying subsidiary's most recent trading results, the parent company's outstanding finance liabilities and an updated view on the timescale, and likely quantum, of exercise of those options. |
The value of those options has been recognised as a separate Share option reserve, net of estimated tax reliefs arising upon exercise. |
3. | TURNOVER |
The turnover and profit before taxation are attributable to the one principal activity of the group. |
An analysis of turnover by class of business is given below: |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
£ | £ |
Contract fees | 29,638,868 | 23,554,112 |
Permanent placement fees | 326,924 | 138,858 |
29,965,792 | 23,692,970 |
4. | EMPLOYEES AND DIRECTORS |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
£ | £ |
Wages and salaries | 1,316,396 | 1,006,967 |
Social security costs | 142,542 | 121,552 |
Other pension costs | 40,032 | 32,134 |
1,498,970 | 1,160,653 |
The average number of employees during the year was as follows: |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
Directors | 2 | 1 |
Administration | 24 | 24 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
4. | EMPLOYEES AND DIRECTORS - continued |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
£ | £ |
Directors' remuneration | 145,656 | 116,771 |
Directors' pension contributions to money purchase schemes | 4,840 | 3,912 |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes | 1 | 1 |
5. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
£ | £ |
Other operating leases | 15,466 | 12,041 |
Depreciation - owned assets | 4,067 | 3,623 |
Goodwill amortisation | 284,661 | 234,107 |
Auditors' remuneration - audit fees | 8,450 | 6,333 |
Auditors' remuneration - tax compliance services | 1,400 | 1,357 |
Auditors' remuneration - taxation advisory services | 4,500 | - |
Auditors' remuneration - other non-audit services | 1,000 | 822 |
Foreign exchange differences | (3 | ) | 18 |
6. | INTEREST PAYABLE AND SIMILAR EXPENSES |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
£ | £ |
Bank interest | - | 13 |
Bank loan interest | 24,649 | 38,294 |
Discounting interest | 4,879 | 6,697 |
Preference share dividends | 114,662 | 91,740 |
144,190 | 136,744 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
7. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
£ | £ |
Current tax: |
UK corporation tax | 228,097 | 186,513 |
Deferred tax | (16,480 | ) | - |
Tax on profit | 211,617 | 186,513 |
Reconciliation of total tax 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: |
PERIOD |
9/9/19 |
YEAR ENDED | TO |
31/12/21 | 31/12/20 |
£ | £ |
Profit before tax | 727,815 | 488,823 |
Profit multiplied by the standard rate of corporation tax in the UK of 19 % (2020 - 19 %) |
138,285 |
92,876 |
Effects of: |
Expenses not deductible for tax purposes | 73,332 | 93,637 |
Total tax charge | 211,617 | 186,513 |
Tax effects relating to effects of other comprehensive income |
2021 |
Gross | Tax | Net |
£ | £ | £ |
Issue of preference shares |
Share option costs recognised | 65,900 | (16,480 | ) | 49,420 |
65,900 | (16,480 | ) | 49,420 |
9/9/19 TO 31/12/20 |
Gross | Tax | Net |
£ | £ | £ |
Issue of preference shares | 614,973 | - | 614,973 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
8. | INDIVIDUAL INCOME STATEMENT |
As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements. |
9. | INTANGIBLE FIXED ASSETS |
Group |
Patents |
and |
Goodwill | licences | Totals |
£ | £ | £ |
COST |
At 1 January 2021 |
and 31 December 2021 | 2,846,612 | 125,000 | 2,971,612 |
AMORTISATION |
At 1 January 2021 | 234,107 | 125,000 | 359,107 |
Amortisation for year | 284,661 | - | 284,661 |
At 31 December 2021 | 518,768 | 125,000 | 643,768 |
NET BOOK VALUE |
At 31 December 2021 | 2,327,844 | - | 2,327,844 |
At 31 December 2020 | 2,612,505 | - | 2,612,505 |
10. | TANGIBLE FIXED ASSETS |
Group |
Office |
equipment |
£ |
COST |
At 1 January 2021 | 75,780 |
Additions | 1,647 |
At 31 December 2021 | 77,427 |
DEPRECIATION |
At 1 January 2021 | 69,341 |
Charge for year | 4,067 |
At 31 December 2021 | 73,408 |
NET BOOK VALUE |
At 31 December 2021 | 4,019 |
At 31 December 2020 | 6,439 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
11. | FIXED ASSET INVESTMENTS |
Company |
Shares in |
group |
undertakings |
£ |
COST |
At 1 January 2021 |
and 31 December 2021 |
NET BOOK VALUE |
At 31 December 2021 |
At 31 December 2020 |
The group or the company's investments at the Balance Sheet date in the share capital of companies include the following: |
Subsidiary |
Registered office: Tanglewood,90-92 Vicarage Hill,South Benfleet, Essex, SS7 1PE |
Nature of business: |
% |
Class of shares: | holding |
The company acquired the entire issued share capital of SmartSourcing Limited on 6 March 2020. In accordance with section 615 of Companies Act 2006, the acquisition of SmartSourcing Limited has been recognised at its nominal value, with merger relief being claimed. |
12. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
2021 | 2020 | 2021 | 2020 |
£ | £ | £ | £ |
Trade debtors | 2,644,463 | 4,050,049 |
Other debtors | 13,980 | 7,030 |
Prepayments | 22,995 | 42,119 |
2,681,438 | 4,099,198 |
At 31 December 2021 £984,572 (2020 - £2,491,853) of the trade debtor balance was subject to financing agreements by HSBC Invoice Finance (UK) Ltd. Cash advances made against these agreements are included separately under creditors. |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
13. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
2021 | 2020 | 2021 | 2020 |
£ | £ | £ | £ |
Bank loans and overdrafts (see note 15) | - | 340,008 |
Preference shares (see note 15) | 28,399 | 28,399 |
Trade creditors | 1,681,692 | 1,786,161 |
Amounts owed to group undertakings | - | - |
Tax | 228,096 | 186,514 |
Social security and other taxes | 94,321 | 107,335 |
VAT | 153,748 | 205,156 | - | - |
Other creditors | 4,189 | 13,141 |
Invoice discounting advances | - | 8,834 | - | - |
Accrued expenses | 202,678 | 158,048 |
2,393,123 | 2,833,596 |
14. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
Group | Company |
2021 | 2020 | 2021 | 2020 |
£ | £ | £ | £ |
Bank loans (see note 15) | - | 811,005 |
Preference shares (see note 15) | 2,259,867 | 2,196,526 |
2,259,867 | 3,007,531 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
15. | LOANS |
An analysis of the maturity of loans is given below: |
Group | Company |
2021 | 2020 | 2021 | 2020 |
£ | £ | £ | £ |
Amounts falling due within one year or | on demand: |
Bank loans | - | 340,008 |
Preference shares | 28,399 | 28,399 |
28,399 | 368,407 |
Amounts falling due between one and | two years: |
Bank loans | - | 343,608 |
Preference shares | 28,399 | 28,399 | 28,399 |
28,399 | 372,007 |
Amounts falling due between two and | five years: |
Bank loans | - | 467,397 |
Preference shares | 950,778 | 114,052 |
950,778 | 581,449 |
Amounts falling due in more than five | years: |
Repayable by instalments |
Preference shares | 1,280,690 | 2,054,075 | 1,280,690 | 2,054,075 |
Further details on the treatment of the preference shares are included in note 18. |
16. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Group |
Non-cancellable | operating leases |
2021 | 2020 |
£ | £ |
Within one year | - | 5,666 |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
17. | SECURED DEBTS |
The following secured debts are included within creditors: |
Group | Company |
2021 | 2020 | 2021 | 2020 |
£ | £ | £ | £ |
Bank loans | - | 1,151,013 |
Invoice discounting advances | - | 8,834 | - | - |
- | 1,159,847 |
The group has granted a fixed charge and a floating charge to HSBC Invoice Finance (UK) Limited and HSBC UK Bank plc. The group has also assigned its rights under its contract with HSBC Invoice Finance (UK) Limited to HSBC Bank plc as security for all of its debts and liabilities owed to HSBC UK Bank plc. |
The group has granted a fixed and floating charge over its assets to HSBC UK Bank PLC for the bank loan as security. |
A personal guarantee in favour of HSBC UK Bank PLC has been provided by A R Martin (a director), guaranteeing 40% of the bank loan outstanding. |
18. | CALLED UP SHARE CAPITAL |
Details of shares shown as equity are as follows: |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2021 | 2020 |
value: | £ | £ |
19,500 | Ordinary | £1 | 19,500 | 19,500 |
82,297 | Ordinary | £1 | 82,297 | 82,297 |
101,797 | 101,797 |
Details of shares shown as liabilities are as follows: |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2021 | 2020 |
value: | £ | £ |
2,839,898 | Preference shares | £1 | 2,839,898 | 2,839,898 |
On 6 March 2020 the company issued £2,839,898 1% preference shares which shall redeem in full no later than 6 March 2030. The company is also obligated to redeem up to 709,975 shares on each anniversary of the full repayment of its bank debt, at the Chairman's (A R Martin) discretion. The preference shares carry a right to a fixed dividend of 1% per annum. |
The preference shares have therefore been recognised as a financial liability on an amortised cost profile, in accordance with notes 2 and 15. |
SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2021 |
19. | RESERVES |
Group |
Share |
Retained | Other | option |
earnings | reserves | reserve | Totals |
£ | £ | £ | £ |
At 1 January 2021 | 372,870 | 544,413 | - | 917,283 |
Profit for the year | 516,198 | 516,198 |
Amortisation unwinding | 88,191 | (88,191 | ) | - | - |
Expense recognised | - | - | 49,420 | 49,420 |
At 31 December 2021 | 977,259 | 456,222 | 49,420 | 1,482,901 |
Company |
Share |
Retained | Other | option |
earnings | reserves | reserve | Totals |
£ | £ | £ | £ |
At 1 January 2021 | 627,600 |
Profit for the year |
Amortisation unwinding | 88,191 | (88,191 | ) | - | - |
Expense recognised | - | - | 49,420 | 49,420 |
At 31 December 2021 | 698,625 |
20. | PENSION COMMITMENTS |
During the period the group made contributions of £40,032 (2020 - £32,134) to stakeholder pension schemes. At the balance sheet date there were no contributions outstanding (2020 - £11,877). |
21. | RELATED PARTY DISCLOSURES |
During the period the group total compensation to key management personnel (including directors) amounted to £457,373 (2020 - £368,116). |
22. | ULTIMATE CONTROLLING PARTY |
There is no ultimate controlling party. |
23. | APPROVED ENTERPRISE MANAGEMENT INCENTIVE (EMI) SCHEME |
An approved EMI scheme was introduced in November 2020 in which 98,203 £1 options were granted to encourage a pro-active environment for the participation of key management in share ownership. |
The options can only be exercised on a exit event, apart from one director who can also exercise his options on cessation of employment with the company. All the options cannot be exercised on or after the tenth anniversary of the grant date. Since inception, no options have been granted, forfeited, exercised or expired, nor any further options granted. |
At the balance sheet date the group measured the fair value of the options at £65,900 (2020 - £nil). |