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Company Information
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Contents
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Directors' report
For the year ended 31 December 2022
The directors present their report together with the Group strategic report and the consolidated financial statements of Shepherd Compello Limited ('the company') and its subsidiaries (together 'the group') for the year ended
The profit for the year, after taxation and minority interests, amounted to £387,832 (2021 - loss £614,730).
The results for the period are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who served during the year and up to the date of signature of the financial statements were as follows:
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), 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 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 for the group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group 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 the group and to 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.
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Directors' report (continued)
For the year ended 31 December 2022
The auditor, Buzzacott LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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Group strategic report
For the year ended 31 December 2022
The directors present the Group strategic report for Shepherd Global Limited ('the company') and its subsidiaries (together 'the group') for the year ended 31 December 2022.
Turnover for the year was £9.5m. There was a profit before tax of £683k.
Against this backdrop, the key financial performance indicators for the group are as follows: The directors consider this result was pleasing given the competitive landscape in which it operates.
The directors consider the principal risks and uncertainties facing the business to be as follows:
The group operates in a highly regulated and diverse business environment. The directors and management of the company therefore regularly review the business and regulatory risks to ensure these are mitigated as far as possible.
The group is exposed to currency risk given a substantial portion of the group's operations are in currencies other than Sterling. The US dollar and Euro are the most significant currencies to which the group is exposed. The directors manage this risk and look to mitigate the effect of exchange rate fluctuations through the use of hedging and foreign exchange forward contracts as deemed appropriate at the time of trade.
Credit risk is the risk that a counterparty will be unable to pay amounts in full when they fall due. The group monitors its debtor balances on an ongoing basis and provision is made for doubtful debts as necessary.
Investments of cash surpluses are only made through banks and companies which have sufficient credit ratings.
Liquidity risk is the risk that cash may not be available to pay obligations when they fall due. The group has appropriate cash flow management structures in place in order to anticipate demand for cash and meet obligations as they are due. In addition, controls are in place over client money to ensure that the company has appropriate cash resource to meet its obligations as they fall due.
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Group strategic report (continued)
For the year ended 31 December 2022
The directors and management of the group meet regularly to review the operation of the business and to review the adequacy of operating systems and internal controls. When a risk is identified, it is assessed and the necessary remedial action is decided and agreed upon by the directors and management team. The group maintains errors and omissions insurance.
The group continues to invest in IT platforms in order to drive forward an improved service for our clients and reporting for our stakeholders, whilst improving internal efficiencies.
The directors have undertaken a strategic review of the business priorities through to 2024 and have mapped out how to grow turnover and profitability through investment in people and diversification of our current offering. This began in earnest during previous periods and will continue moving forward. The group also continues to focus on the team and developing talent from within where there is opportunity to do so.
This report was approved by the board and signed on its behalf.
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Independent auditor's report to the members of Shepherd Global Limited
For the year ended 31 December 2022
We have audited the financial statements of Shepherd Global Limited (the 'parent company') and its subsidiaries (together, the 'group') for the year ended 31 December 2022, which comprise the Consolidated statement of comprehensive income, the Consolidated and Company statements of financial position, the Consolidated and Company statements of changes in equity, the Consolidated statement of cash flows, 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 conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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 or 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..
The other information comprises the information included in the Annual report other than the financial statements and our Auditor's report thereon. The directors are responsible for the other information contained within the Annual report. 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.
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Independent auditor's report to the members of Shepherd Global Limited (continued)
For the year ended 31 December 2022
Other information (continued)
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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Independent auditor's report to the members of Shepherd Global Limited (continued)
For the year ended 31 December 2022
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group 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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
How the audit was considered capable of detecting irregularities including fraud Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
∙the Senior Statutory Auditor ensured that the engagement team collectively had the appropriate competence,
capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we made enquiries of management as to where they considered there was susceptibility to fraud, and their
knowledge of actual, suspected and alleged fraud;
∙we identified the laws and regulations that could reasonably be expected to have a material effect on the financial
statements of the company through discussions with directors and other management at the planning stage;
∙the audit team held a discussion to identify any particular areas that were considered to be susceptible to
misstatement, including with respect to fraud and non-compliance with laws and regulations; and
∙we focused our planned audit work on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company including the Companies Act 2006 and taxation legislation.
We assessed the extent of compliance with the laws and regulations identified above through:
∙making enquiries of management;
∙inspecting legal correspondence throughout the year for any potential litigation or claims; and
∙considering the internal controls in place that are designed to mitigate risks of fraud and non-compliance with laws
and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙identified and assessed the design effectiveness of controls management has in place to prevent and detect fraud;
∙determined the susceptibility of the company to management override of controls by checking the implementation
of controls and enquiring of individuals involved in the financial reporting process;
∙reviewed journal entries to identify unusual transactions;
∙performed analytical procedures to identify any large, unusual or unexpected transactions and investigated and large variances from the prior year;
∙reviewed accounting estimates, in particular regarding the valuation of investments in associate and deferred income, and evaluated where judgements or decisions made by management indicated bias (see note 3);
∙tested the existence of revenue by obtaining an understanding of the clients' systems, including when insurance debtors, insurance creditors, and commissions are recorded, and when a bordereau is issued, as well as tracing a sample of nominal ledger transactions to their respective bank receipts and bordereaux;
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Independent auditor's report to the members of Shepherd Global Limited (continued)
For the year ended 31 December 2022
Auditor's responsibilities for the audit of the financial statements (continued)
∙tested the completeness of revenue by tracing bank receipts through to their bordereau and the accounting records; and
∙carried out substantive testing to check the occurrence and cut-off of expenditure.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included:
∙agreeing financial statement disclosures to underlying supporting documentation;
∙enquiring of management as to actual and potential litigation and claims; and
∙reviewing correspondence with the Financial Conduct Authority.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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 Auditor's 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 an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the 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 Auditor
130 Wood Street
EC2V 6DL
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Consolidated statement of comprehensive income
For the year ended 31 December 2022
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Consolidated statement of financial position
As at
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Consolidated statement of financial position (continued)
As at 31 December 2022
The financial statements were approved and authorised for issue by the board on and were signed on its behalf by:
The notes on pages 17 to 38 form part of these financial statements.
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Company statement of financial position
As at
The financial statements were approved and authorised for issue by the board on and were signed on its behalf by:
The notes on pages 17 to 38 form part of these financial statements.
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Consolidated statement of changes in equity
For the year ended 31 December 2022
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Company statement of changes in equity
For the year ended 31 December 2022
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Consolidated statement of cash flows
For the year ended 31 December 2022
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Consolidated statement of cash flows (continued)
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
Shepherd Global Limited ('the company') is a private company limited by shares and is registered and incorporated in England and Wales. The registered office and principal places of business is 88 Leadenhall Street, London, EC3A 3BP.
The group consists of Shepherd Global Limited and all of its subsidiaries. The company's and the group's principal activities and nature of its operations are disclosed in the Directors' report.
2.Accounting policies
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires group management to exercise judgement in applying the group's accounting policies (see note 3). The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements. The following principal accounting policies have been applied:
The consolidated financial statements incorporate those of Shepherd Global Limited and all of its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtained economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date control passes.
All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The cost of a business combination is the fair value at the acquired date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
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Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
At the time of approving the financial statements, the directors have a reasonable expectation that the group and company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Therefore the financial statements have been prepared on a going concern basis.
Functional and presentation currency
Transactions and balances
Fee income is recognised when and to the extent that insurance services to which it relates have been substantially completed. Rentals receivable under operating leases are recognised as turnover on a straight line basis over the lease term.
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Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
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Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
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 the group's share 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 Consolidated statement of comprehensive income over its useful economic life, which is 10 years. Other intangible assets Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Amortisation is provided on the following bases:
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
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.
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Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated statement of comprehensive income includes the group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the group. In the Consolidated statement of financial position, the interests in associated undertakings are shown as the group's share of the identifiable net assets, including any unamortised premium paid on acquisition. Any premium on acquisition is dealt with in accordance with the goodwill policy.
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Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the group becomes aware of the obligation, and are measured at the best estimate at the reporting 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 Statement of financial position.
An amount of income, representing anticipated future claims handling costs on contracts of insurance written
or accepted under binding authorities as at the reporting date has been deferred to future accounting periods and is shown within creditors as a deferred income reserve.
i) The group acts as an agent in brokering the insurable risks of its clients and generally is not liable as a
principal for premiums due to underwriters nor for claims payable of its clients. Notwithstanding the group's legal relationship with client and underwriters and since, in practice premium and claims monies are usually accounted for by insurance intermediaries, it has followed generally accepted accounting principles by showing cash, debtors, and creditors relating to insurance business as assets and liabilities of the group itself. ii) The group has given regard to FRS 102 and offsets debtors and creditors from insurance broking transactions only when it is legally enforceable.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development
expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
The group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
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Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated statement of comprehensive income. 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 revision and future periods where the revision affects both current and future periods. Critical judgements The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements. Investment in associate In line with the company's and group's accounting policies, the directors have assessed whether there are any indications that the company's investment in its associate undertaking is impaired. Though the associated undertaking has made only a small profit in the year ended 31 December 2022, in the judgement of the directors the carrying value of the investment is not impaired. They have reached this conclusion after considering the discontinuation of loss making divisions within the company and the appointment of a new Chief Underwriting Officer, who is well known to the market and is expected to drive profitable growth in years to come. Key sources of estimation uncertainty The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows: Deferred income Material estimates are made in determining deferred income. Details of its nature and carrying amount are set out in note 23. Insurance creditors Included in creditors are amounts that are being investigated and may be subject to a future credit write back. At 31/12/22 these totalled £175,880.
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Notes to the financial statements
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
12.Taxation (continued)
With effect from 1 April 2023 the rate of corporation tax increased, tapering from 19% for businesses with profits
of less than £50,000 to 25% for businesses with profit over £250,000. Deferred tax in these financial statements has been measured at 25%, being the rate that was substantively enacted at the reporting date.
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Notes to the financial statements
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
Subsidiary undertakings (continued)
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Notes to the financial statements
For the year ended 31 December 2022
The bank loan of £1,075,000 (2021: £1,375,000) is due for repayment over 6 years and attracts interest at 1.69% per annum above the Bank of England Base Rate and is secured by debentures across Shepherd Compello Limited, Shepherd Global Limited and White Oak Underwriting Agency Limited.
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Notes to the financial statements
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
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Notes to the financial statements
For the year ended 31 December 2022
Share premium account
Reserve represents consideration received for shares issued above their nominal value. Profit and loss reserves Cumulative profit and loss net of distributions to owners.
The group operates a defined contribution pension scheme. The assets of the scheme are held separately from
those of the group in an independently administered fund. The pension cost charge represents contributions payable by the entity to the fund and amounted to £447,506 (2021: £699,786). Contributions totalling £114,667 (2021: £268,897) were payable to the fund at the reporting date.
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Notes to the financial statements
For the year ended 31 December 2022
During the year, total advances of £107,747 (2021: £56,598) were made to J Shepherd and total repayments of £nil (2021: £nil) were received by the company. At the year end, £320,289 (2021: £161,724) was owed to the group by J Shepherd.
During the year, total advances of £170,202 (2021: £418,623) were made to H T Shepherd, and total repayments of £nil (2021: £10,000) were received by the group. At the year end, £969,401 (2021: £913,648) was owed to the group by H T Shepherd. These balances are included within "other debtors" in note 16, and are interest free and repayable on demand.
Shepherd Global Limited heads the smallest and largest group for which consolidated financial statements are prepared. Its registered office is 88 Leadenhall Street, London, EC3A 3BP.
The ultimate controlling party is considered to be J Shepherd by virtue of his majority shareholding in Shepherd Global Limited.
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Notes to the financial statements
For the year ended 31 December 2022
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